Our Strategy for Growth
Conversation: An Analyst's Perspective on Capcom's Strategy for Growth
Accelerating Online Strategy
- Capcom's online development is garnering attention from the market. In particular, mobile social game "Smurfs' Village", released under the Beeline brand in 2010, was a global success; you have also begun aggressively distributing content on GREE and Mobage.
- With regard to online development, we were a bit late to enter the domestic social game domain, but we have finally solidified our lineup and gained expertise along the way. From now, we will develop social games from popular package games with the objective of getting this area on track. "Resident Evil: Outbreak Survive"(GREE) , which began distribution in June 2011, already has more than two million members. "Monhan Tankenki Maboroshi no Shima" (GREE) and "Minna to Monhan Card Master" (Mobage) have over one million members each, and we feel this response means we are winning support among a wider population outside traditional game users.
- Besides social games, with PC online games like "Monster Hunter Frontier Online", package game downloadable content and Capcom's entry into the recently rising PC browser market, it appears you are stepping-up online development. How do you see each platform growing?
- What is important for Capcom, rather than how each platform will grow, is to create better games that more people can enjoy playing for a longer time. For example, the traditional package game usually ended when the story was cleared, but upgrades to hardware and telecommunications technology and the advent of the paid content in-game system enable the download and enjoyment of new stories. Anticipating these kinds of changes, I think overall expansion of the online business domain is important.
- I see. In that context, it is clear to see why Capcom employed its multiplatform strategy early on. You are not a hardware manufacturer; your strength lies in being able to provide games quickly to the platform users want.
- Yes, and of course, we need to respond quickly to rapid advances in devices and hardware. However, pursuing something because it is popular takes place after the fact. If we release superior game content, it has the ability to sell compatible hardware as well. To forward planning and development focused on these possibilities, from fiscal 2012(ended march 31, 2012) we integrated the consumer, PC online and mobile development structures. Motivated by Beeline's eye-opening success, we are promoting awareness-raising in the development division and throughout the entire company.
Capcom's Strengths and Responding to Changes
- In terms of promoting strategy, what are Capcom's strengths?
- The first is the originality of our content. The majority of our games have highly original stories and characters. And, the root of all this is the ongoing creation of content intended to always satisfy users. Second, is the Single Content Multiple Usage strategy, which we have pursued for some time. We grow our fan segment by developing game content for multiple media. Our third strength is global development. I think expanding our content not only domestically and in developed countries, but also in developing countries and throughout the entire world, will enhance our brand power.
- Because of expansion in the online domain, I suspect traditional thinking may no longer apply in some areas. In fact, given the extreme complexity of business composition, it is difficult to understand conditions looking at the stock market; have any new issues spring up in response to changes in the business environment?
- There is no doubt that the business environment is undergoing tremendous changes. However, I think these changes offer new opportunities for growth. For example, in Asian nations, even with brand recognition, there were profitability issues in the package business. However, going forward, with the rise of smartphones and tablets, we will attempt to improve profitability through the distribution of online content.
This means that the time has come to restructure this into a companywide profit model. The game distribution structure is going through significant changes, so the issue is whether we can seize this opportunity- I think this is the key to success. Traditional business ended with package games sold at stores, but now it begins after sales. Direct confirmation of user satisfaction linked to more satisfying projects and services will become integral to the game business going forward.
A Corporate Culture Able to Continue Taking on Challenges
- Globally, there are many new players entering the game industry. It appears that market competition is entering enter a new phase; what is your outlook for future growth?
- Many new players are evidence of the industry's potential. An insular industry is one that is on the decline. Given present conditions where individual manufacturers are able to engage in steady and direct contact with each user, it is possible that a giant market may suddenly emerge unexpectedly. This age of unpredictability is also one of great opportunities. Platform diversification and global expansion are driving up development costs every year, but as it is management's mission to generate steady profits, I want to aggressively invest in growth.
- This fiscal year, you released the first new title in a while with "Dragon's Dogma". How is it going?
- I think stable growth is difficult with only the titles we have now. We invigorate the company by creating new titles. Actually, from this year we increased the number of new graduates we employ, plan to increase our development staff by 100 people each year and are strengthening our educational system. Always striving to continually improve is Capcom's corporate culture. I think that, just like life, this is growth.
- After the Conversation
- The important point when evaluating game companies is the strength of their content. In addition to this, global business development, approach to pursuit of profit opportunities and commitment to constant objectives are also important. Capcom aggressively engages in all these initiatives. In particular, I highly commend their pursuit of originality and acceptance of risk symbolized by new title "Dragon's Dogma". In terms of global development, I have high expectations that their use of the Beeline brand will increase user segment. Because of the complexities of online business, it is difficult to see progress in each area; from now, changes in the number of members for each titles and disclosure of other detailed information will further heighten market expectations. (Mia Nagasaka)
- Mia Nagasaka (Profile)
Mia Nagasaka joined Morgan Stanley MUFG Securities in July 2010. Previously she worked at Bank of Tokyo-Mitsubishi UFJ and Barclays Capital Securities, and has covered the game sector since 2007. She graduated from Keio University's Department of Humanities and Social Science and received a Master's Degree from Keio Business School. While in graduate school she studied at the Wharton School at University of Pennsylvania.