Singling out Japanese PSP system seller Monster Hunter Freedom 2G, Capcom trumpeted its "best Q1 net sales and operating income since quarterly release announcements began." Net sales were ¥16,352 million, up 14.5% from the same period a year ago, thanks mostly to strong performance in its Home Video Games business, citing "exceptional sales of approximately 2.4 million units" of the aforementioned Monster Hunter title. The Home Video Games business saw quarterly sales of ¥10,406 million, a 31.5% jump from the same period last year.

So, what's keeping the rest of Capcom down? Arcade operations were particularly weak; Capcom said, "The number of customer visits and average customer spending grew at a sluggish pace reflecting market stagnation and declining customer confidence, forcing us to struggle." Ouch! That unit had an operating loss of ¥73 million, versus an operating income of ¥261 million in the same period last year. Arcade Games saw an increased operating loss "due to an increase in development costs" while "character-related licensing royalties" were up 25.7%.

So, what's the lesson? More developers should target the PSP because, really, people just want some games for it. And second, arcade games aren't even doing well for Capcom ... in Japan.