The lights are on
'Tis the season for financial reporting. Capcom has released its results for the year ending March 31, 2013.
The past twelve months saw a significant decline in operating income in the amount of 10.1 billion yen ($103 million), a decrease of 17.6 percent from 2012. Capcom's net income was also down by more than half, despite a boost from improved currency exchange.
Unexpectedly, Resident Evil 6 sales dropped off quickly in response to less than overwhelming critical and fan response. Dragon's Dogma has sold more than one million copies in Japan, and Devil May Cry is reported to have posted "solid sales" despite Capcom's recently stated desire to dramatically shift away from outsourcing.
Of concern is Capcom's outlook for the coming months. The publisher expects that costs for next generation will soar. This is in stark contrast to what we heard from EA yesterday, who will be holding overall operating expenses flat (though moderately increasing R&D with funds that would have otherwise been used to compensate the 10 percent of its workforce laid off last month).
The prime difference seems to be that EA has focused on creating in Frostbite 3 an engine that will support a variety of different genres and titles. Furthermore, by unifying development on a single, flexible platform, the body of support across internal studios grows. The economies of scale are a critical piece of EA's strategy.
Capcom did not share news of anything comparable, and the documents do not mention the Panta Rhei engine displayed at the PlayStation 4 reveal. Additionally, a statement regarding the coming months before the release of next generation hardware is concerning.
Even though a full lineup of new home video game consoles will eventually be released, the industry is likely to be in a period of scant new product releases over the near future, awaiting the full-scale launch of the next-generation machines. In the meantime, development costs are projected to soar as advanced and multiple functions are added to hardware. Business alliances and consolidations may therefore occur in increasing numbers.
Capcom only mentions two titles in its forward-looking statements regarding fiscal year 2014: Monster Hunter 4 for 3DS (Japan only) and Lost Planet 3. The passage above seems to indicate that Capcom will be forgoing cross-generation development in favor of strictly focusing on new hardware.
This is counter to the approach taken by EA, Ubisoft, and Activision. Cross-generation development enables publishers to tap into the install bases for current generation consoles rather than relying strictly on consumer adoption of new technology.
We expect Capcom to reveal more about its next-generation plans at E3, but for the time being, the company's slate of upcoming titles is looking a little thin.