Capcom Investing in New R&D Buildings; Partnership with Tencent

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Capcom’s trying to turn things around with new facilities… and a new partner.

Things haven’t been so rosy for Capcom as of late.  They reported a net income of 5,957 million yen (approximately $5.8 million US) on their 3rd quarter financial report for the 2013 fiscal year (the period ending Dec. 31, 2013), which was a 10.3% decrease from the same same period in 2012. People have been predicting doom and gloom for the house that Mega Man built, going so far as saying they’ll fold in another year or two. The company is hoping to change its financial fortunes with a couple of plays.

First, according to Joystiq, Capcom invested 79 million yen (or $8 million US) on two research and development buildings in Osaka. The hope is that these will help curb game development costs by keeping things more internal instead of farming it out to other developers (Joystiq also reported a while back that Capcom lost $7 million US due to game cancellations, which the company says is in part because of outsourcing game development to overseas companies). One of the buildings will be 8 floors tall and will be completed around January 2015, while the other will be 16 floors and be ready for January 2016. The R&D buildings will be home to about 1,000 employees fresh out of school; 100 new employees per year over the course of 10 years.

The other piece of Capcom news comes courtesy of Shoryuken, who report that Capcom is in talks with Tencent Holdings, and the two could be forming a partnership soon. Tencent, for those who don’t know, is the Chinese company who not only purchased League of Legends creators Riot Games for $400 million back in 2011, but worked with Activision Blizzard to bring Call of Duty games to China in 2012.

So what could this mean for Capcom? Well, with regards to the new buildings, I’m of two minds about it. On the one hand, I’m happy to hear that they’re eager to get hire up and comers. An injection of new blood into a company brings new perspectives, new ideas, and so on, which is so very important to keep things from becoming more stagnant. On the other hand, new blood won’t help anyone if they’re not allowed to flex their creative muscle. My fear is that those who’ve been with the company a number of years and who share the “old guard” mindset will tell these new kids, “This is how things have to be done, and you will abide by those rules.” In other words, even with fresh new faces, things will remain the same.

Then there’s the issue of spending all that money. The 8-floor building will cost 2.5 billion yen ($24.5 million US); the 16-floor 5.5 billion yen ($54 million). I mean, I guess we’ll find out how they fared last year when their full 2013 fiscal year report in early May, but I’m wondering if they can take that gamble.

As for the partnership with Tencent… hmm… it’s anyone’s guess as to what this could mean. Along with the gloom and doom, people have been whispering that some big company’s gonna come and outright purchase Capcom. Could that be Tencent? Or it could be like the Shoryuken article says, with Tencent helping Capcom get a bigger piece of the Chinese market? Maybe both?

What do you guys think of these recent Capcom happenings? Let me know in the Comments Section!