Putting Japanese game creators back in the pole position
Inflexion Point Capital adds Keiji Inafune to board, aims to invest $15m in Japanese mobile studios
"We had a lost decade in Japan," Kevin Lim, founder of newly formed Inflexion Point Capital (IPC), tells me in a recent conversation. It's a bold statement, but if you look at the most successful games in the last decade, they are largely Western developed. Lim has made it his mission at Inflexion Point Capital to breathe new life into the Japanese games market, empowering indies to bring their games to the market.
IPC sees itself as more than just a venture capital firm; it's dubbed itself a "synthetic publisher" and that means it's looking to fuse a variety of elements (business incubator, a venture capital fund and a traditional publisher) to support the growth of startup video game studios. "In essence we replicate the role of a publisher but provide significant additional benefits without handcuffing the developers with deeply unfavorable financial terms. Our goal is for the studios to become self-sufficient and self-sustaining as soon as possible," the company states (note: IPC says a typical equity stake will range from 20-25 percent).
IPC's initial investment capital will total roughly $15 million, and the firm is planning on making initial seed investments between $100,000 and $500,000 per studio. It expects two to three investments to be made each year. And it's not doing so lightly; importantly, outspoken designer Keiji Inafune has joined IPC's advisory board and will play a direct role in evaluating talent and projects.
While the former Capcom creative director and current Comcept CEO has been known for his criticism of the Japanese market in recent years, that actually makes him the perfect candidate to help shape the future indie talent, says Lim.
"Japan is still stuck in the old brick-and-mortar business in a digital age. We hope to change the game by giving designers a different option"
"I don't think his problem is with the creative aspect of it. Japan is very creative... I think the problem Inafune-san described is that publishers want another Final Fantasy 15 or whatever, they don't want something untested or different. If you were to look at the app store right now, everything just looks like Puzzle & Dragons or Candy Crush to me. As passionate gamers, Alex and I would really like to see some variety out there," notes Lim.
Alexander de Giorgio, COO of IPC, adds, "I think the bottom line with Inafune-san is he's genuinely passionate about helping game creators in Japan. He does a lot outside his main role as CEO of Comcept. He's very involved at the early stage, even earlier than we're considering, basically at the university level - he talks to developers and designers and encourages them to break out and try and be independent. It's something which is happening in Japan but it's taking time. It's a change in mindset and we're still in the relatively early stages. In many ways, he's just trying to push that through in whatever way he can. That's part of why you see him making strong statements to wake people up, because the potential is massive in Japan. It's just how do you tap into that?"
IPC is actually based in Ireland and is seeking to leverage foreign capital with Japanese studios. While American talent has been able to tap into funding from Silicon Valley, the options have been quite limited for Japanese game startups, and Lim thinks that's a major reason for the slump we've seen in the Land of the Rising Sun.
"Typically in Japan right now if you need funding, you either go to your mom, you go to a bank for a loan, or you go to a typical publisher who wants another Puzzle & Dragons clone," Lim says, adding: "Japan is still stuck in the old brick-and-mortar business in a digital age. We hope to change the game by giving designers a different option. I think they need more options; they should not be restricted to self-financing or going to a publisher."
"We just want to put Japanese game creators back in the pole position," Lim continues. "We strongly feel that Japan has lost a bit of its momentum, not just on the gaming front but in multiple industries. It's very much a victim of its own success. Let's just work on the games industry for now... and give the Americans a run for their money."
Part of the problem, according to de Giorgio, is that too many Japanese game designers got caught up in the Westernization of their own projects. But he sees a huge opportunity for Japanese-style content, not just in Japan but around the world.
"The fact is there is still a huge demand for Japanese games or Japanese-style games globally. You still have a whole generation of gamers who have grown up with Japanese games when they were the genre-defining titles out there. One of the revolutions that happened in the Japanese gaming industry is that a lot of the big publishers, the Capcoms and so on, started making games more focused towards Western markets and they kind of lost their way, they lost their identity. That's the sense that a lot of people have in Japan," he says.
"So trying to bring back what makes Japanese games unique, innovative and popular, that's something a lot of developers want to do but they just need to find the right avenue to be able to access funding and bring those games to life, because a lot of the larger traditional publishers are no longer looking at those games. That's something that has to change. Japan has to regain some identity in the gaming industry, and that's going to come from a lot of the indie designers, the young guys coming through who haven't worked with the traditional publishers and still have that element of original creativity. If we can play a part in supporting them and nurturing them, we feel that's a step in the right direction."
Putting Japan's game makers back in the pole position will largely revolve around mobile gaming, IPC believes, as that's where the biggest growth has been and where it's likely to continue.
"More than just a great idea, we're looking for a real business plan and conceptualization of the whole process from beginning to end. The biggest challenge is always getting a game through its final stages to launch
Alexander de Giorgio
"We are looking at this from a mobile first perspective. It doesn't mean we're not going to consider investing in studios on other platforms, but our focus is on mobile first and part of that is also looking at a cross-platform strategy," de Giorgio notes.
That may be true, but the portable games market (3DS and Vita) is also quite popular in Japan and IPC is certainly open to considering projects for those systems if it makes sense. Ultimately, the goal is to put the right game on the right platform and not force something that doesn't fit. "We want to let the game dictate the business model rather than the other way around," Lim says.
While IPC wants to bring some of Japan's best new projects to the market, the firm fully admits that those developers who have some business savvy and actually bring a business plan to the table will be at a distinct advantage.
"There are a number of things we look at. More than just a great idea, we're looking for a real business plan and conceptualization of the whole process from beginning to end. The biggest challenge is always getting a game through its final stages to launch. Lots of games look great at the inception, but getting them to that final stage is key. We're looking for game designers and project managers as well - guys who really know what it takes to bring a game to market," says de Giorgio.
IPC realizes that some developers may prefer to go it alone with another funding source, like Kickstarter - something Inafune is experienced in thanks to Mighty No.9 - but crowd funding brings its own set of challenges, IPC is quick to point out. That said, the firm is also willing to work with developers on Kickstarter who need a boost.
"Kickstarter has had some big wins in Japan and there certainly is a lot of interest in that avenue for fundraising. On a case by case basis, if we could see a way for us to be involved in a project beyond just the financing, particularly looking at bringing some of our hands-on advice, then it's something we could look at. Kickstarter brings its own challenges as well, and the focus on Kickstarter often means you're less focused on other things. Kickstarter as a funding tool requires a lot of focus so we would really need to see that the partnership would be viable on both sides," says de Giorgio.
IPC officially launches on August 1.