Mass appeal boosts video games firm

Software workers navigating the UK's tough jobs market might be tempted to join the international video games industry, or not, depending on which set of figures they see.



Capcom, one of the world's 50 largest software firms, reported an annual rise of 11.4 per cent in operating profit to Y14.6bn ($167m), largely thanks to its Home Video Games unit.



While the company's familiar brand name helped, sales at the unit were mainly led by two new titles, Resident Evil 5 and Street Fighter IV, on the PS3 and Xbox360 consoles.



Osaka-headquartered Capcom, which derives 41 per cent of its sales from overseas, said the two titles were driven by "the healthy US and European home video game markets."



In contrast, yet also reporting from Japan for the year to March 2009, Namco Bandai, a gamer more domestically-focussed, said its operating profit fell 33 per cent to Y22.3bn.



The subtext of both sets of results is that makers are better placed to offset the high fixed costs of developing for consoles if their games boast an international appeal.



Capcom's Resident Evil and Streetfighter series, for example, feature characters popularised by films, whereas Namco's virtual robots spring from an 'anime' on Japanese TV.



Only a quarter of the former's profits hail from overseas, but it blamed economic weakness abroad for its profit dip, in spite of it prioritising growth in foreign markets, the Financial Times reported.



Analysis from Ibis World suggests such a move might make financial sense: it shows that US video games industry sales will rise this year by 4.8 per cent, making it the tenth most resilient sector to the recession.



Speaking to Reuters, the firm's Toon van Beeck made a separate prediction in February that video game industry revenue would reach $41.9bn this year, up from $27.2bn in 2004.



However, blogs by video games industry staff are ablaze with reiterations that their once impervious sector is not immune to the current recession, which has hit the hardest in North America.



Wanda Melon of M2, a US-based analyst, estimated to Game Biz Blogs that 8,450 game staff have been laid off since July 2008, three quarters of which fell in the northern regions.



But IBIS has signalled that these job losses do not dictate the video games industry is contracting.



"The industry has historically proven itself resistant to recession conditions, and the current economic downturn being experienced is unlikely to make a dent in the ongoing strong growth."



Explaining its upbeat outlook, the researcher said the main driver of the industry's revenue growth during the recession would be the unwillingness of older gamers to stop playing.