When it comes to Capcom it’s easy to make the assumption that the company had always been making the big bucks, especially when seeing the financial success of their modern titles. However, even in the 90s, Capcom was no stranger to hits, with massive generation defining titles like Mega Man and Ghosts n’ Goblins under their belt and the Famicom being a sensation selling over 60 million units, one can make the assumption that the company was swimming in cash from sales. Yet, if the words of former Capcom producer Yoshiki Okamoto (via Automaton Media) are anything to go by, that wasn’t quite the case.
On his personal YouTube platform, Okamoto reflected on the challenge of making games during the Famicom era while working with a paper-thin profit margin from sales thanks to Nintendo.
“Let’s say a Famicom cartridge sold for 10,000 yen at retail. Out of that, 3,000 yen went to the retailer. 4,000 yen went to the software developer, like Capcom, and 3,000 yen went to Nintendo. Out of Nintendo’s 3,000-yen share, about 1,500 went to manufacturing contractors. Since Nintendo got paid upfront for the exact number of copies, manufactured the cartridges, and delivered them, what happened after that didn’t matter to them. In other words, only Nintendo had a guaranteed profit.”
This meant that third party companies had to pay 3,000 yen per unit upfront to Nintendo for production of the cartridges, which for a relatively new company (at the time) like Capcom wasn’t a particularly insignificant amount. Moreover, Capcom had to overestimate the number of units to be produced in anticipation of rising sales as it would between 1.5-3 months for new units to be produced.
On the other hand, Sony’s PlayStation and the rise of CD’s presented a massive boon to Capcom. Okamoto notes that Sony could manufacture CDs within a week, making restocking significantly easier. On top of that was the fact that Capcom paid Sony 1,800 yen per disc, of which 200 yen would go to the manufacturing costs and the remaining 1,600 yen would be Sony’s share, however, if Capcom returned the unsold CDs, then Sony would refund the 1,600 yen per each unit. Okamoto further adds that the company’s profits skyrocketed after they switched to discs.
