The Nikkei Telecom 21 reports:

Capcom will withdraw from the diminishing arcade market within the fiscal year. From prospects that the arcade industry will not recover from its current downfall, Capcom will retreat from the arcade industry and focus their development on games for home consoles. While development on currently made arcade games will still continue, no new games will be developed. Capcom will be the first major company in the arcade industry to withdraw from the market.

Capcom's arcade games sales have decreased to 5,000 units per title, a major drop from the 80,000 units per title at the peek of the arcade industry. For the fiscal of March 2001, Capcom's sales from the arcade dropped to 3.9 Billion Yen, only 1/5 of the income compared to 1994. Capcom held 30% of total sales in the arcade industry at its peek as well; estimates for this fiscal year have dropped to under 10%.

Another aspect to Capcom's decision comes after Sega's discontinuation of the DreamCast console, a machine compatible to the arcade board "Naomi" used by Capcom for arcade game development.

Thanks to The Mad Man's Cafe and SRK for the heads-up.