Capcom's Console Department Profits Drop

The company resorts to restructuring and layoffs to increase profitability.

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According to Bloomberg Japan, Capcom has revealed in its 2002 financial report that its business profits from its console game department have dropped 40 percent from the previous year. In addition to a lack of sales, the decline in profits is the result of losses incurred by inventory clearances and the cancelation of a number of games in development. Capcom's final deficits for the 2002 fiscal year clocked in at 19.6 billion yen ($167.7 million), 100 million yen ($855,500) more than reported last month.

For the 2003 fiscal year, Capcom predicts that its volume of sales in console games will decrease approximately 18 percent--from last year’s 16.3 million copies to 13.4 million copies. Capcom expects that its games for the PlayStation 2 and the Xbox, which sold 6.83 million and 280,000 copies, respectively, last year, will increase in sales to 7.6 million and 800,000 copies, respectively. However, GameCube and Game Boy Advance games, which sold 3.23 million and 4.8 million copies, respectively, last year, are expected to decline to 2.2 million copies for the GameCube and 2.04 million copies for the Game Boy Advance.

Capcom also revealed plans to restructure its software department. Aside from the reevaluation of its development methods, Capcom will be laying off a number of staff members and recruiting new employees. Capcom expects to have 730 developers left by the end of the fiscal year, 31 less than the end of the last fiscal year.

Capcom hopes to post good sales figures with major upcoming games such as Biohazard Outbreak, Onimusha Buraiden, Onimusha 3, Dino Crisis 3, and Biohazard 4, which is currently in development for the GameCube--though Resident Evil 4 will more than likely not be released until the next fiscal year. While console sales are expected to decline, Capcom expects a positive outcome for the 2003 fiscal year, with a 12 percent profit increase in the console game department compared with 2002 and a 1.6 percent increase in the company’s annual profit.

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