Capcom has been a highly important and successful third-party company for decades, but lately they've faced some tough times and financial struggles. As a result, the company has experienced downsizing and restructuring over the past two years, and investors recently voted to end their takeover defense policies. Previously Capcom had rules in place to make sure that no outside company could buy up enough stock to take control, but the decision-makers at Capcom have decided to do away with these rules and open themselves up to the possibility of being bought out.

Of course there's no guarantee of a takeover, and not all of Capcom's investors want to sell, but the possibility is now there. A company interested in buying Capcom would have their work cut out for them, but doing so would grant them exclusive ownership of popular franchises like Street Fighter, Resident Evil, Monster Hunter, and more. Any developer could use those games in their lineup, but there's one company that would benefit substantially more than the others, and that's Nintendo. In fact, Capcom is just what Nintendo needs to take big steps forward in the next generation.

Why it Makes Sense

For a major developer like Capcom to be absorbed by another company, it needs to be a good fit or there's going to be all kinds of compatibility issues. Capcom has ties to all of the major game makers, but their relationship with Nintendo is especially fitting. While Capcom doesn't release as many Nintendo games as they did years ago, they still have close to ties to the company, and games like the Ace Attorney franchise and all the recent main series entries in the Monster Hunter franchise remain exclusive to Nintendo platforms.Monster Hunter 4 (a 3DS exclusive) is now the highest-selling game in the franchise and was Capcom's highest-grossing game of 2013. Resident Evil: Revelations also began as a 3DS exclusive, and Capcom even re-packaged all of the Mercenary Mode levels from the series as Resident Evil: The Mercenaries on 3DS as well.

Most recently, Capcom decided to revive Mega Man for Super Smash Bros. on Wii U and 3DS after letting the character stay dormant for years. On the other side of things, Capcom is the only outside company Nintendo has trusted to develop a main series Zelda game (no, the CD-i games do not count), which resulted in the creation of Oracle of Seasons, Oracle of Ages, and The Minish Cap. Former Capcom developer Hidemaro Fujibayashi now works for Nintendo on the Zelda franchise to this day. The two companies clearly gel well, and each has shown a lot of trust in lending out their intellectual properties for the other to use.

Buying out Capcom is an interesting idea, but is it financially possible for Nintendo? Capcom's market cap, or the amount of money it would cost to buy up all their stock, is currently sitting at around 105 billion yen. That converts to just over $1 billion, but you don't have to own 100% of a company's shares to buy them out. By controlling just over 50% of the company, you effectively own them, so Nintendo would have to spend around $500 million to buy Capcom. Nintendo's latest financial report states that the company has $4.7 billion in the bank, and another $3 billion wrapped up in short term investments. That means buying up Capcom, while expensive, would only take about one-tenth of Nintendo's banked cash, and it's only about one-sixth of the amount they already have tied up in other investments. Considering the long term potential of owning Capcom, that's a pretty reasonable investment, and certainly wouldn't put the company in financial danger.

How It Pays Off in the Long Run

So Nintendo spends half a billion dollars to take control of Capcom and all its assets. What now? How does this help Nintendo in the long term? Aside from the obvious fact that having more quality games is always better, owning Capcom would help Nintendo get off to a much stronger start next generation, making them a legitimate force in the gaming industry once again.

As I said earlier, whoever buys Capcom is going to have some work to do. Capcom has been downsizing and restructuring for a while now, but there's still some tough decisions to be made, and Nintendo would have to decide which development teams, work-in-progress games, and game concepts could be integrated into Nintendo's current structure and which ones should be cut. As such, a few Capcom-developed games could still launch in the next couple of years on Wii U and 3DS, but most development won't start until a year or two down the line.

This is actually a good thing, as Nintendo is currently in the beginning stages of planning their next gen hardware. This allows Nintendo to make a big change to one issue that, according to Bethesda, has been driving away third-party developers.

The time for convincing publishers and developers to support Wii U has long past. The box is out. You have to do what Sony and Microsoft have been doing with us for a long time. And it’s not that every time we met with them we got all the answers we wanted. But they involved us very early on, and talking to folks like Bethesda and Gearbox, they say ‘here’s what we’re doing, here’s what we’re planning, here’s how we think it’s going to work’ to hear what we thought – from our tech guys and from an experience standpoint.

You have to spend an unbelievable amount of time upfront doing that. If you’re just going sort off deciding ‘we’re going to make a box and this is how it works and you should make games for it.’ Well, no. No is my answer, I’m going to focus on other ones that better support what it is we’re trying to do. So you’ve gotta spend more time trying to reach out to those folks before you even make the box, when you’re still designing and thinking about how it’s going to work. — Bethesda Vice President Pete Hines

Outside of ZombiU, Wii U had no exclusives aimed towards older gamers in its launch window. Video games often take two years or longer to develop, so companies have to get third-party developers interested in their console years in advance if they want a strong launch lineup and a strong first year, and Nintendo failed to do that with Wii U. As such, Wii U has had to rely almost exclusively on its "family friendly" lineup of first-party games, and many outside developers see it as a system geared towards younger gamers.

If Nintendo buys Capcom right now, they can have AAA titles geared towards older audiences in development from the very first day that a dev kit is available. This means that the next Nintendo console could launch with a big, mature exclusive like Resident Evil 7 on day one. This allows Nintendo to entice third-party developers to get involved with the next console early. If Nintendo offers third-party developers a dev kit and lets them know that they'll be launching games like Resident Evil, Monster Hunter, Devil May Cry, and Street Fighter in the console's first year, those developers will feel much more confident about releasing their games on the system, because there will actually be a market for them. Very few companies would be willing to launch an M-rated game on a console that only has games like Mario and Donkey Kong on it, but having Capcom's lineup in its arsenal makes it a whole different story.

Nintendo will, of course, continue to make family friendly games, and they'll never stop catering to their dedicated fans. However, buying Capcom allows them to expand that audience and create even more dedicated fans. Before Wii U launched, Nintendo stated that they wanted it to bring in new fans and attract older games as well as younger ones, but that hasn't been the case. Wii U is seen by many as the "kiddie console," but their next console doesn't have to be. Nintendo can do next generation what they hoped to do with Wii U, and then some. All it takes is about half a billion dollars.

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