Today Capcom released its financial results for the fiscal year ended on March 31, 2019.
As you can see in the first table below, the sales and income figures were quite strong, showcasing significant improvements over the previous fiscal year.
We also get a look at the outlook for the next fiscal year, ending on March 31, 2020 (in the second table). Capcom predicts a rather significant decline in sales, but a considerable increase in profit.
We also get an overview of the results, with an explanation of what led to them.
While Monster Hunter World did not achieve any further sales milestone beyond the latest 12 million shipments figure as of March 31, its sales are defined “Strong.”
Interestingly, Capcom points to a slowdown in mobile games offset by “steady” growth in the console/PC market, even if said growth is seen as “uneven”
“During the fiscal year ended March 31, 2019, our industry witnessed a slowdown in mobile games as well as steady yet uneven growth in the market for home video games due to market maturation trends. Meanwhile, esports, which was a demonstration event at the 2018 Asian Games last year, continued to increase in popularity around Japan with the start of league matches and the launch of pro teams domestically in an effort to expand the fan base.
In such an environment, Monster Hunter: World (for PlayStation 4, Xbox One and PC), which shook up the market last year, continued to report strong sales, with total shipments breaking 12 million units, marking a record high for any single title in the Company’s history. Additionally, the Company’s other flagship brands demonstrated their appeal and boasted strong sales during this period, as Resident Evil 2 (for PlayStation 4, Xbox One and PC) scored a major hit, shipping more than 4 million units, while Devil May Cry 5 (for PlayStation 4, Xbox One and PC) shipped 2 million units, backed by its established popularity in overseas markets.”
Furthermore, the Company took a strategic step in cultivating the new business domain of esports, an area that has been attracting increasing attention in the past year. This included holding the Capcom Pro Tour Japan Premier at the Tokyo Game Show 2018, generating much excitement among spectators, and launching the Capcom Street Fighter League powered by RAGE in February 2019, leveraging the popular Street Fighter versus fighting game series that many consider to have started esports.
We get additional information about the Digital Contents business, which relates to video games. We learn that Resident Evil 2 “Exceeded Expectations” and Devil May Cry 5 “Performed Strongly.” The PC version of Monster Hunter World also showcased “solid” performance.
Monster Hunter Generations Ultimate for Switch saw “robust” sales in the western markets, while Mega Man 11 and Street Fighter 30th Anniversary Collection also performed well.
“In this business, the popularity of major title Resident Evil 2 (for PlayStation 4, Xbox One and PC) exceeded expectations, driving the Company’s business performance. Devil May Cry 5 (for PlayStation 4, Xbox One and PC) targeted overseas markets and also performed strongly, backed by consistent demand. Additionally, the Monster Hunter series contributed significantly to improving profits: flagship title Monster Hunter: World (for PlayStation 4 and Xbox One), which was a phenomenal success in the previous fiscal year, maintained popularity through the expansion of its user base, while the Steam version for PC also performed solidly, boosting profits; meanwhile, Monster Hunter Generations Ultimate (for Nintendo Switch) enjoyed robust sales through its release in markets outside of Japan.
Furthermore, Mega Man 11 (for PlayStation 4, Nintendo Switch, Xbox One and PC) and Street Fighter 30th Anniversary Collection (for PlayStation 4, Nintendo Switch, Xbox One and PC) performed well. In addition, high-margin catalog titles, including Resident Evil 7 biohazard (for PlayStation 4, Xbox One and PC), increased sales through their enduring popularity.
The resulting net sales were 82,982 million yen (up 11.9% from the previous fiscal year) and operating income was 23,315 million yen (up 22.0% from the previous fiscal year).”
The outlook for the current fiscal year (ending March 2020) mentions a high-tech landscape where high-resolution graphics, AI and virtual reality will boost realism and natural movements of characters.
Capcom intends to develop games that appeal to diverse customers including titles that can be popular in the west. The publisher aims to focus resources in growing divisions while downsizing unprofitable ones.
“The company expects an increasingly high-tech landscape, where high-resolution graphics and the adoption of AI (Artificial Intelligence) and VR (Virtual Reality) will enable greater realism and natural movement by characters in home video games.
As such, to generate synergy with its popular games via greater global brand awareness and value, the Company has been producing world-leading content, with brands such as Street Fighter and Resident Evil being made into Hollywood movies, now followed by Monster Hunter and Mega Man, which are also scheduled for live-action film adaptation.
In recent years, as the domestic market matures, further efforts to increase sales in the larger overseas market have become essential to maintain sustained growth. The Company will, therefore, develop and sell titles that appeal to diverse customer needs, including games that are popular overseas, thereby enhancing customer satisfaction and ensuring its competitive advantage.
Moreover, in the fast-growing esports business, the Company, in addition to leveraging its abundant experience and operational knowhow accumulated over the years in the US, intends to make a full-scale entry into the market and gain a firm footing through the allocation of the necessary funds and human resources.
Furthermore, by focusing its management resources in growth areas and priority divisions, as well as reinforcing existing divisions and downsizing and withdrawing from unprofitable divisions, the Company will rebuild its businesses in line with environmental changes. It will also aim for more cohesive business development and higher management efficiency while at the same time enhancing the corporate value of the entire Group by carrying out the following business strategies and priority measures that utilize the Company’s strengths.”
The plans for the gaming division can be found below, including stronger marketing activities to deepen the relationship with existing customers and earn new ones. Digital download sales will also be a focus.
“While the Company holds multiple, flagship brands that have achieved worldwide status, such as Monster Hunter, Resident Evil and Street Fighter, it will further put effort into marketing activities,
deepening relationships with existing customers and developing new users in line with market trends.
Moreover, digital download sales have taken off in the US and Europe, and sales have also been increasing in the fast-growing Asian markets in conjunction with the development of network infrastructure. As such, the Company will aim to increase revenues by focusing on digital download sales, which carry less inventory risk and promise higher profitability than one-time physical product sales, both in Japan and overseas.”
Lastly, we learn about Capcom’s plans to approach the west focusing on the “Cool Japan” concept and on the promotion of global expansion.
“Development of the overseas market will become crucial for promoting growth strategies as the domestic market matures. Japanese games, along with animation (anime) and comics (manga) are collectively
referred to as “Cool Japan,” and have gained popularity among young people around the world, even becoming a common global language. The Company already owns numerous tittles that are popular overseas, including Resident Evil and Street Fighter, which have been turned into Hollywood movies, and with the growing number of fans of the mega-hit title Monster Hunter: World in the promising Asian market, it intends to aggressively promote global expansion to further business opportunities.”