Article below is contributed by the Editor of The Stinger Report, written and released on 08/31/2006.

“Capcom in Breaking Asian Partnership Rumor!” (#502)

Stinger REPORT Skinny!

(07/15/06) Merger Madness continues since Stinger #133, with leaks from respected sources that Taito and Capcom are in discussions. Developments in the toy industry have resulted in newly merged Takaratomy that has direct impact on both companies in new Kid gaming technology. While Capcom's next video ‘War of the Grail’, revealed as a Taito TypeX+, is joined by the exclusive news that Banpresto licenses the Taito architecture and tests new release.

Main REPORT:

Sources have started to circulate reports that Taito and Capcom are in the final phase of discussions on a possible partnership. This is not yet a merger but it is being revealed to the Stinger that following the agreement to move over to the TypeX+ hardware and the collapse of the Banpresto distribution agreement that Taito will now be filling the subsequent hole, and following the new Taito/SQX merger - they are looking at Capcom as an interesting acquisition possibility.

The development of new video content from Capcom had been curtailed following the merger of Sammy SEGA in 2004, an agreement with Sammy previously announced at JAMMA’04 that Capcom would be the second developer focusing their work on the A-Wave at launched; never materialized R&D projects ‘Sammy Vs. Capcom’ and ‘Street Fighter 4’ all shelved.

Another victim of current reshuffling, the Capcom / Banpresto relationship had resulted in the ‘Mobile Suit GunDam SEED’ series ended with the last Capcom project (‘Mobile Suit GunDam SEED : Federation Vs. Z.A.F.T. II’) programmed by Capcom GM team. Banpresto reverted to their Namco Bandai merger, developing all games 100 per cent internally – most recently sources to the Stinger revealed a new gun game based on the GunDam franchise was on test (‘Mobile Suit GunDam: Spirit of ZEON’) by Banpresto – without Capcom involvement.

Breaking Stinger News – Banpresto, continuing to prove its autonomy in the new Bandai Namco Holding operational structure had on test their new gun game, but also held a summer private distributor event in Tokyo during July. The company along with additional Kid Vending products based on exclusive Bandai properties showed ‘The Battle of Yuu Yuu Hakus Yo’ (System 256), this the latest cell-shaded fighting game based on a popular Japanese comic book license (Yoshihiro Togashi). Like GunDam and more recently Dragon Ball Z its international popularity is yet to be determined.

The big news revealed to Stinger sources following the private event was that Banpresto is still showing its independence since the Bandai Namco Holding reorganization. The news that Banpresto was the latest licensor of the Taito TypeX architecture, ‘Mobile Suit GunDam: Spirit of ZEON’ the first TypeX+ game. This seemed to confirm rumors that Yuu Yuu would be the last Sony / Namco licensed System 246 hardware release.

The power of the Taito Type+ architecture to consolidate the remaining amusement developers to a single architecture methodology has allowed Taito / Square to consider a wider area of control. More recently Capcom had focused GM efforts on pusher token projects with an Aliens and Mario licensed medal platform. Capcom IP maximized in remaining amusement projects for the home market, including a considerable number of Crane and Catcher fillers based on popular mascots.

The company still attempting to define creativity signed a special agreement with Japanese toy giant Takara to develop a next-gen kid vending platform. The ‘Rockman EXE’ system uses a memory card style cross platform system (Navi Link) to store player’s characters (see Stinger #458). The new ‘Navi Link’ system allows the swapping of characters from home to arcade, and promises to be a considerable step in the evolution of the Kid Vending genre.

A genre that Capcom have invested heavily in with a new puppy rearing, dress-up game (‘Idle Puppy’) added to their list of card gaming properties. This system debuted recently at the Tokyo Toy fair was shown as a new toy combination with a mini LCD docking case that allows the player accumulated 70 cards to be activated from the arcade game – a major move by the new Takaratomy partnership. This product marks a gathering of a new market move in the genre as Kid Vending embraces toy product ranges.

The link between Kid Gaming systems aimed at the 6-12 age group, and the toy sector has not been lost on the rest of the industry. At the same Toy Fair SEGA and Konami showed toy applications based on or linked to their own coin-op systems. With SEGA merged with Sammy, and Namco with Bandai (major toy corporation), many had seen Capcom (and Taito) as possible opportunities. This possible bond is cemented with the recent move in March of the merger of Takara and Tomy, (Tomy having a licensing agreement with Taito); the newly named Takaratomy operation looking to a wider application of their IP relationships in amusement. Stated in their newly merged corporate literature, “(the) declining birth rates in Japan, the rise of information technology and globalization will have a great impact on the domestic toy industry”.

Beyond the investment in toy business, and returning to the Capcom situation - in announcing a new video amusement title (‘War of the Grail’), and the previous Stinger revelation of this release confirmation of Capcom joining the TypeX architecture
- along with the position on future distribution and opportunities started - the need for a strong architecture with established connectivity steered Capcom thinking; unable to allocate recourse to build a new system, or agree to restrictions of future Naomi, A-Wave or System 246 platforms, especially with this come with Capcom's first ST title.

What Could this all Mean:

A partnership with Taito would bring redemption, medal, merchandising (plush), Kid Vending, and a considerable Back Catalogue to Square Enix - and so to Taito. Issues remain, predominately the orientation of the Square board to such a merger. There is also the issue of the Capcom / Takaratomy toy agreement, and if this would have ramifications on the Taito / Tomy undertaking? More announcements are sure to follow.