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Capcom cancels games, brings development back in-house

Capcom cancels games, brings development back in-house

Thu 18 Apr 2013 9:44am GMT / 5:44am EDT / 2:44am PDT
PublishingDevelopmentFinancial

"Excessive" outsourcing and poor marketing blamed for missed targets

Capcom hopes a return to in-house game development will improve the fortunes of the company, as it suffers a special loss of 7.2 bn ($73.3m / 48.1m) due to the cancellation of titles in development.

As it prepares to reveal full-year results that have come in significantly under target, the company has blamed "excessive" outsourcing for low quality games, as well as a slow response to expanding digital markets and poor co-ordination from its own marketing and development divisions.

The publisher of Devil May Cry and Resident Evil has more than halved profit forecasts for the financial year ended March 2013 from 6.5bn ($66.2m / 43.4m) to just 2.9bn ($29.5m / 19.4m).

Presentation material to investors shows that the publisher singles out a "decline in quality of titles outsourced to overseas developers". As a result the company has cancelled in-progress projects farmed out to third parties as part of a "strict" review that has found games incompatible with a new focus.

It also acknowledges the company had a "delayed response to the shift to digital media" in its home video game business.

Sales of Resident Evil 6 across consoles during the financial year are expected to be around 4.9 million - way off the original 7 million target, while DmC Devil May is expected to have shifted 1.1 million units of the estimated 2 million.

To address the disappointing year, Capcom has a three point plan to improve the business; strengthen digital strategies, raise game quality by moving more game development in-house and enhance co-ordination between marketing and development divisions.

At the end of the 2014 financial year it expects profits of 6.8bn ($69.1m / 45.4m) with net sales of 97bn.

15 Comments

Adam Campbell Associate Producer, Miniclip Ltd

1,180 967 0.8
Capcom were doing so well with internal development and technology, the idea of outsourcing everything seemed crazy to me.

Posted:A year ago

#1

Paul Jace Merchandiser

937 1,416 1.5
To address the disappointing year, Capcom has a three point plan to improve the business
I really wish they would have had a five point plan instead. It would have been much easier to compare them to Mitt Romney that way. Nobody(including myself) believed in his five point plan. I'm curious how many people think Capcom's particular plan will work to turn their sales fortunes around.

Posted:A year ago

#2

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
This is a good news for them, always wondered why CAPCOM opted to be a publisher instead of developing games themselves. they want to become a Japanese EA or Activision. It clearly has not worked for them. Im glad they are going back to making games themselves. They lost that japanese spark that made them make my favorite games.

Posted:A year ago

#3

Tommy Thompson Lecturer in BSc (Hons) Computer Games Programming., University of Derby

44 28 0.6
I find it funny that they point to outsourced work as the problem when even sales forecasts for internal projects (RE6) are woefully inflated. 7 million copies of RE6 is certainly ambitious.

Capcom alongside Sega continue to miss one core addition to their strategy: development (read: exploitation) of core IPs. I cannot think of any other companies who have such a strong roster of IP and fail to do anything with it. Certainly Capcom has revived their fighting genre, but when you consider that much of their IP maintains a cultural resonance amongst gamers, it's bizarre that they fail to capitalise upon it.

Posted:A year ago

#4

David Radd Senior Editor, IndustryGamers

359 78 0.2
I wish they would cite more specific examples because of the two listed (RE6 and DmC), the latter externally developed game was by far the better received one critically, though it missed its sales percentages by a higher amount.

Posted:A year ago

#5

Matt Martin Editor, GamesIndustry.biz

173 113 0.7
Popular Comment
I guess it's unannounced projects in development that have been outsourced and are not meeting high enough standards.

As a publisher they seem to have those same completely unrealistic targets for sales that Square Enix had for Tomb Raider and Hitman. Solid games, with decent sales, but expectations are ridiculous.

Posted:A year ago

#6

Yiannis Koumoutzelis Founder & Creative Director, Neriad Games

363 207 0.6
I understand the Indian studio considered internal development.

Posted:A year ago

#7

Private Industry

1,176 182 0.2
DmC was a great game and deserves better sales. RE6 on the other hand is a train wreck if you are a RE fan. They should bring back the real RE not what happened to the series since RE4 with it becoming more and more a shooter and less of a survival game with great puzzles and tension.

Posted:A year ago

#8

M.H. Williams Staff Writer, USgamer

37 32 0.9
So, sounds like Square's excuse. From last year's annual report:
http://www.capcom.co.jp/ir/english/data/explanation_2011.html?tab=0
How do you assess the performance of titles that were introduced in the fourth quarter of the previous fiscal year?

Sales of "Street Fighter X Tekken" have fallen short of our plan. We believe one of causes is cannibalism because of the large number of other games in this genre that were launched within a short time. "Resident Evil: Operation Raccoon City" has reached shipments of 2 million units (as of May 10, 2012). This shows the success of our decision to try the new approach of using an alliance with an overseas development company.

The only other outsourced title released this year was DMC, which did about as well/poorly as RE6 and probably cost far less to make. So, what changed?

Posted:A year ago

#9

Meelad Sadat [a]list daily editorial director, Ayzenberg Group

51 30 0.6
Falling yen might have something to do with it. Normally doesn't make sense to redirect your business based on currency fluctuations but Japan is showing that decreasing the value of the yen has become part of their economic recovery policy.

Posted:A year ago

#10

Drew Northcott Senior Artist

8 2 0.3
And so it goes around again. Publishers have been wobbling between in-house and external pretty much since there have been publishers.
"We need more control, bring everything in-house"
"Look how expensive in-house is! We need to control our costs, I know - let's outsource"

Posted:A year ago

#11

Lindsay Cox Unity Developer, Mediatonic

28 48 1.7
It is great bringing the game s back in house, if the quality of the games are actually going to be any better. And I am not convinced they will be. RE6 and to a lesser extent RE5 were both not great entries to the Resi series, and I am sure the reviews that showed the games weren't great would have affected the sales. I am surprised DMC didn't do as well as they thought though, it is a really good game, however I guess they probably annoyed some of the die hard fans by taking the game in a different (and I think better) direction. For them, I don't think suddenly bringing everything back in house is the answer. If they can outsource some of the core IPs to studios that are going to make them awesome then the games will sell themselves.

(And on a slightly unrelated note, they shouldn't have canned that Megaman title, as it looked like a cool reinvention!)

Posted:A year ago

#12

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
Reseident Evil 4 was great... RE5 and RE6 were dissapointing... DMC was a great game and I want a new side scrolling Megaman. Id be ok if they remake the entire set of 8Bit and 16bit games in the way that ducktales is being handled. resident Evil needs to be remade, the story line is a mess now, with 3 versions of wesker, he now has a son, and two versions of Ada, its all just a huge mess.

Posted:A year ago

#13
Alternatively, they could try co development. I doubt if outsourcing per se meant there was less control and quality. Would any cultural and language barriers be also be in effec?

Posted:A year ago

#14

Tom Keresztes Programmer

683 335 0.5
And so it goes around again. Publishers have been wobbling between in-house and external pretty much since there have been publishers.
"We need more control, bring everything in-house"
"Look how expensive in-house is! We need to control our costs, I know - let's outsource"
Those managers seem to think 9 woman can deliver a baby in a month.

Posted:A year ago

#15

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