(Bloomberg) -- Shares of Capcom Co. surged to a record on Tuesday after the Japanese company unveiled Monster Hunter Now, a new mobile game developed with Pokémon Go creator Niantic Inc.
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Capcom’s stock rose 9% in Tokyo, adding to a winning streak that’s seen the company quadruple its value over the past four years. The Osaka-based creator of Resident Evil and Street Fighter is Japan’s top maker of big-budget titles for consoles and PCs, and franchises like Monster Hunter have helped it sustain momentum even without monetizing the mobile games arena as well as competitors.
The new iteration of the fantasy role-playing game uses smartphone geolocation to let players find each other and then work together to trap or kill monsters overlaid on a fantasy version of the real world. In this alternate reality, Tokyo’s Shibuya entertainment district can become a vast desert, a swamp or a forest, teeming with the 19-year-old Capcom franchise’s creatures.
Players can also continue the hunt from home, bringing with them monsters they encounter on their travels, the companies said. The free-to-play game is scheduled to launch globally in September on both Apple Inc.’s App Store and Alphabet Inc.’s Google Play and will feature in-game purchases without making them critical to advancing in the game, executives said.
“We decided on the spot that we needed to do this when Niantic approached us four years ago,” said Ryozo Tsujimoto, executive corporate officer at Capcom. “This is a completely new way to play Monster Hunter.”
Monster Hunter Now represents a low-risk bet by Capcom to grab a share of the expanding global smartphone game market. Mobile games accounted for half of the entire game industry last year at $92 billion, outweighing both console and PC games combined, Newzoo data show.
Capcom has largely missed Japan’s lucrative market for smartphone gacha games, which for years boosted domestic rivals’ sales by nudging players to spend more for in-game items or upgrades. Capcom earned just ¥4 billion ($30 million) from smartphone games in the fiscal year ended March 2022, while Square Enix Holdings Co. earned ¥130 billion and Bandai Namco Holdings Inc. made ¥186 billion.
The old monetization model may have peaked, giving Capcom room to grab new audiences abroad, said Hideki Yasuda, an analyst at Toyo Securities.
“Even a minor success in the mobile game market would have a big impact for Capcom’s overall earnings, because its current smartphone revenue is so tiny,” he said. “Capcom’s best bet is to license its IPs to a proven mobile game maker that can reach a global audience.”
For Niantic, Monster Hunter is the latest attempt to cement augmented reality into the mainstream. The San Francisco-based company has for years experimented with blending computer-generated content with the real world using geolocation. It’s tapped storylines from the Harry Potter books, piggybacked on the NBA and distributed software development kits largely free of charge.
But the technology remains niche. Players often turn off AR features because of their drain on a phone’s battery.
Niantic can only push the boundaries little by little, UBS analyst Kenji Fukuyama said. “If Niantic’s serious about making AR a pillar of social infrastructure, the company should keep investing aggressively and score more partnerships with powerful movie, game and anime franchises.”
--With assistance from Vlad Savov.
(Corrects name and title of Capcom executive in fifth paragraph)
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