Capcom released today its financial results for the fiscal year ended on March 31st, 2017.
As you can see in the table below, all numbers are in the positive realm, and are slightly increased year on year.
The press release also included a statement with an overall analysis of the businesses under the publisher’s umbrella.
“During the fiscal year ended March 31, 2017, signs of major changes to our industry became evident, such as the successive releases of VR (virtual reality) devices that are highly compatible with games. With an eye to creating a new market we entered a new era many are calling “VR year one.”
Under such circumstances, the Company has carried out reorganization and strengthened its management structure aiming to reform its development divisions, which are the core of its business operations. At the same time, the Company promoted speedy decision-making and agile business development by clarifying reporting lines and responsibilities.
Moreover, the Company strove to enhance its presence and increase its brand value by generating synergy with its flagship titles through a mixed media strategy leveraging its rich content assets. This included an animated TV program based on Monster Hunter Stories that began airing in October 2016 (Fuji Television Network); the musical theater performance of Resident Evil: Voice of Gaia in Tokyo and Osaka, which is the first ever musical theater performance based on a survival horror game; and the Hollywood film, Resident Evil: The Final Chapter, which is based on the Company’s popular game series and was first released in Japan on December 23, 2016, followed by a worldwide run.
Under the Corporate Governance Code of Japan, the Company has been engaged in measures to make its corporate governance effective, which include the proactive promotion of constructive dialogues with domestic and foreign institutional investors and the adoption of some of their suggestions in company management. The resulting net sales were 87,170 million yen (up 13.2% from the previous fiscal year).
Regarding profitability, operating income was 13,650 million yen (up 13.5% from the previous fiscal year), ordinary income was 12,589 million yen (up 10.9% from the previous fiscal year) and net income attributable to owners of the parent was 8,879 million yen (up 14.6% from the previous fiscal year).”
Secondly, we also get an in-depth analysis of the Digital Contents Business, which includes console and PC games. The company mentions an “overall solid performance” for Resident Evil 7, and a “promising start” for Monster Hunter XX. Unfortunately both Dead Rising 4 and Monster Hunter Stories “underperformed.”
“Resident Evil 7 biohazard (for PlayStation 4, Xbox One, Windows PC), which features the ability to play the full game in the included optional PSVR Mode for PS4, gave an overall solid performance, while Monster Hunter XX (Double Cross) (for the Nintendo 3DS family of systems), is off to a promising start following its March 2017 release.
3 Re-releases of the Resident Evil series performed steadily thanks to a stable fanbase for the brand. Further, Monster Hunter Generations, known as Monster Hunter X (Cross) in Japan and Asia (for the Nintendo 3DS family of systems), achieved solid sales overseas thanks to Capcom’s established brand capabilities.
On the other hand, Dead Rising 4 (for Xbox One and Windows PC) and Monster Hunter Stories (a game targeting younger audiences, for the Nintendo 3DS family of systems) underperformed. In online games and mobile contents, the Company broke new ground amidst ongoing efforts to achieve progress in this static sub-segment by reviewing its development framework and operation methods.
This led Toraware no Paruma (an enterprising romance game for Android devices and iOS that was developed primarily by female staff) to reach the top of the App Store paid application rankings on its release date. The resulting net sales were 58,704 million yen (up 11.7% from the previous fiscal year), and operating income was 11,096 million yen (down 8.8% from the previous fiscal year).”
We also learn that Resident Evil 7 shipped 3.5 million copies, while Monster Hunter XX shopped 1.7 million copies. Monster Hunter Stories and Dead Rising 4 are still under a million copies shipped.
Last, but not least, we get a meaty description of the outlook for the current fiscal year, ending on March 31st, 2018. The company plans to focus on home video game development (defined “core competence”) on top of mobile contents.
Capcom also wants to expand digital download sales and sales on a worldwide scale, enhancing the product lineup , and leverage its popular IP.
“Looking forward, the market environment is changing rapidly with the emergence of new business areas in VR (virtual reality) and AR (augmented reality) as well as further increases in mobile contents and the spread of online games. In addition, Nintendo Switch, a new home video game console, was released in March 2017.
Amidst such structural changes to the industry, the Company will endeavor to increase profitability through business management based on selection and concentration. This will include the allocation of development resources in accordance with the Company’s medium-term strategic map to priority divisions, such as home video game software development, which is its core competence, and mobile contents.
In addition to package game sales, the Company will focus its efforts on expanding digital download sales, which promise higher profitability, in order to diversify its profit structure. The Company will also endeavor to further cultivate existing customers while developing new customers by enhancing its product line-up, which includes releasing distribution titles as well as re-releasing or remaking popular titles from its back catalog.
Holding a significant number of popular IP, such as Monster Hunter and numerous others, the Company will strive to leverage these valuable assets to generate synergy and break through the current situation of its online games and mobile contents businesses. At the same time, the Company will promote the development of appealing titles in-step with market trends, through the development, marketing and operations departments working as one. Additionally, it will continue to build a value chain, seeking to increase customer satisfaction through the timely provision of additional contents.
Expansion of sales in large overseas markets is essential for the achievement of the Company’s growth scenario. The Company is one of the world’s leading contents holders with many brands that are popular overseas including Resident Evil and Street Fighter, both of which have been made into Hollywood films. The Company will promote aggressive global strategies by leveraging these strengths, coordinating with its overseas subsidiaries in releasing software that meet overseas customer demands and increasing its presence through the popularization of the “Capcom Brand.”
Meanwhile, the pachinko & pachislo market faces some uncertainty due to the recent revision in the pachislo model certification method and the strengthening of applicable regulations. However, the Company will expeditiously develop compliant equipment and promote business flexibly to enable it to respond promptly to changes in the industry.
Interestingly, we also learn that Capcom is planning to enhance its development infrastructure to support new features of game consoles like VR and 4K.
As home video game consoles and smart devices continue to advance, offering support for features such as VR and high-definition 4K resolution, enhancing development infrastructure will be crucial to the development of video game software suitable for game consoles with sophisticated functions while satisfying diverse customer needs. Under the slogan “from Osaka to the world,” the Company opened its R&D Building #2 in 2016 as a new game development hub. The Company will continue to engage in aggressive business management, keeping in mind strategic business alliances, mergers and acquisitions, and any other options available for the achievement of sustainable growth and improvement of medium- to long-term corporate value.
Additionally, the Company has been promoting the establishment of a work-life balance through child-rearing support and other initiatives, empowering employees to pursue both their career and childrearing in order to secure and utilize superior talent. As a part of this endeavor, the Company opened onsite childcare facilities in April 2017.”