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Capcom Says Better Smartphones Raise Game-Development Costs

Capcom Co., the creator of the “Resident Evil” and “Street Fighter” video games, said improvements in smartphones are making it more expensive to develop games.

Creating a multiplayer game for mobile devices now costs at least 100 million yen ($1.1 million) because of the need for greater complexity, such as better graphics, and rising labor costs, Chief Operating Officer Haruhiro Tsujimoto said in an interview in Tokyo yesterday. That compares with “a few tens of million” yen for games on basic mobile phones, he said.

Capcom is racing to catch up in mobile gaming as users increasingly shun consoles in favor of playing cheaper online games using Apple Inc. iPhones and Samsung Electronics Co. devices. The Osaka-based company generated 12 percent of sales from mobile content in the nine months ended Dec. 31, compared with 45 percent from packaged software.

“We were a bit late in mobile games,” said Tsujimoto, the 48-year-old son of Capcom founder Kenzo Tsujimoto. “We have to show some achievement this year.”

The company is hiring more programmers after unifying development for online and console titles to support its mobile- gaming push. Its games are also offered on Nintendo Co.’s Wii U, Sony Corp.’s PlayStation and Microsoft Corp.’s Xbox 360.

Smurfs, Ghostbusters

Capcom’s sales of online content including games for mobile devices and personal computers surged 53 percent to 16.7 billion yen in the nine months ended Dec. 31. Packaged-software sales rose 33 percent to 33 billion yen.

The company plans to prioritize in-house development of mobile games, rather than acquiring other companies, Haruhiro Tsujimoto said. It already has more than 7.2 million registered online users in Japan for its Capcom brand. The company also owns the Beeline Interactive Inc. studio, which offers “Smurfs’ Village” and “Ghostbusters.”

Japan’s mobile-game market may expand 37 percent to 387 billion yen in the year ending March and grow 10 percent next fiscal year, Yano Research Institute Ltd. said last month. Global smartphone sales will probably rise 28 percent this year to 836 million units, according to IHS Inc.’s iSuppli.

Capcom fell 1.9 percent to 1,570 yen on the Tokyo Stock Exchange today. It has jumped 19 percent this year, compared with a 9.3 percent gain for the benchmark Nikkei 225 Stock Average.

The company plans to begin promoting its new “Monster Hunter 4” for Nintendo’s 3DS handheld with the Kyoto, Japan- based device-maker this spring before the planned summer release, Tsujimoto said. A delay in the development of the game prompted Capcom to cut its net income forecast for the year to March by 34 percent in December.

“Monster Hunter 3 Ultimate” for Nintendo’s Wii U console and 3DS will also be introduced in North America and Europe next month.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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