Capcom profits drop 90%

Street Fighter house sees massive quarterly profit drop alongside small sales decline; poor Lost Planet 2 sales, strong yen, and weak global economies blamed.

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Capcom today announced its net income for the first quarter of this year was ¥216 million ($2.4 million), 90 percent lower than the same period in 2009. This poor performance was due to the poor sales performance of Lost Planet 2 and the lack of headline releases during the quarter compared to the same period last year.

Capcom was showing off new titles at E3 and Comic-Con that may boost its bottom line in years to come.
Capcom was showing off new titles at E3 and Comic-Con that may boost its bottom line in years to come.

The Japanese development house branded the results for the quarter ending June 30, 2010, as "sluggish." It specifically called out Lost Planet 2 as the reason the profits in its games division had fallen, saying it "underperformed its projection substantially." Overall sales "remained stagnant" thanks to lower-than-expected growth for Monster Hunter Tri on the Wii and the fact that Ghost Trick on the DS "struggled." This was moderated by continued "steady growth" for both Super Street Fighter IV and Monster Hunter Online. Compounding sales-related problems were the "stagnating economy" in Europe and the US and a significant exchange loss, thanks to the strong Japanese yen, the firm said.

The Mobile Devices division was a bright spot for Capcom, however, with the newly formed division reporting ¥680 million ($7.8 million) in sales and ¥97 million ($1.1 million) net income. Net sales in Capcom's Arcade Operations division fell 10 percent to ¥2.6 billion ($30 million), but operating income for the division was up 56 percent to ¥178 million ($2 million), thanks to the success of the firm's "profitability improvement strategy."

This drop in profits was foreshadowed by reports earlier this week that the company was planning to cut development time for its flagship titles in an effort to stabilise its earnings. Capcom has reiterated its forecasts for the rest of this fiscal year, where it expects net income of ¥8 billion ($91 million) with ¥2.9 billion($33 million) coming in the first half of the year.

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