Capcom reveals how long it takes for its games to turn a profit

Japanese publisher Capcom is able to consistently generate quarterly profits through its volume-oriented sales structure, which prioritizes strategic, long-term discounts over time.

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In a recent Q&A with investors and analysts, Capcom revealed some interesting details about its games business in terms of sales and profits. Company execs say that it takes around 1-1.5 years for a game to recoup development costs and become profitable.

This, of course, is wholly dependant on the game in question--a new Monster Hunter or Resident Evil, for example, would sell better than something like Dragon's Dogma II.

Here's what Capcom said in the Q&A:

"Recently, there has been a trend in the industry of spending large amounts on advertising and promotions just before and after release to kickstart initial sales, but we have not traditionally used such methods.

"We calculate the costs for promotions based on expected performance and take a long-term approach to sales. On average, we can recover development costs within about one to one and a half years after release, so even if we lower the selling price afterward, once costs are recouped we expect profit margins of 80-90%. Our marketing approach remains unchanged."

With this structure, by the time a game has become profitable, it has rotated into Capcom's discount- and sales volume-oriented catalog of older titles.

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As for sales, we've seen Capcom routinely discount its games to around $20-30 throughout the year, especially during the holiday season. A significant amount of these game sales are from digital channels, which makes sense because Capcom can tactically adjust the prices of its games in real time through stores like Steam.

Capcom sold 10.49 million games in the Q2'FY24 period, and the group wants to sell at least 50 million games throughout the year.

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Capcom aims to meet a lofty aspirational target of 100 million games sold in a single fiscal year...but it's got a long way to go before that can happen.