Our Strategy for Growth
Growth Strategy 2: Development Strategy
Aiming for Medium- to Long-Term Growth by Increasing Number of Package Titles Released in a Single Year
This section explains the second component of our growth strategy, which involves "expanding our line-up of games under development", necessary for achieving medium-term business goals.
For Capcom to achieve sustainable and stable growth in the game software industry, where the presence or absence of hit products dictates performance, we mapped out a 60-month title development plan that lays out a medium- and long-term development schedule for multiple major titles in the first phase of structural reforms. By organizing efficient development teams according to this plan, we are able to invest in sequels to multiple popular games each year, which enables stable growth in the Consumer Online Games business. Also, we must further increase single-year sales of major software to achieve medium-term business goals.
To this end, we are promoting (1) a shorter sales cycle for popular series titles and (2) the launch of new titles to create a title portfolio facilitating sustainable growth over the medium- to long-term.
Shortening the Development Cycle of Popular Series Sequels with an Efficient Development Structure
(1) "In terms of shortening the sales cycle of popular series titles", we launch sales of popular series titles held by the Company approximately every 2.5 years. This is because the development of a single major title usually requires 3-4 years; in the event that there are few hits, it will be difficult to create a series title every year and earnings will be adversely impacted. For this reason, it is important either to maintain a large number of popular titles or shorten the sales cycle to ensure stable earnings. Among the multitude of major titles held by Capcom, such as "Monster Hunter", "Street Fighter", "Resident Evil", "Devil May Cry", "Lost Planet", "Dead Rising" and many others, we will promote shortening of the sales cycle in pursuit of further earnings stabilization and growth.
Specifically, teams developing major titles will be limited to 100 members, with multiple sequel titles developed at the same time. Also, as it will be necessary to create a large-scale development structure for shortening the development process, we will strengthen in-house development staff recruitment. In addition, we will increase the number of titles released in a single year and expand earnings using a hybrid development model whereby the core portions of the project are developed in-house by Capcom and the process-work is outsourced to outside development companies.
Furthermore, 80% of Capcom's proprietary integrated development environment "MT Framework" development process is common to the Xbox 360, PS3 and PC platforms, realizing development efficiency that significantly reduces costs and shortens time to completion to one-third of the traditional time required for development. In response to market needs, we are always expanding platform compatibility, which now includes the Nintendo 3DS, Wii and the iPhone.
In addition, through ongoing download sales of new items and scenarios online during the 2.5 year period required to release a title, users will be captive fans until the release of a sequel as we acquire revenue from the sales of additional items to maximize profits.
Strengthen Portfolio with Launch of New Titles
(2) Having established the new brand, Capcom will allocate approximately 20% of development investment funds to enhance the strength of a new hit title-creating lineup. The reason is because popular games have a solid fan base, and when they become a series, there is a high probability that users and retailers will purchase and stock the sequel based on past game content and sales performance, which, in turn, increases the likelihood of a string of hits. In the next fiscal year (ending March 2013), we plan to release new titles including "Dragon's Dogma".
In this way, we will create a title portfolio enabling sustainable growth over the medium- to long-term by shortening the sales cycle, regularly distributing DLC during blank periods while releasing series titles at the appropriate time and strengthening our lineup with the launch of new titles.