Capcom forecasts digital shift after solid fiscal year results

Capcom saw both revenue and profits rise in the last fiscal year, but it is nevertheless planning a move away from the packaged console games on which its business was built.

In the fiscal year ended March 31 2016, Capcom earned ¥‎77 billion ($715 million / €627 million) in revenue, up 19.8 per cent over the previous year. Net income for the period was ¥‎7.75 billion ($72 million / €63 million), an increase of 17.1 per cent. The company's games (Digital Contents) business represented the majority of its revenue, earning ¥‎52.6 billion ($488 million / €428 million) over the course of the year, up 15.9 per cent. Operating income for the division rose 19.2 per cent to reach ¥‎12.2 billion ($113 million / €99 million).

Despite the eagerly anticipated Street Fighter V launching in February (which shipped 1.4m units by the end of March), much of Digital Contents' growth was down to a single IP. Monster Hunter X sold 3 million units between its November launch and the end of the fiscal year, despite being available for a single platform (Nintendo 3DS) and only in Japan. The game is expected to launch - as Monster Hunter: Generations - in Europe and North America later in 2016.

Monster Hunter Online was launched in China by Tencent in December 2015, which Capcom said, "was off to a good start, thus increasing the possibility of even greater business development in China going forward." Lastly, Monster Hunter Explore on mobile reached 3 million downloads across iOS and Android, which Capcom framed as a possible "breakthrough" for its "underperforming" mobile products.

Both Monster Hunter Online and Monster Hunter Explore could prove to be pivotal for Capcom, if its strategic outlook for this fiscal year proves to be accurate. The company promised to, "inject new life into the underperforming Mobile Contents business," echoing a prior statement made in reference to the strong performance of Monster Hunter Explore. The merging of its Japanese and US mobile studios last month was a key step towards achieving that goal.

That is one aspect of Capcom's active pursuit of a digital-first production and distribution model - "to mitigate inventory burden and reduce distribution costs." This will involve the promotion of more profitable digital downloads, with "package products" only receiving "limited sales runs." It will also guide the foreign markets Capcom is targeting for future growth, with Asian countries preferred due to the dominance of online games. Following the "strong showing" of Monster Hunter Online, China will be a particular focus in this fiscal year and beyond. Capcom referred to a "full scale expansion" for the its brand in the territory.

There are echoes here of Konami, which discussed a shift in emphasis from packaged console games to online and mobile titles at this time last year.