Capcom Results of Operations and Strategies: First Half of Fiscal Year Ending March 31, 2009

Capcom’s financial results for the first half of the fiscal year ending March 31, 2009, reflect a period of strategic transition characterized by strong profitability in the home video game segment, which offset significant underperformance in arcade operations and content expansion. The company’s primary thesis centers on leveraging a multi-platform development strategy and expanding its international footprint to drive growth, despite volatile market conditions and a challenging economic environment.

The home video game business served as the primary growth engine, achieving an operating margin of 22.1% during the first half. This success was largely driven by robust repeat sales of established titles, most notably Monster Hunter Freedom 2G, which reached 2.58 million cumulative shipments. While total unit shipments decreased to 5.1 million compared to the previous year, the shift toward higher-margin repeat sales improved overall profitability. Conversely, the arcade operations segment struggled, with existing store sales falling to 84% of the previous year’s performance, attributed to rising energy costs affecting consumer traffic and a general decline in arcade popularity. Similarly, the contents expansion business, encompassing pachinko, pachislo, and mobile content, fell below expectations due to product launch delays and weakening demand.

Geographically, the company is prioritizing expansion in North America and Europe, evidenced by the establishment of a new subsidiary in France and a strategic focus on localized game development. The company maintains its full-year fiscal forecast, projecting net sales of 95.3 billion yen and operating income of 14.6 billion yen. To achieve these targets, the strategy for the second half involves an aggressive multi-platform release schedule for major titles like Resident Evil 5 and Street Fighter IV, alongside a restructuring of the arcade business to close unprofitable locations and reduce operating expenses.