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ONLINE INTEGRATED REPORT 2017

Leading World Creators

Latest version is available on the "Online Integrated Report 2019" top page.

Top page > [Financial Data] An Analysis of the Market and Capcom

An Analysis of the Market and Capcom

Game Industry Characteristics

Characteristics of Each Market

Diagram: Characteristics of Each Market
Consumer Market Characteristics
(Package + Digital Download Contents)

Package and digital download contents are a 21.2 billion dollar market, forecast to grow 30% over the next five years to 27.2 billion dollars by 2021. The customer base is composed mainly of core users who are highly loyal to game titles. They have relatively high willingness to purchase sequels and remakes along with low sensitivity to price and economic conditions. This market is the lowest among the three in terms of margin, yet occupies a high position in the Japanese industry overall. Hereafter, we expect the digital sales ratio to increase, shrinking the gap between the other two markets' margins.

Mobile Market Characteristics

This is a 48.5 billion dollar market, forecast to grow to 81 billion dollars in 2021. The customer segment is primarily composed of casual users, many of whom play games just to pass the time, thus they demonstrate the lowest loyalty toward game titles. They have a limited willingness to purchase games and have the highest sensitivity to price and economic conditions. Although this is the most profitable among the three markets, only a limited number of titles are able to generate stable earnings over the long term. Going forward, we expect smartphones will continue to grow rapidly as the most pervasive game device.

PC Online Market Characteristics

This is a 31 billion dollar market, forecast to peak at 32.8 billion dollars in 2021. The customer base is primarily composed of core users who demonstrate the highest loyalty toward game titles. They have a fairly strong willingness to engage in ongoing purchases, and are unique for having the lowest sensitivity to price and economic conditions. Among the three markets, profitability is comparatively high, and hit titles tend to generate stable earnings over the long term; however, the influx of new customers is expected to taper off, causing growth to be sluggish in the future.

Five Competitive Factors Related to the Consumer Market (Five Forces Analysis)

	Diagram: Five Competitive Factors Related to the Consumer Market (Five Forces Analysis)

Capcom Business Characteristics

Digital Contents Business Portfolio

図表:各市場の特性
Consumer Busines (Proportion of Net Sales: 56%)
Package + Digital Download Contents

Capcom's core business is to create a multitude of original content for home video game consoles. The regular release of sequels to popular IPs and an increased download sales ratio have, in recent years, led to a greater volume of sales and operating margins over 20%.

Mobile Contents Business (Proportion of Net Sales: 4%)

This business distributes games featuring popular Capcom content on smartphones, cultivating new markets such as the casual user segment to create new earnings opportunities. However, insufficient know-how in ongoing game operations, which differs from Consumer, has resulted in sales underperforming market growth.

PC Online Business (Proportion of Net Sales: 7%)

We are working to distribute PC Online games utilizing our popular content and ensure stable management of our existing content in Japan and Asia.

Capcom Management Resource VRIO Analysis and Evaluation/Measures

V: Value R: Rarity I: Inimitability O: Organization
◯: High △: Medium ×: Low

Area Management Resource V R I O Evaluation
Management Top management with strong leadership dedicated to high-quality production and trusted by employees Ongoing competitive advantage
Development/
technology
Development capabilities to produce original titles of word class quality Ongoing competitive advantage
RE ENGINE for streamlined development and the technological prowess to create games with full-VR support
Corporate culture of training younger employees ×
※1
Other companies possess this strength as well
Governance Promotion of governance reforms (independent director ratio/company with an audit and supervisory committee) × Some companies are even more progressive
Swift decision-making system × Strength seen at many founder-run companies
Brand Many popular, global IPs Ongoing competitive advantage
Corporate brand known worldwide for action games × There are more widely recognized companies
Finances Paid dividends for 26 consecutive years since listing × There are about 40 companies that have provided dividends for 10 consecutive years or more
Sales Consumer digital sales ratio of more than 30% ×
※2
Major overseas companies are ahead
Marketings Bolstering of lineup through revival of dormant IP and catalog titles Companies with popular IP can roll them out in other media
Single Content Multiple Usage strategy of rolling out popular IP to multiple media ×
※3
External partners Trusted by hardware manufacturers High rank compared to competitors

Note: Prepared in-house based on interviews of analysts.

Measures to address evaluation

  • *1 With respect to the low evaluation of the originality of our system for training younger employees, we are working on system development that includes (1) providing an environment conductive to taking on new challenges through visualization of management, and (2) developing an environment of friendly rivalry through the promotion of younger employees and consolidation of offices.
  • *2 With respect to the low evaluation globally despite being ahead of other companies in Japan, we are promoting measures such as (1) taking advantage of our many popular IPs by re-releasing past million-sellers (79 titles) in digital format and (2) extending the sales period with brand strategies for each IP.
  • *3 With respect to the low evaluation of not successfully rolling out IPs to mobile platforms despite their relative strength, we are promoting measures such as (1) assigning capable creators to internal production and (2) forming alliances with mobile game companies possessing abundant game operations know-how.

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