PSA Gaming: Capcom (9697) - The Next Square Enix?
PSA Gaming: Capcom (9697) – The Next Square Enix?
The success of Square Enix (9684) over the past couple of years is impressive and the share price performance is justified, but it would not be unreasonable to think that the shares may take a bit of a breather as questions are raised over the ability of the company to continue this growth rate. Conversely, Capcom is enjoying a better than usual year thanks to recent hits and a more commercial attitude to its back catalogue. Meanwhile, there is growing interest in forthcoming release Monster Hunter: World. With several near-term positives, we discuss whether Capcom can mimic SQE’s approach; not only to console gaming, but also to mobile and PC online. It has the IP, and with eSports, it even has the publicity. Will it deliver the goods and generate growth over the longer term?
Key Points:
- Can Capcom do what it did in the mid-2000s, and move its earnings up a level?
- There is some evidence that Capcom is following SQE’s lead by putting its IP into more and more segments of the market.
- Capcom is looking to rework its back catalogue, kicking off with a full revamp of the second Resident Evil outing, which is reckoned by many to be the best.
- The key to FY18 is likely to be Capcom’s response to the Nintendo (7974) Switch by getting its back-catalogue of games (Resident Evil et al) picked up and how it builds its presence in the PC Online and mobile markets.
- As well as having high hopes for Monster Hunter, we think Sengoku games will be popular on handhelds and we see no reason why Street Fighter shouldn’t be as successful in the living room as in the arcade thanks to the explosive growth of eSports.
- Given the 1H performance, and given the positive whisper on Monster Hunter: World, the FY17 forecasts look conservative.
Capcom is engaged in the development, manufacture and sales of video games, online games, mobile games and arcade games, as well as the operation of amusement arcades. Co.'s business segments are digital contents, amusement facility and amusement equipment. Co. is engaged in the planning, development, manufacture and sales of home video games, online games and mobile games including "Rockman," "Monster Hunter World" and "Dragons Dogma"; the operation of "Plaza Capcom" amusement facilities in Japan; and the development, production and distribution of arcade games for amusement facilities. Co. is also engaged in the licensing business of game characters and the real estate leasing business.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
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