Capcom 1st Quarter Report: Fiscal Year Ending March 31, 2011

Key insights

7 takeaways

01
Capcom’s operating income dropped significantly to 1,005 million yen in Q1 2011, down from 3,664 million yen in the same period the previous year.See it on page 5
02
Net sales for the quarter reached 19,037 million yen, a slight decrease from the 19,497 million yen reported in the prior year's first quarter.See it on page 5
03
Operating margins in the consumer online games segment compressed from 33.3 percent to 11.9 percent due to a shift toward cost-intensive new title launches like Lost Planet 2 and Super Street Fighter IV.See it on page 11
04
While consumer online margins fell, sales volume in that segment increased to 4.6 million units.See it on page 11
05
Arcade operations reported an operating income of 178 million yen, driven by successful cost-cutting measures and improved facility performance.See it on page 13
06
The company maintains its full-year fiscal projections of 95,000 million yen in net sales and 8,000 million yen in net income.See it on page 20
07
Strategic priorities for the remainder of the fiscal year include improving development efficiency and expanding the company's footprint in social, smartphone, and Asian PC gaming markets.See it on page 16

Summary

The Capcom first-quarter report for the fiscal year ending March 31, 2011, details a period of financial contraction characterized by declining profitability despite steady revenue performance. The company reported net sales of 19,037 million yen, a slight decrease from the 19,497 million yen recorded in the same period the previous year. However, operating income fell significantly to 1,005 million yen, down from 3,664 million yen, primarily due to increased game development costs associated with a higher volume of new title releases and the negative impact of a strong yen on foreign exchange.

The consumer online games segment, which serves as the company's primary revenue driver, saw sales volume increase to 4.6 million units, led by titles such as Lost Planet 2 and Super Street Fighter IV. Despite this volume growth, operating margins in this segment compressed from 33.3 percent to 11.9 percent as the company shifted focus from high-margin repeat titles to new, cost-intensive product launches. Conversely, the arcade operations business showed signs of recovery, with operating income rising to 178 million yen as a result of rigorous cost-cutting measures and improved performance at existing facilities. The mobile contents business remained stable, bolstered by new releases for mobile devices and consistent demand for established intellectual properties.

Looking forward, the company maintains its full-year fiscal projections, anticipating net sales of 95,000 million yen and net income of 8,000 million yen. Strategic priorities remain focused on enhancing development efficiency, expanding the online and PC gaming footprint in Asia, and increasing the distribution of social and smartphone-based titles. The company continues to monitor market conditions and the performance of upcoming major releases to ensure alignment with its annual growth targets.