produced for the UK Anime League’s Annual Con Book

“Japan is over. We’re done. Our game industry is finished.” These were the famous words announced by the recently former Head of Capcom’s Research and Development Division and Global Head of Production Keiji Inafune at last years Tokyo Game Show. Those words rang out and brought out the chilling truth we’d all known as avid video gamers. Japanese game developers are at a crossroads at the start of 2011, to evolve their rooted mind-set or to face another long hard year.

According to Keiji, “Japan is at least five years behind” and that’s quite evident looking at the major Japanese publishing houses and their profits for the last year. Capcom’s last completed fiscal year ended in March 2010 and it’s startling 102-page financial report cited an incredible 73% drop in net income from their last report and profits were down by a whole 40% in the same time-span. Unfortunately Capcom are not an outside case. Square Enix slashed it’s projected profit targets down from 12 billion yen to just 1 billion yen (91%) after another disappointing year and have delayed a number of A-list titles like the much anticipated Deus Ex: Human Revolution as it hopes it will avoid the same fate befallen upon its seemingly infallible Final Fantasy franchise.

The fact of the matter is that Japanese game developers have found themselves in a rut they might not be able to get out of and for a number of reasons. For a start, the Japanese consumer market is shrinking very rapidly and has in recent years been slipping down the charts. What was once a reliable “domestic” markets for these publishers has seen a dramatic downturn in the last two years to the point at which they have questioned their own ability to create video games for their own culture. The US is now the largest gaming market in the world followed by the EU and coming in quickly at 3rd and 4th are South Korea and China. Unfortunately these developers don’t appeared to have caught wind and so have been left completely out of touch with their target audience.

The games being developed by these companies have simply become culturally irrelevant. They’re too niche to create any withstanding impact on the Western market yet not taken at all seriously on the home front.  Even much hyped titles Monster Hunter and Dragon Quest have tanked and worryingly yet, the massive advertising campaign for these games didn’t seem to have been able to stir up enough viable interest. Too many games now are based upon animes that are not aired in Europe or the States and therefore simply can’t be translated across to mainstream audiences. Now don’t get me wrong, I have no issues with anime as genre, but it’s no surprise that games won’t sell abroad when they’re called “Tsuki Nojime … (30 words later) … Noh Tsuba” and featured a spiky haired Teenager fighting off evil monsters that look to be 30 years late on the fashion front.

Perhaps Japan’s decade of a “Sakoku” closed off policy to the world maybe an insight into the psyche of these developers. Perhaps it is out of stubborn choice that they refuse to acknowledge the need for change, instead preferring to go down in a patriotic sinking ship of flames. Entire genres of games have become wholly unexportable to the West and appeal only to the very niche markets. The springing to and fro of “Dating simulators” can attest to just how out of touch developers have become. Sure they may provide the odd quick buck here and there as there will always be perverts in the world but will it ever sell to the level that a Sims or Civilization game would?

Even one of Japan’s strongest exports has fallen off the proverbial cliff in recent times. Final Fantasy XIII was met with scathing reviews last year after it quite spectacularly rubbed fans up the wrong way with an initial 25 hour long marathon of snore inducing linear game play which devolved most gamers into button bashing quick-time event experts. Whether or not Square Enix were pandering to their own designers and story writers, heartily patting themselves on the back for a make-belief epic job well done, it’s not been a great year for them and Final Fantasy XIII will have scared off potential suitors to the next instalment of the Final Fantasy franchise. On a personal note, speaking to an associate who trades in Square Enix merchandise, the last year has seen them slowly withdrawing away third party vendors through price hikes and deciding to sell directly. Perhaps this has been a closed policy that has been echoed company-wide?

As many of you will know, the biggest game of the last year was Call of Duty: Black Ops which obliterated the previous sales record set by Modern Warfare 2 and surpassed the $1 billion mark in less than 2 months. What was the budget set for Black Ops? Some people estimate that at launch, the figure stood at a staggering $350 million. What was the budget for Final Fantasy XIII? An estimated $70 million dollars. Of course this is the top end of the budgeting scales for Westerners and Easterners but frankly Japanese developers simply can’t afford to develop on as large a scale as the West can. Whether it be the stagnating Japanese economy pounding the value of the Yen against the dollar or simply through lack of funding, it’s difficult to see where they can make this up. Of course it’s not all black and white as Shenmue with it’s fourth highest budget of any video game brought dire sales figures.

There is one exception to all of this and that’s one word. Nintendo. In the last decade, they’ve produced 29 of the top 50 games bestselling console games and amazingly hold 15 of the top 20 titles. What’s the secret behind their success? They tailor their games to the Western market without changing the original formula that made them so popular at home and abroad. And how do they do this? Well if I knew, I’d be writing books about this and flogging them left right and centre to developers for the price of a young koala. But I digress. What’s important is that unless a solution is found quickly and if Japanese developers don’t get their head out the sand, then sadly they face a very bleak future ahead.

Of course Capcom will be safe in the knowledge that they’ll be OK in 2011. What  with Devil May Cry 5 coming out and we all know how much fans are looking forward to that game. With the cool emo styled Dante and the oh-so rebellious smoking. Oh I’m sorry, I guess the written word doesn’t quite convey my tone of condescension clearly enough.