Capcom cut their predicted profits for the current financial year by more than half, blaming the drop in part on a shift to digital media and the quality of games they had developed overseas, according to its recent financial report.
A "concentration of AAA titles in the the hands of a few foreign competitors" also contributed to the company falling short of its fiscal year 2012 targets, according to the report.
According to the company's analysis its "delayed response to the shift to digital media in the Home Video Game business" and a "decline in quality" in titles outsourced to overseas developers added to losses. While an "insufficient coordination between the marketing and game development divisions in overseas markets," also attributed the revisions to its initial forecast.
The end result is that Capcom had to revise its financial forecast from a projected net income of 6,500 million yen down to 2,900 million yen.
Capcom's chief "countermeasures" to the financial downturn will be to increase the amount of downloadable content they produce and shift to internal research and development, according to the report.
They also say that "work in progress" games were "strictly re-evaluated for business restructuring" which doesn't sound good.