maxlords
07-16-2004, 10:04 PM
http://www.1up.com/do/feature?cId=3133485
Setting Sun: What has happened to Japan's gaming industry?
By David F. Smith
July 16, 2004
The Japanese games industry would appear to be screwed at this point. That
is the basic message delivered by the latest CESA White Paper, the annual
report of the Computer Entertainment Suppliers' Association. CESA's survey
chronicled a third consecutive year of steady decline in Japanese hardware
and software revenues, down 11% in 2003 and nearly 40% since the peak of the
PlayStation generation in 1997.
The year of Final Fantasy VII and Pokemon was the beginning of a continuing
boom in North America. Since then, the American games market has grown
steadily into a monster that comfortably supports three platforms and looks
to have another banner year in 2004. In Japan, it was the beginning of a
long, grim slide, briefly interrupted by Dragon Quest.
Aside from the obvious question of what developers and hardware manufactures
can do to kick-start the market again, the figures inspire a kind of
chicken-and-egg problem. Has the industry changed, and stopped selling what
consumers want to buy? Or has the market changed, and stopped buying what
the industry sells?
What Sells, Who's Buying?
In Japan, 1997's big hits were Final Fantasy and Pokemon. 2003's big hits,
six years later, were Final Fantasy, Pokemon, and Dynasty Warriors 4. Times,
they change.
Koei's tactical action series is more or less the only original domestic
platinum hit the Japanese development community has created this generation,
coming out of nowhere to move millions of units across three installments
and three more expansions. Going against the current trend, it's actually
enjoyed increasing sales from sequel to sequel -- Sengoku Musou was one of
only four million-selling Japanese PS2 releases in 2003.
Besides that...Capcom's Onimusha looked to be the genesis of a profitable
new franchise, but in fact its first installment was the only one to go
platinum in Japan, in the software-starved early days of the PS2. Its two
sequels both sold progressively less, and its creators have now turned to a
project designed exclusively for a Western audience, Shadow of Rome. "We're
going to think of the other territories, and after we start to understand
what they like, then maybe we'll be able to see the whole picture," says
producer Keiji Inafune, but it remains to be seen whether this study-abroad
project of his will bring Capcom significant benefit in any part of the
world.
Devil May Cry also came out strong and faltered with its sequel. Konami's
Zone of the Enders debuted on shaky legs, and its second installment,
despite an improved critical reception, fell flat at the box office. Sony
Computer Entertainment, which created massive hits in the 32-bit era, has
comfortably sat back on its Gran Turismo laurels while publishing an endless
string of boutique releases. Drakengard was Japan's best-selling original
game in 2003, struggling to move around a quarter-million units. No original
titles were spotlighted in Sony's 2004 PlayStation awards, only sequels and
licenses.
Everything else to consistently sell in blockbuster-hit quantities since the
advent of the PlayStation 2 is either a sequel to something that was a hit
in the last generation or a license from some other medium (Super Robot
Wars, Winning Eleven, Antonio Inoki pachinko games and the like). Metal Gear
Solid 2; Gran Turismo 3; Soul Calibur II; the Tales series; a profusion of
Final Fantasies; Nintendo's franchise players; and so on.
"Before we've just been looking to Japan," says Keiji Inafune. "Now
it's time to look at the other areas of the world" -- starting with ancient
Rome, evidently.
The failure of the industry to create new successes leaves a continually
expanding gap created by franchises in decline. Konami's Silent Hill horror
adventures have fallen on hard times -- Silent Hill 4 was outsold its first
week by a pachinko game -- and the Tokimeki Memorial franchise's third
installment killed it. After years of dominating the horror genre, Resident
Evil is on shaky legs. Its online debut tanked, and Resident Evil 4 is
confined to the comparatively small GameCube installed base. Characters and
concepts that found currency on the PlayStation are has-beens now -- look
what became of Parappa the Rapper, and in fact the entire rhythm action
genre. Namco's Taiko no Tatsujin has sold steadily through its expansions,
but the followup to Nintendo's Donkey Konga sold a disappointing 32,000
units its first week.
See You On The Other Side
By comparison, the American and European branches of the industry have
created new hits, new characters, and new franchises. Grand Theft Auto is
technically a holdover from the 32-bit age, but it became a success after
completely reinventing itself for PS2. Ubisoft trumped the Japanese stealth
action competition with Splinter Cell, giving the city of Montreal alone as
many or more original platinum hits than Japan as a whole. Electronic Arts
draws plenty of flack for its reliance on established names, but even the
old monolith gave us SSX and the rest of the EA Big lineup. Sony threw out
its PlayStation franchises and started over with Jak and Ratchet & Clank.
The American games industry has grown as a consequence. Entertainment
Software Association figures chart steady growth in North American software
shipments since the dawn of the PlayStation era in 1995 -- $7 billion worth
in 2003. The only year-on-year decline since then took place in 2000, when
the PS2 was on its way in and the Dreamcast was on its way out.
Games People Play
There's a strange irony in the comparison between two sets of figures in the
2003 CESA White Paper. As mentioned above, hardware and software sales are
in decline, and have been for some time. Yet at the top of the survey
summary, it says that 37.6% of the Japanese population "is in continuous
contact with games," compared to only 25.6% in 2002. That's 34.4 million
people who are apparently pretty interested in electronic gaming.
The gaming audience is expanding, then, but it's not necessarily expanding
in traditional areas. Of those 34.4 million, according to CESA's research,
3.4 million are focused on online games, and almost 9 million are fans of
cellular-phone games.
Mobile gaming is only just catching on in the west, but like any trend
related to cellular phones, it started in Japan, where it's rapidly growing
in revenue and popularity. Some independent developers have turned to mobile
gaming as a primary source of income -- shooter developer Cave is a good
example -- and it's penetrated areas of the market that traditional games
can't touch. In an amusingly publicized incident earlier this year, a Diet
member was censured by his colleagues after he was caught playing cell-phone
Tetris during legislative debate.
The proliferation of mobile gaming offers an uncomfortable reminder of
Nintendo president Satoru Iwata's broken-record refrain. More complex games,
he says, "require customers to consume enormous time and energy" playing
them. Iwata may be questionably optimistic about the prospects of the
Nintendo DS, and he's shoving his head in the sand with regard to the
proliferation of online gaming. Here he may have a point, though, especially
in an aging market with fewer and fewer chunks of free time.
Complex, lengthy, story-driven games demand an awful lot of care and feeding
these days, and often offer paradoxically little replay value. DMA Design
hit on a formula with Grand Theft Auto III that balanced the old and the new
effectively -- it offers activities suited to both long stretches of
gameplay and short sittings of cruising or random action. So far, though,
the trends thus inspired haven't caught on in Japanese development, and in
the meantime, pachinko outsells Silent Hill.
Better Luck Next Year
The coming year could see a turnaround for the console business, thanks to a
few key games. Between the beginning of this fall and the end of next
spring, providing their current release dates hold, Final Fantasy XII, Gran
Turismo 4, and Dragon Quest VIII will all hit the market, providing new
installments in the three most popular and lucrative franchises in Japan.
That doesn't solve the problem of creating new hits, but it should sell a
few more consoles even in a saturated market.
That same timeframe will also see two new handheld launches, though, the
outcome of which is a little harder to predict. The PSP promises more of
what we already have (in portable form) -- except Japanese consumers aren't
buying most of what's on offer these days. The DS, meanwhile, promises
something new, different, and original -- except Japanese developers seem to
have a rough time coming up with original concepts right now.
What if they gave a system launch and nobody came? The PSP's as-yet
franchise-dominated lineup of titles is particularly worrisome, because a
new platform's early days are the best time to create new hits. EA succeeded
with SSX largely because of its lack of competition -- were it to debut now,
it wouldn't do nearly as well. Exactly how portable the final hardware
proves to be is another critical issue, since the rise of mobile gaming
suggests that the Japanese market currently favors portability over power.
"Game developers are finding it difficult to make completely unique
software," says Satoru Iwata. A completely unique bit of hardware should be
a start, at least.
The DS is more of a question mark, given the vague nature of its software
lineup at this point, but the current pattern of hardware sales in Japan
bodes ill for its success, given that even the Game Boy Advance missed sales
targets by about 10% in 2003. Nintendo claims the DS will carve out a market
niche for itself, regardless of other handhelds on the market, but we'll see
if that prediction actually pans out.
Where Will It End?
For all this pessimism, it doesn't seem like the Japanese game industry is
going away entirely. CESA still charted more than $10.5 billion in hardware
and software revenue in 2003. The decline has been slow compared to, say,
the American gaming crash of the early '80s (a 35% decline one year, a 60%
drop the next), and a dedicated enthusiast audience remains to follow games
in whatever form developers choose to present them.
The advent of new hardware in the next two to three years suggests things
will get worse before they get better, though, if indeed they ever do.
Conventional wisdom believes that new handheld launches will soften the blow
of a transitional period, but that may not be the case in Japan, where the
development community seems to have a hard time delivering enough compelling
software for even one dominant platform.
Satoru Iwata claims that Nintendo's new handheld will inspire new,
revitalizing game concepts, while Sony touts the crossover potential of the
PSP. Hopefully, for the sake of the games industry at large, they're both
right. It would be unfortunate to look back at 2004 as the beginning of yet
another long, grim slide, briefly interrupted as usual by Dragon Quest.
"Say g'night to da bad guy!"
Maybe it's because Hiroshi Yamauchi's gone. He always did seem
to think the industry would fall to pieces without him.
The western perception of the Japanese business world still
seems to paint it as the usual inscrutable Asian hive mind. Which is too
bad, because in the absence of that overwhelming stereotype, Yamauchi would
be recognized among the unique industrialists of the latter half of the 20th
century. He spent more than 40 years in the fast lane as the gaming world's
answer to Tony Montana -- he had his balls and his word, and he didn't break
them for no one.
Legend has it, in fact, that one of the only known instances of
Yamauchi giving way to anyone screwed Nintendo for the next 10 years. So the
story goes, Yamauchi favored an optical disc format for the Nintendo
64...except that Shigeru Miyamoto couldn't bear to deal with load times in
his games. Which would mean that Yamauchi, for almost 20 years as the head
of a console gaming power, was more or less always right.
Well, except for the Virtual Boy. Somebody has some explaining
to do there.
Setting Sun: What has happened to Japan's gaming industry?
By David F. Smith
July 16, 2004
The Japanese games industry would appear to be screwed at this point. That
is the basic message delivered by the latest CESA White Paper, the annual
report of the Computer Entertainment Suppliers' Association. CESA's survey
chronicled a third consecutive year of steady decline in Japanese hardware
and software revenues, down 11% in 2003 and nearly 40% since the peak of the
PlayStation generation in 1997.
The year of Final Fantasy VII and Pokemon was the beginning of a continuing
boom in North America. Since then, the American games market has grown
steadily into a monster that comfortably supports three platforms and looks
to have another banner year in 2004. In Japan, it was the beginning of a
long, grim slide, briefly interrupted by Dragon Quest.
Aside from the obvious question of what developers and hardware manufactures
can do to kick-start the market again, the figures inspire a kind of
chicken-and-egg problem. Has the industry changed, and stopped selling what
consumers want to buy? Or has the market changed, and stopped buying what
the industry sells?
What Sells, Who's Buying?
In Japan, 1997's big hits were Final Fantasy and Pokemon. 2003's big hits,
six years later, were Final Fantasy, Pokemon, and Dynasty Warriors 4. Times,
they change.
Koei's tactical action series is more or less the only original domestic
platinum hit the Japanese development community has created this generation,
coming out of nowhere to move millions of units across three installments
and three more expansions. Going against the current trend, it's actually
enjoyed increasing sales from sequel to sequel -- Sengoku Musou was one of
only four million-selling Japanese PS2 releases in 2003.
Besides that...Capcom's Onimusha looked to be the genesis of a profitable
new franchise, but in fact its first installment was the only one to go
platinum in Japan, in the software-starved early days of the PS2. Its two
sequels both sold progressively less, and its creators have now turned to a
project designed exclusively for a Western audience, Shadow of Rome. "We're
going to think of the other territories, and after we start to understand
what they like, then maybe we'll be able to see the whole picture," says
producer Keiji Inafune, but it remains to be seen whether this study-abroad
project of his will bring Capcom significant benefit in any part of the
world.
Devil May Cry also came out strong and faltered with its sequel. Konami's
Zone of the Enders debuted on shaky legs, and its second installment,
despite an improved critical reception, fell flat at the box office. Sony
Computer Entertainment, which created massive hits in the 32-bit era, has
comfortably sat back on its Gran Turismo laurels while publishing an endless
string of boutique releases. Drakengard was Japan's best-selling original
game in 2003, struggling to move around a quarter-million units. No original
titles were spotlighted in Sony's 2004 PlayStation awards, only sequels and
licenses.
Everything else to consistently sell in blockbuster-hit quantities since the
advent of the PlayStation 2 is either a sequel to something that was a hit
in the last generation or a license from some other medium (Super Robot
Wars, Winning Eleven, Antonio Inoki pachinko games and the like). Metal Gear
Solid 2; Gran Turismo 3; Soul Calibur II; the Tales series; a profusion of
Final Fantasies; Nintendo's franchise players; and so on.
"Before we've just been looking to Japan," says Keiji Inafune. "Now
it's time to look at the other areas of the world" -- starting with ancient
Rome, evidently.
The failure of the industry to create new successes leaves a continually
expanding gap created by franchises in decline. Konami's Silent Hill horror
adventures have fallen on hard times -- Silent Hill 4 was outsold its first
week by a pachinko game -- and the Tokimeki Memorial franchise's third
installment killed it. After years of dominating the horror genre, Resident
Evil is on shaky legs. Its online debut tanked, and Resident Evil 4 is
confined to the comparatively small GameCube installed base. Characters and
concepts that found currency on the PlayStation are has-beens now -- look
what became of Parappa the Rapper, and in fact the entire rhythm action
genre. Namco's Taiko no Tatsujin has sold steadily through its expansions,
but the followup to Nintendo's Donkey Konga sold a disappointing 32,000
units its first week.
See You On The Other Side
By comparison, the American and European branches of the industry have
created new hits, new characters, and new franchises. Grand Theft Auto is
technically a holdover from the 32-bit age, but it became a success after
completely reinventing itself for PS2. Ubisoft trumped the Japanese stealth
action competition with Splinter Cell, giving the city of Montreal alone as
many or more original platinum hits than Japan as a whole. Electronic Arts
draws plenty of flack for its reliance on established names, but even the
old monolith gave us SSX and the rest of the EA Big lineup. Sony threw out
its PlayStation franchises and started over with Jak and Ratchet & Clank.
The American games industry has grown as a consequence. Entertainment
Software Association figures chart steady growth in North American software
shipments since the dawn of the PlayStation era in 1995 -- $7 billion worth
in 2003. The only year-on-year decline since then took place in 2000, when
the PS2 was on its way in and the Dreamcast was on its way out.
Games People Play
There's a strange irony in the comparison between two sets of figures in the
2003 CESA White Paper. As mentioned above, hardware and software sales are
in decline, and have been for some time. Yet at the top of the survey
summary, it says that 37.6% of the Japanese population "is in continuous
contact with games," compared to only 25.6% in 2002. That's 34.4 million
people who are apparently pretty interested in electronic gaming.
The gaming audience is expanding, then, but it's not necessarily expanding
in traditional areas. Of those 34.4 million, according to CESA's research,
3.4 million are focused on online games, and almost 9 million are fans of
cellular-phone games.
Mobile gaming is only just catching on in the west, but like any trend
related to cellular phones, it started in Japan, where it's rapidly growing
in revenue and popularity. Some independent developers have turned to mobile
gaming as a primary source of income -- shooter developer Cave is a good
example -- and it's penetrated areas of the market that traditional games
can't touch. In an amusingly publicized incident earlier this year, a Diet
member was censured by his colleagues after he was caught playing cell-phone
Tetris during legislative debate.
The proliferation of mobile gaming offers an uncomfortable reminder of
Nintendo president Satoru Iwata's broken-record refrain. More complex games,
he says, "require customers to consume enormous time and energy" playing
them. Iwata may be questionably optimistic about the prospects of the
Nintendo DS, and he's shoving his head in the sand with regard to the
proliferation of online gaming. Here he may have a point, though, especially
in an aging market with fewer and fewer chunks of free time.
Complex, lengthy, story-driven games demand an awful lot of care and feeding
these days, and often offer paradoxically little replay value. DMA Design
hit on a formula with Grand Theft Auto III that balanced the old and the new
effectively -- it offers activities suited to both long stretches of
gameplay and short sittings of cruising or random action. So far, though,
the trends thus inspired haven't caught on in Japanese development, and in
the meantime, pachinko outsells Silent Hill.
Better Luck Next Year
The coming year could see a turnaround for the console business, thanks to a
few key games. Between the beginning of this fall and the end of next
spring, providing their current release dates hold, Final Fantasy XII, Gran
Turismo 4, and Dragon Quest VIII will all hit the market, providing new
installments in the three most popular and lucrative franchises in Japan.
That doesn't solve the problem of creating new hits, but it should sell a
few more consoles even in a saturated market.
That same timeframe will also see two new handheld launches, though, the
outcome of which is a little harder to predict. The PSP promises more of
what we already have (in portable form) -- except Japanese consumers aren't
buying most of what's on offer these days. The DS, meanwhile, promises
something new, different, and original -- except Japanese developers seem to
have a rough time coming up with original concepts right now.
What if they gave a system launch and nobody came? The PSP's as-yet
franchise-dominated lineup of titles is particularly worrisome, because a
new platform's early days are the best time to create new hits. EA succeeded
with SSX largely because of its lack of competition -- were it to debut now,
it wouldn't do nearly as well. Exactly how portable the final hardware
proves to be is another critical issue, since the rise of mobile gaming
suggests that the Japanese market currently favors portability over power.
"Game developers are finding it difficult to make completely unique
software," says Satoru Iwata. A completely unique bit of hardware should be
a start, at least.
The DS is more of a question mark, given the vague nature of its software
lineup at this point, but the current pattern of hardware sales in Japan
bodes ill for its success, given that even the Game Boy Advance missed sales
targets by about 10% in 2003. Nintendo claims the DS will carve out a market
niche for itself, regardless of other handhelds on the market, but we'll see
if that prediction actually pans out.
Where Will It End?
For all this pessimism, it doesn't seem like the Japanese game industry is
going away entirely. CESA still charted more than $10.5 billion in hardware
and software revenue in 2003. The decline has been slow compared to, say,
the American gaming crash of the early '80s (a 35% decline one year, a 60%
drop the next), and a dedicated enthusiast audience remains to follow games
in whatever form developers choose to present them.
The advent of new hardware in the next two to three years suggests things
will get worse before they get better, though, if indeed they ever do.
Conventional wisdom believes that new handheld launches will soften the blow
of a transitional period, but that may not be the case in Japan, where the
development community seems to have a hard time delivering enough compelling
software for even one dominant platform.
Satoru Iwata claims that Nintendo's new handheld will inspire new,
revitalizing game concepts, while Sony touts the crossover potential of the
PSP. Hopefully, for the sake of the games industry at large, they're both
right. It would be unfortunate to look back at 2004 as the beginning of yet
another long, grim slide, briefly interrupted as usual by Dragon Quest.
"Say g'night to da bad guy!"
Maybe it's because Hiroshi Yamauchi's gone. He always did seem
to think the industry would fall to pieces without him.
The western perception of the Japanese business world still
seems to paint it as the usual inscrutable Asian hive mind. Which is too
bad, because in the absence of that overwhelming stereotype, Yamauchi would
be recognized among the unique industrialists of the latter half of the 20th
century. He spent more than 40 years in the fast lane as the gaming world's
answer to Tony Montana -- he had his balls and his word, and he didn't break
them for no one.
Legend has it, in fact, that one of the only known instances of
Yamauchi giving way to anyone screwed Nintendo for the next 10 years. So the
story goes, Yamauchi favored an optical disc format for the Nintendo
64...except that Shigeru Miyamoto couldn't bear to deal with load times in
his games. Which would mean that Yamauchi, for almost 20 years as the head
of a console gaming power, was more or less always right.
Well, except for the Virtual Boy. Somebody has some explaining
to do there.