Augmenting Our Strategy in Light of Changes in the Consumer Market and the Online Market, Our Core Business, Respectively. We Aim to Maximize Profitability With Additional Multiple Usage.
In the fiscal year ended March 31, 2013, although the expanding online business caused sales to increase, an important point of our growth strategy, major games that either missed their sales targets or were postponed caused profits to decline.
The following is an explanation of Capcom’s strategy to achieve medium-term business goals, including improvements to the Consumer business in response to rapid changes in the market environment and enhancements to the online business.
Revised Strategy in Response to a Changing Market
We will continue to create popular content for the consumer market, a major market that will continue to represent one-third of the overall game market in 2017, positioned as a core business able to ensure an operating margin of 15% or higher. Hence, with a slight shift in the strategy we have pursued up to now, we will create a structure better able to generate stable growth conforming to the rapidly changing market.
To this end, we will (1) strengthen our digital strategy (DLC), (2) improve development efficiency and product quality by transitioning outsourced work in-house and (3) shorten the sales cycle of popular series titles to create a portfolio of titles enabling sustainable growth over the medium- to long-term.
Online Business as Our Growth Engine
In terms of online business measures, Capcom is (1) developing social games for mobile and PC on many platforms, (2) strengthening overseas development and (3) enhancing development staff. These measures will enable us to grow online business sales to 28 billion yen (up 22.3% from the previous fiscal year) in the fiscal year ending March 31, 2014 and to 30 billion yen in the fiscal year ending March 31, 2015. There are three points to these measures. The first is to augment the number of social game titles that make thorough use of the Capcom brand developed for a variety of platforms. The second, to strengthen the Beeline brand management structure and create a next hit to follow “Smurf’s Village”. The third is to establish a presence overseas with respect to PC online games. Through these measures, we aim to further entrench existing users and cultivate new user segments.
Developing Popular Multimedia Content to Expand Earnings
A “home video game” is an artistic media product that consists of highly creative, multi-faceted elements such as images, storyline, a worldview, music and interactive game play. This is exactly why each of these constituent elements can be individually developed into an attractive product through different facets of media.
Therefore, we can expect the following four effects by developing each of these elements into different business fields: (1) creating new profit opportunities other than the Consumer business; (2) creating heightened excitement through increased exposure by simultaneous multiple-field development (promotional effects); (3) absorbing customers obtained from other business segments as home video game users; and (4) reducing profit fluctuations through business portfolio creation (risk hedge).
We own scores of intellectual properties based on popular content. We are now creating a business model to enjoy multiple profits by promoting Single Content Multiple Usage strategy in several applications.
This strategy will allow us to leverage the success of our Consumer business with the aim of maximizing profits and achieving success in other businesses (Mobile, Pachinko & Pachislo, Arcade Games, Movies, Publishing, Character Goods, etc.).
Promoting Multiple Usage Development to Achieve a Synergy Effect with Games
This fiscal year (ended March 31, 2013), we maximized profits by promoting the Single Content Multiple Usage development of popular content. First, Hollywood film “Resident Evil: Retribution” based on the “Resident Evil” series was released worldwide earning 0.24 billion dollars at the box office. In Japan, the CG animated film “Resident Evil: Damnation” was released. Also, we collaborated with Universal Studios Japan (USJ) to hold “Halloween Horror Night”, part of the “Universal Surprise Halloween” event, as well as with Shibuya PARCO to open a “Resident Evil Café” inside that department store. These initiatives contributed to sales of the “Resident Evil” series consumer software in our attempt to maximize profits.