Capcom Shows 91% Profit Boost, Sluggish Western Sales

Capcom Co., Ltd. has released its worldwide financial results for its fiscal year ending March 31, 2006, showing a 91.6% increase in profits over its results for the same period in 2005; 6,941 billion yen (approximately $62 million), increased from 3,622 billion yen ($32 million). "The video game industry experienced a favorable growth in general while it was going through the period of 'generational shift', the transition of hardware to the next-generation stationary game consoles," said Capcom's financial report, seemingly majorly contradicting many other companies that are seeing issues in transition. "One of the major contributors for the growth was the new portable game consoles which generated a buzz in the market and played a central role in the diversification of the customer base by attracting female and novice game players." The report continues: "These new portable game consoles led the demand increase during the year-end sales, thus boosting domestic market." Examples cited of high-selling portable Capcom titles on portable systems include Mega Man Battle Network 6 for the Game Boy Advance and Phoenix Wright: Ace Attorney for the Nintendo DS. However, not all seems to be working perfectly in Capcom's home video game segment, as the company commented: "Additionally, we promoted the reorganization of the overseas operations, one of our most critical business segments, to enhance the earning power of the entire Capcom group." Profit was down a significant 87.9% percent in the U.S. market, with sales down 18.3%, and profit down 89.6% in the European market (though on sales that were up 9.3%), and the company confirmed that its Bay Area-based Capcom Studio 8 developer has closed down, and that it is in the process of closing Capcom Eurosoft, which used to be responsible for the distribution of game software in Europe. On the home console front, Capcom cited both Resident Evil 4 and Monster Hunter 2 as being pivotal to its financial results, while admitting that Onimusha: Dawn of Dreams, Without Warning and Beatdown did not reach projected sales figures, with the Western market particularly problematic for the company. "It is possible that the existing market share alignment will be totally redrawn as the competition over the market initiative in the game industry becomes further intensified," continued the report. "The launch of the advanced and sophisticated game hardware will result in an urgent need for software makers to address the problem of increasing development costs."