Risk of rising development costs and game software obsolescence
First written in FY2016. 5 of 13 entries say "Materialised", first in FY2018. Latest entry: FY2026.
Capcom moved to the "Worse" side of this theme in 2018, 2 years before the typical company in this theme (2020).
The whole theme swung hardest in 2019: 9 of 13 companies on the "Worse" side.
4 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「The write-down of the book value attributable to declining profitability included in cost of sales was as follows: ¥10,213 million」
The write-down of the book value attributable to declining profitability increased from ¥5,040 million in the previous fiscal year to ¥1,000,213 million. The balance of work in progress for game software also increased from ¥49,209 million to ¥54,628 million. - FY2026-H1Increase in work in process for game softwareAnnual report
「Work in process for game software 49,209 62,542」
The balance of work in progress for game software increased from ¥49,209 million at the end of the previous fiscal year to ¥62,542 million. The company also stated that there had been no significant changes in business or other risks during the six-month interim consolidated accounting period. - FY2025WorsenedAnnual report
「The write-down included in cost of sales due to declining profitability was as follows: ¥4,544 million; ¥5,040 million.」
The write-down of work in process for game software and other items due to declining profitability increased from ¥4,544 million in the previous fiscal year to ¥5,040 million. The balance of work in process for game software also increased from ¥3,903.5 million to ¥4,920.9 million. - FY2024MitigatedAnnual report
「The write-down included in cost of sales due to declining profitability was as follows: ¥4,544 million.」
The write-down due to declining profitability decreased from ¥7,584 million in the previous fiscal year to ¥4,544 million. The average margin of safety for titles that could have a significant impact in the following fiscal year also increased from approximately 9% to approximately 13%. - FY2023WorsenedAnnual report
「The write-down included in cost of sales due to declining profitability was ¥7,584 million in the current consolidated fiscal year.」
The write-down due to declining profitability increased substantially from ¥840 million in the previous fiscal year to ¥7,584 million. The average margin of safety for key titles also declined to approximately 9% from approximately 28% in the previous fiscal year, quantifying the risk of failing to recover development costs. - FY2022MitigatedAnnual report
「As measures, the company is focusing on containing development costs by building an in-house development engine and expanding and efficiently deploying development personnel, thereby improving quality while increasing development efficiency.」
In response to the risks of rising development costs and software obsolescence, the company identified in-house development engines such as RE ENGINE, expansion and efficient deployment of development personnel, digital sales and use of past titles as measures. The write-down due to declining profitability was ¥840 million. - FY2021MitigatedAnnual report
「The write-down included in cost of sales due to declining profitability was ¥943 million in the current consolidated fiscal year.」
The write-down due to declining profitability decreased from ¥6,754 million in the previous fiscal year to ¥943 million. Meanwhile, the company continues to pursue the development of an in-house development engine, expansion of development personnel and efficient deployment as measures to contain development costs. - FY2020MaterialisedAnnual report
「The write-down included in cost of sales due to declining profitability was ¥6,754 million in the current consolidated fiscal year.」
The risks related to recovering investments and declining asset values arising from rising development costs and game software obsolescence continued to materialize as a ¥6,754 million write-down. The amount was ¥6,869 million in the previous fiscal year. - FY2019MaterialisedAnnual report
「The write-down included in cost of sales due to declining profitability was ¥6,869 million in the current consolidated fiscal year.」
The investment recovery risk arising from rising development costs and product obsolescence materialized as a ¥6,869 million write-down of inventories and other assets due to declining profitability and a ¥393 million impairment loss on assets scheduled for disposal. - FY2019-Q3MaterialisedAnnual report
「In the Digital Contents segment, the carrying amount of business assets scheduled for disposal was reduced to their recoverable amount, and the reduction was recorded as an impairment loss under extraordinary losses. The impairment loss recorded was ¥393 million.」
A decline in the recoverable amount of digital content business assets actually occurred, and the company recorded an impairment loss of ¥393 million. - FY2019-Q2MaterialisedAnnual report
「In the Digital Contents segment, the carrying amount of business assets scheduled for disposal was reduced to their recoverable amount, and the reduction was recorded as an impairment loss under extraordinary losses. The impairment loss recorded was ¥398 million.」
In addition to recording a loss on the discontinuation of development, the company recorded an impairment loss of ¥398 million on business assets scheduled for disposal, showing that the risks related to recovering development investments and declining asset values had materialized. - FY2018MaterialisedAnnual report
「In recent years, home video game consoles have become more advanced and multifunctional through the incorporation of computer graphics, VR (virtual reality), AI (artificial intelligence), internet functionality and other technologies, and development costs therefore tend to rise.」
The company explicitly stated that enhanced functionality has driven up development costs and lengthened the recovery period. The write-down of cost of sales due to declining profitability was ¥10,158 million in the current fiscal year. - FY2016First statedAnnual report
「Home video game consoles are becoming more advanced and multifunctional through the incorporation of computer graphics technology, internet functionality and other features, and development costs therefore tend to rise. ... Many of the main users of games are children and young people, while competition is intensifying with industries serving overlapping customer segments, such as smartphones and the internet, and product lifecycles are not necessarily long.」
The company discloses as risks higher development costs resulting from enhanced functionality, short product lifecycles, increased inventories and the possibility of failing to recover development costs.