Today Capcom announced its financial results for the first nine months of the fiscal year 2019, which ended on December 31.
As you can see in the table below, sales were down 13.6% year on year.
On the other hand, operating income (profits, in layman terms) grew by a whopping 37.1%
This is the highest profit recorded at the end of the third quarter of a fiscal year in the whole history of Capcom.
The accompanying press release included an in-depth explanation of the results.
During the nine months ended December 31, 2019, advances in the communications environment provided a backdrop for new momentum in the sector as a spate of IT giants entered the market, including U.S.-based Apple with its Apple Arcade game subscription service, along with a new cloud-based game streaming service from Google.
In such an environment, in addition to focusing resources on the development and sales of home video game software, which is the source of our competitive advantage, the Company enhanced our development structure by bolstering our developer workforce and workplace environment.
In such a situation, Monster Hunter World: Iceborne (for PlayStation 4 and Xbox One), our flagship title for the current fiscal year that launched in September, shipped over 3.2 million units worldwide, supported by consistent popularity.
In addition, profit improved due to the continued popularity of major
catalog titles, particularly in overseas markets, and the growth of highly profitable digital download sales.
Meanwhile, the Company released Shinsekai: Into the Depths, a highly-creative new title for the Apple Arcade game subscription service, in a bid to promote our multi-platform business strategy. In addition, the Company opened its first dedicated retail store in Shibuya Parco to capitalize on synergies with our popular game titles, offering exclusive and limited-edition merchandise. Further, the Company remained committed to building a new business model by working on initiatives to put on track our eSports Business Division, which has garnered attention for its future growth potential.
These initiatives included holding events in Japan, such as Street Fighter League: operated by RAGE, and in the U.S., such as Capcom Cup 2019, the world championship tournament that caps the Capcom Pro Tour.
Aside from these initiatives, the Company worked to give back to society by engaging in ESG-related activities. These included characters from our Monster Hunter series being selected as mascots for the Osaka Prefectural Police’s cyber-crime prevention awareness program, which contributed to building awareness of online safety among the youth demographic.
The resulting net sales for the nine months ended December 31, 2019 were 52,908 million yen (down 13.6% from the same term in the previous fiscal year), the decrease due in part to promoting the shift from physical package sales to digital sales.
In terms of profitability, profit improved at all levels due to the contribution of the hit title Monster Hunter World: Iceborne, primarily sold digitally, as well as to an increase in the percentage of highly profitable digital sales within catalog title sales.
Specifically, operating income was 18,448 million yen (up 37.1% from the same term in the previous fiscal year), ordinary income was 18,702 million yen (up 38.1% from the same term in the previous fiscal year), and net income attributable to the owners of the parent was 13,065 million yen (up 42.3% from the same term in the previous fiscal year).
We also get an overview specific for the Digital Contents business, which includes video games.
Monster Hunter World: Iceborne’s sales are described as “solid,” driving the growth of profitability.
Resident Evil 2 and Devil May Cry 5 also recorded a “healthy” performance, contributing to boosting profits.
While overall sales were down 15.2% due to higher digital sales, operating income was up 30.1%.
In this business segment, Monster Hunter World: Iceborne (for PlayStation 4 and Xbox One) delivered solid sales and served as the key driver of profitability growth owing to a focus on high-margin digital sales.
Further, healthy sales of catalog titles also boosted profit. Specifically, Resident Evil 2 (for PlayStation 4, Xbox One and PC) and Devil May Cry 5 (for Xbox One, PlayStation 4 and PC), both released in the previous fiscal year and recipients of an Award for excellence at the Japan Game Awards: 2019, saw continued growth in sales buoyed by a growing user base. Monster Hunter: World (for PlayStation 4, Xbox One and PC), which was launched in January 2018, also continued to display its long sales life.
The resulting net sales were 40,589 million yen (down 15.2% from the same term in the previous fiscal year ) due to an increase in the percentage of digital sales. Operating income was 19,885 million yen (up 30.1% from the same term in the previous fiscal year) due to successfully revising the earnings structure and contributions from Monster Hunter World: Iceborne and catalog titles.
If you’d like to compare, you can also check out the previous financial results, announced by Capcom in October.