Both Capcom Entertainment and Capcom USA are subsidiaries of Capcom Co. Ltd., which is headquartered in Japan. Capcom is an international corporation, with offices in Tokyo, Osaka, England, Germany, and Hong Kong. Its California office houses Capcom Entertainment, which serves the US and European markets.
In 2004, Capcom made a strategic decision to focus more resources and build new strategies centered on developing brands relevant to its overseas markets by adding subsidiaries outside of Japan. But even before 2004, Capcom properties such as Mega Man, which was introduced in 1987; Street Fighter, which was introduced in 1992; and Resident Evil, which was introduced in 1995; were all well received outside of Japan and continue to be popular today.
Beyond video games
To understand why Capcom made such a strategic decision, King offers a bit of background on the gaming markets. “More than 15 years ago, the global video game market was dominated by Japanese companies,” he said.
“As time has gone by, gaming has become more sophisticated, and the needs of the gamer have become more sophisticated.” As the shift happened, overseas developers, such as those in Europe and the US, became more prominent on the global stage because of their ability to better connect on a culturally relevant level to gamers.
One of the challenges that Japanese video game publishers/ developers such as Capcom are working to overcome is being relevant to the American and European audiences, said King. By developing overseas subsidiaries, Capcom has been able to perform well on a global scale.
Evidence of this comes from the success of its newer brands, Dead Rising and Lost Planet, which were part of the strategy to specifically target overseas audiences. The success of these properties, as well evergreen brands Resident Evil and Street Fighter, stems from what King refers to as Capcom’s one-content, multi-use strategy.
“The essence of this strategy,” explained King, “is developing our intellectual property into brands that span not just video games, but other media and consumer products. The objective is to build brands that are much bigger than the video games from which they originated, which centers on expanding Capcom’s brands beyond video games.”
Resident Evil, for example, launched as a game in 1995 and has since become a successful movie franchise. In 2000, Capcom developed a deal with Sony Pictures to develop “Resident Evil,” which premiered in 2002. It was followed by “Resident Evil: Apocalypse” in 2004, “Resident Evil: Extinction” in 2007, and “Resident Evil: Afterlife” in 2010. The latest film opened at number one at the box office with $26.6 million gross domestic in its first weekend.
“Up until that point,” said King, “Capcom had only produced merchandise for the property, including action figures, books, and printed apparel, with licensing.”
It’s since added gambling games, soundtracks, and other ancillary merchandise, but the success of the movies themselves only bolstered support for the one-content, multi-use strategy. This is where Capcom Entertainment’s media and consumer products division comes in to play. “It’s our remit is to take Capcom’s game intellectual property and expand it into new audiences and new dimensions that go beyond the scope of the video game market,” said King.
Largely, the focus on consumer products and media is done through licensing, and Capcom Entertainment currently works with between 80 and 90 licensees over all product categories, from merchandising categories like apparel, beverage, home furnishing, music, publishing, stationary, toys, and collectibles to animations, movies, and webisodes.
“We’re becoming more strategic and less opportunistic about what options we have for expanding our intellectual property into animation, TV series, media, live action series, and even web series,” said King. “Over the next year or so, our focus is to introduce our fans, who are broader media consumers, to our new licensed media channels.”
To ensure its licensing efforts are successful, Capcom treats its licensees as partners, understanding that retail is in a difficult place right now. Retailers have become more conservative about what properties they distribute, and even the most popular brands often fight for their share of shelf space.
“To get more visibility for our brand properties, we’ve been supporting our licensees this year by working with them as they approach retail and by helping the buyers understand the products,” said King. “We visit and talk to retailers together with our licensees about new games, new media, and new licensed products to help the retailers understand what’s happening with our intellectual properties and our upcoming plans.”
As Capcom continues to grow its licensing business, it’s also looking to grow its inhouse production. “An analogy that we often use internally is to what Marvel has done over the years, starting from comics and becoming a broader entertainment and merchandising company,” said King. “That is exactly what we want to do and what we’re working on doing right now, but we’re starting from video games instead of comics.”