Topic: Capcom Posts Dramatic Drop in First Quarter Income

[NWR_Karlie]

Huge drop in profits compared to this time last year.

http://www.nintendoworldreport.com/news/23795

Capcom have reported a net income of 216 million yen ($2.4 million) for the quarter ending June 30, 2010. Compared with the same period in 2009, this is a 94.8 percent drop. While profits are down, net sales are similar to last year, with just a 2.4 percent drop to 19,037 million yen ($219 million).

The shrinking US and European markets due to the state of the economy and the strong yen are large factors in the profit decrease. Titles such as Super Street Fighter IV and Monster Hunter Frontier Online showed steady sales growth, but Lost Planet 2 sales failed to match projected earnings, leading to overall stagnant sales. The slow sales rate of Monster Hunter Tri for Wii and the struggle of Ghost Trick for DS in the Japanese market has contributed to the figures.

New franchises have high development costs, yet risk worse sales performance compared to established franchises. Recent reports from Capcom have stated the company's intention to release more titles of their more profitable franchises.

The interim results do not affect predicted income for the year ending March 31, 2011, an expected net income of 8,000 million yen ($92 million). 

[Kytim89]

I have to wonder if HD development has anything to do with these companies losing money?

[Deguello]

I think the two biggest factors in the near 100% drop in Profit is Lost Planet 2 and Dark Void.  Lost Planet was already mentioned, but even Capcom would like to forget Dark Void.  That was one of the biggest flops this generation.  And it also had an enormous budget that spanned years of development time.

As for HD development being a large factor in lowered earnings... yes and no.  NOW HD development is considerably easier than it was in 2005.  But the massive investment that graduating to High Definition required in those years has not been monetized enough to make up for it, resulting in all of the pain of being a trailblazer, but none of the benefit.

[Kytim89]

HD development is still a return on investments fiasco.

[broodwars]

I think the two biggest factors in the near 100% drop in Profit is Lost Planet 2 and Dark Void.  Lost Planet was already mentioned, but even Capcom would like to forget Dark Void.  That was one of the biggest flops this generation.  And it also had an enormous budget that spanned years of development time.

As for HD development being a large factor in lowered earnings... yes and no.  NOW HD development is considerably easier than it was in 2005.  But the massive investment that graduating to High Definition required in those years has not been monetized enough to make up for it, resulting in all of the pain of being a trailblazer, but none of the benefit.

I have to agree with this assessment: Lost Planet 2 and Dark Void were monetary black holes that produced very little and cost quite a bit.  The only title I can think of them having a hand in that could have made them much money Q1 this year was Super Street Fighter IV, and I have to imagine there was some profit loss in there from people being perfectly happy with Street Fighter IV already.  There's also Tatsunoko vs. Capcom, which was probably a modest success, but not enough to make an impact one way or another and certainly wasn't enough to offset the losses from the 2 HD flops.

It's sad, really, that Dark Void turned out as poorly as it did, because that game at least looked entertaining if derivative.
 

[Kytim89]

This goes to show that third party games on wii are not the only ones suffering poor sales.

[broodwars]

This goes to show that third party games on wii are not the only ones suffering poor sales.

While the industry is suffering overall from tight budgetary and sales constraints, Capcom's problems right now pretty much suffer from lackluster or poor product.  Typically, Capcom's been one of the more successful companies at monetizing their franchises, so I'd say this was more just bad management than anything condemning or praising particular console markets.

[Mop it up]

More titles in their established franchises? How many more Mega Man and Resident Evil games are going to come out of this?

[ControlerFleX]

This is bad, I'm a HUGE Capcom fan. I have two Street Fighter tattoos.

Speaking of which, get ready for a slew of more Mega-Man Capcom Vs. Resident Evil announcements.............. wait what was that........

[Plugabugz]

Needs more Zack and Wiki.

[Pale]

I really don't want to start a fight again, but the mentality that making an HD game costs significantly more money than making a non HD game is just patently false at this point.

Yes, making a AAA game for 360 costs more than making a shovelware game for Wii... but making a AAA game for Wii will cost pretty much the same amount.

[BlackNMild2k1]

So time and effort into HQ HD assets with details in everything from the ground and it's grass to the character model and his shoes that are stepping on them cost about the same as a Good Wii game?

I'll be sure to tell that to all the 3rd parties that have been wasting all this time and money chasing the Uncanny Valley when they could have been making Wii games instead. They were the ones spouting off the cost difference of Wii development vs PS360 development afterall.

[broodwars]

So time and effort into HQ HD assets with details in everything from the ground and it's grass to the character model and his shoes that are stepping on them cost about the same as a Good Wii game?

I'll be sure to tell that to all the 3rd parties that have been wasting all this time and money chasing the Uncanny Valley when they could have been making Wii games instead. They were the ones spouting off the cost difference of Wii development vs PS360 development afterall.

At this point, I'm starting to wonder if the typical black hole that is sinking money into a 3rd party Wii project is starting to equal the money lost by developing HD resources for an HD game.  You don't pay a relatively large amount of money developing for Wii, but make very little in return.  By comparison, you pay a relatively large amount of money developing for PS3/360, but make a fair amount in return.  That's assuming the game's quality is equal on both platforms, of course.
 
On the issue of the cost of developing HD resources, I think at this point the advance in technology has made that process a great deal cheaper and quicker than it once was.  While there is still undoubtably a cost difference, I doubt it is as significant a chasm for developers to cross as it was when the Wii launched, at least enough to determine the fate of a project.  I think at this point the big issue now (especially in Japan) is the chasm and profit portential for developers to cross between developing for consoles and developing for handhelds.

[Pale]

The Wii games that we all like have just as fancy of assets as the HD games.

I hate to burst all of your bubbles, but corporate CEOs aren't stupid.  They aren't in the boardroom saying...

"Uh durrrrrrr. We are going to make de PS3z gamez because they are really expensives and we likes to waste money!"


Maybe at the beginning of this generation there was some sticker shock because team make-up and planning had to be tweaked, but this has all been hammered out.  Had Assassin's Creed been made for the Wii instead of the 360, it would have cost just as much money.  If there were any savings to be had for doing lower res textures or whatever game players are dreaming up, it would have been spent again in the additional work needed to deal with the constraints.

My point is that, developers make games for whatever system they decide on.  They use the same budget regardless.  If they are setting out to make a 100 million dollar shooter... it's going to be a 100 million dollar shooter.  It doesn't matter if the system they are developing on gives them the luxury of developing at a higher resolution.

I'm sick to death of Nintendo fans rationalizing lack of HD by claiming games are cheaper to make. It's just not true.  What is true is that developers aren't dedicating the same budgets to wii games that they are to other consoles, and there are many reasons for that.

[Pale]

And before anyone jumps down my throat... I know there are other reasons why development should be easier on Wii.  Most notably that it is so similar to GameCube so most developers should have a lot of experience.

My beef here is the claim that having to upscale games to HD somehow means developers need to spend substantially more money.

[BlackNMild2k1]

All I'm saying is that it was the developers saying that in the first place.
We didn't come up with that, they did.

I understand the concept of "You have X $$ to make Y game" and how they will find ways to spend that money, but the devs themselves were the one's saying that they can do plenty with a smaller team and a much smaller budget on the Wii, but to fully utilize whats being offered on the HD systems in the same amount of time, would require larger teams, which means more equipment & space and therefore much larger budgets.

So if you know something that they don't, then maybe it's not the Nintendo fans you should be sick to death of, but the lazy developers with their poor excuses.

[Pale]

There you go again, calling the developers "lazy".

It's that sort of bull**** that puts me through the roof.

By this logic, why on earth are there so many threads being so excited about how powerful the 3DS is? The hypocrisy is sickening.  You can like the Wii without vilifying the other systems.


Oh, and didn't Nintendo just post a big decline too? Obviously that's also because they are dedicating all their dev dollars to the 'HD Systems'.




The cost of making games on 360 and PS3 has little to do with needing to "take advantage of the nice hardware."  It is true that smaller teams can make smaller games.  We see that on ALL THE SYSTEMS. It's actually a big movement right now.  Companies will also always choose to make big budget games and go for the next modern warfare.  The cost of those games has nothing to do with the resolution they are rendered at.

[KDR_11k]

I really don't want to start a fight again, but the mentality that making an HD game costs significantly more money than making a non HD game is just patently false at this point.

If you've ever made an art asset for last gen specs and then for current gen specs you'd know that it's a shitload more work. There's just more details that need to be added, no amount of automation can do that for you.

[Pale]

KDR, I'll agree with that statement if it was phrased as follows:

If you've ever made an art asset for last gen standards and then for current gen standards you'd know that it's a ****load more work. There's just more details that need to be added, no amount of automation can do that for you.


See the fact is that people demand the same level of polish in Wii games or they call the developers "lazy".  At that point, resolution and horsepower have very little to do with it.

[Pale]

Sorry to get so heated...

But, to some up my point.  Making a game like Assassin's Creed would cost relatively close to the same regardless of what console it's on, so if you are going to blame something in this argument, blame the decision to make the game at all, not to make the game for an "hd console."

[BlackNMild2k1]

you are the one making this about resolution. I referenced detail & all that the HD consoles offer. there is lots of detail in HD games that just isn't possible on the wii and bigger teams are needed to make the same exact game that utilizes all the horse power of an HD system in the same amount of time.  It would be like building an apartment building in the same time frame as a house that uses the same size lot. it can be done, but it's gonna cost you.

[Deguello]

By this logic, why on earth are there so many threads being so excited about how powerful the 3DS is? The hypocrisy is sickening.

How is this hypocritical?  Last time I checked the 3DS wasn't "HD" by any stretch of the word, or however you would apply that to screens so small.  It is "3D," and the graphical fidelity is impressive, and Nintendo obviously isn't going to charge more than $200 for it. that's plenty enough of a reason to be excited.  It's 2010, bro.

Besides I think more of the excitement was about the games being announced in coalition with "good enough" specs of the 3DS.  It's not like how the PSP was in 2004 where the specs were nice but all the games sucked and the prospects were bleak.

Oh, and didn't Nintendo just post a big decline too? Obviously that's also because they are dedicating all their dev dollars to the 'HD Systems'.

I think it's them dedicating all their dev dollars to R&D of Next generation consoles and 3-D enabled handheld gaming devices, as well as manufacturing costs of the latter.  Nintendo's Q1 loss is nothing to excuse as a loss, but in context with the last five years?  Peanuts.  And they are still projected to post a $3.something billion profit.  Even if it's only half of that it'll still be more than MS or Sony ever made in a year.  Comparing Nintendo's rare Quarterly loss vs. years of institutionalized losses at Sony and MS, as well as developers like EA, is pretty darn specious.

As for "HD development" costing more, I'll stick with BlacknMild's assessment.  The developers were the ones to claim that in 2006, even saying that they could make comparable games in scope, gameplay and design, and obviosuly not as good graphics, for significantly less than HD games.  Of course they took that to mean Wii games get shoestring budgets and rookie devs and PS360 games regularly crease the $60 million budget (even going over $100 million for a few.)

But you can't say HD assets and development, requiring more manpower and work hours, adds NO cost to development.  In fact, that's sort of what the Topic is about.  Capcom is saying that their sales have remained the same, but they've lost almost all profit, and it's all due to two high profile HD games that bombed hard.  Why?  Because they cost much, much more money to make than similar Wii bombs like Spyborgs and Zack and Wiki.

[broodwars]

The thing is, the visuals of Lost Planet 2 and Dark Void aren't even that impressive.  I don't think them being HD projects is what made them so costly to Capcom, but that they put so much money into them trying to make troubled projects work and then no one bought them.  Being HD projects certainly didn't help matters, but I doubt those were the worst costs of the projects.  I doubt Capcom lowering their earnings projections for Dark Void shortly before release helped the game's sales, either.

[KDR_11k]

See the fact is that people demand the same level of polish in Wii games or they call the developers "lazy".  At that point, resolution and horsepower have very little to do with it.

This isn't about polish. Higher specs means things like higher texture resolution which means more details can and must be added by the artist. It simply takes longer to make an art asset with higher polygon counts and texture sizes, never mind the additional rendering passes the HD engines do that require even more textures to define material properties (even in the old Doom 3 we used 3 textures instead of the one in previous engines, the Unreal Engine has added quite a few more by now). Do you think PS2 characters are less detailed than PS3 characters because devs were lazy? The smallest includable details were significantly larger on the PS2 than the current gen systems simply because the texture resolution wasn't there and trying to add any tiny details would just look bad.

Yes, tools improve but lower spec assets benefit from that too. Nowadays an artist can make a DS-spec asset at top quality within an hour or two. For comparison, PS2-level assets (characters) take 2-3 weeks and PS3 level used to take 2-3 months back when I was dealing with that stuff (those may have been free time numbers, i.e. how much the artist gets done in his time off, not at work but whichever they are both numbers apply to the same thing, note that hobby projects always exhibit top grade polish). While the PS3 time likely has decreased I don't think there's a way in hell to get that stuff down to PS2 levels.

The thing is, the visuals of Lost Planet 2 and Dark Void aren't even that impressive.  I don't think them being HD projects is what made them so costly to Capcom, but that they put so much money into them trying to make troubled projects work and then no one bought them.  Being HD projects certainly didn't help matters, but I doubt those were the worst costs of the projects.  I doubt Capcom lowering their earnings projections for Dark Void shortly before release helped the game's sales, either.

Not impressive doesn't mean not expensive, even bad workers need to be paid. The Zero Punctuation review of Dark Void guesses that the game ran out of money and had to be pushed out of the door unfinished because it exhibits the signs of an unfinished-and-badly-patched-together game. That would be a money issue.