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A Window on Japan - Part One

A unique look at the country's changing videogames development landscape

It's interesting to ponder sometimes precisely where the videogames industry would be today without Japan and its plethora of software and hardware revolutions over the years. Standing on the third floor of a retro store in Akihabara the country's influence over time is more apparent than ever, with its rows of shelves containing thousands upon thousands of as-new NES, Super NES, Gameboy and PlayStation titles - to mention just a few of the platforms represented - spanning decades of global videogame history.

But while Japan holds an immovable position in the backstory of our industry, its grip on the present - and perhaps the future - is slipping dangerously. It's in a decline to make anybody sit up and take notice - even in the current financial climate - and while it coincides nicely with the rise of super-publishers in the West such as Electronic Arts and Activision (Blizzard), if not for the position of the Sony and Nintendo hardware brands it's likely it would dwindle even further.

But it's not something that's gone unnoticed by the Japanese games industry, with this year's Tokyo Game Show opening speech - from Square Enix president Yoichi Wada - calling for more collaboration with Western companies to make Japanese games more accessible for other markets.

But it's not just words. On a recent trip to Tokyo as part of an industry delegation from Nordic countries - organised by the Swedish Games Industry organisation, the Nordic Game Program and the Swedish Embassy in the city - the desire for some Japanese countries to reach out was clear.

In a two-part feature based on that trip, I'll look at the way in which attitudes are changing within Japan, how the internal market is also changing, and offer an insight into the development practices of some of the most respected game designers in the world.

Touching down at Narita airport is the first experience of Tokyo for most people, and probably represents the most straightforward part of the journey - English-language public transport maps have improved even in the just the past couple of years, but getting around the city can bewilder any first-time visitor.

In a funny way it's analogous to the way that the Japanese videogames market has been perceived in the West in the past couple of decades, thanks largely to the relentless onset of technology's place in society. Later in the week, while walking to a meeting, I came across a crowd listening to a jazz group outside the opening of a new clothing store. Nothing too unusual, except when on closer inspection you notice that the audience - unsurprisingly made up of a largely elderly demographic - were almost without exception video recording the performance on their mobile phones.

In an environment where the benefits of technology as a whole - and videogames as an entertainment form by extension - are so widely accepted it's no surprise that the domestic market for videogames in Japan has matured more quickly and yielded the majority of successful console hardware platforms over the past twenty years.

But while in the past videogames developers and publishers have been happy to cater with their games first and foremost to that hungry domestic market, and assume a degree of international success as a natural by-product of their art, there's been a significant shift in the number of Japanese videogames sold around the world.

This was highlighted in September this year by Game Republic's Yoshiki Okamoto, who told ITMedia that he believed the global market share for Japan-developed videogames had fallen from around 70 per cent in the eighties to 15-20 per cent today, a feeling shared by a number of Japanese developers, as well as onlookers from other parts of the industry.

As a result one of the most startling - and welcome - impressions to come from the week in Tokyo was one of openness and acceptance, and of a genuine desire from Japanese companies to work with international partners in the hope that a greater understanding of external cultural influences can help to inspire Japan-developed titles to compete more effectively on the world stage.

"You expect a certain level of stand-offishness," said Ste Curran, creative director at Zoe Mode and honorary Viking for the trip. "It was anything but that. We were welcomed with open arms. I think that's testament to the organisers of the trip, but also the nature of the Japanese development community."

And one of the trip's organisers, Nordic Game senior executive advisor Sten Selander, also noticed something similar.

"It struck me that there was openness," he said. "You don't perceive Japanese business relations as being very open, but they were very open and honest about their needs and shortcomings - urging us to have these contacts."

So if the atmosphere was generally more open and inviting than might have been anticipated, what were the specific learning points from the trip? On the Monday before Tokyo Game Show took place, after a first meeting in which all of the Nordic company representatives gathered to study the itinerary, it was straight off to Square Enix' headquarters for a two-hour trip around the building.

In the corporate handbook at Square Enix the company's philosophy is one of the first things mentioned: "To spread happiness across the globe by providing unforgettable experiences."

Obviously this from a company that's responsible for two of the biggest RPG franchises in the history of the industry - Final Fantasy and Dragon Quest - seems like a logical statement, but read it again and you'll notice the prominence of the word "globe". It's no surprise that the president of Square Enix is the same Yoichi Wada, president of CESA, that opened TGS with a similar message.

Delving further into the handbook's management guidelines and you'll find further evidence of this kind of thinking. Just after the sections on professionalism and creativity/innovation is one on harmony, and here are a number of rather interesting lines developing that mission statement's theme.

"Everything in the world interacts to form a massive system. Nothing can stand alone," it reads, sounding not dissimilar to a John Donne poem. "Everything functions with an inevitable accord to reason.

"It is vital to gain an understanding of the constantly changing tides and to take advantage of these variations instead of struggling against them. We shall continue to work towards harmony and serve as part of this ever-fluctuating system."

A somewhat surprising set of statements for a company that primarily makes videogames, but a glimpse into Wada-san's vision for the company, moving forward. In fact, in his president's summary he notes the ambition to reach out to the wider industry:

"With regard to game development projects with external studios, we have heretofore only pursued this strategy within Japan. Hereafter we intend to add more game development functions to our North American and European operations, and aggressively commission overseas development projects where deemed appropriate."

And a matter of weeks after TGS closed the company announced its first development collaboration with a Western studio - Gas Powered Games, and hinted at acquisitions or other partnerships in the future.

The next morning was devoted to a visit to a marketing firm called Dentsu - but Dentsu isn't just any marketing firm, it's one that employs over 35,000 people housed in a modern skyscraper in central Tokyo.

It also handles accounts for countless numbers of companies - both from Japan and internationally - and deals with advertising on television, radio, mobile platforms and the internet.

The purpose of the visit was to find out how videogames were being used in marketing - not so much to look at things like in-game advertising, but to understand more the way that games fit into society, and I think the impression given surprised some people.

For example, while Dentsu puts in significant work on casual web or mobile games, they're almost all exercises in building brand recognition - and given the company's research (and continued strong relationships with customers) it's something that seems to work.

But what about core games? After all, that was the prime concern of those developers attending from the Nordic countries.

Surprisingly a question on whether or not dedicated gamers were important to advertisers was largely dismissed. The main advertisers in Japan have no interest in trying to communicate to otaku, it appears - possibly because they already feel their brand is strong in that sector, but more likely because it's just not seen as a desirable market for mainstream brands to chase.

Comparing that to the Western markets and it seems very odd - what brand wouldn't want to get its message across to the 16-34 age bracket in an effective and suitable environment? While Dentsu would, I'm sure, be delighted to work on solutions for core gamers, there's simply no demand for such products.

But probably the biggest eyebrow-raiser came in the question session at the end of the meeting - how were advertisers in the domestic market gearing up for the launch of PlayStation Home?

The answer was rather puzzlingly bereft of any knowledge about what Home actually was, and on further questioning after the session it became clear that, for the biggest marketing firm in Japan - maybe the world - Sony's forthcoming online brand shop window wasn't on the agenda... in its home territory.

That of course begs the question as to whether or not the lack of knowledge is firstly a problem for Sony, and secondly whether it's again related to the low priority that core gamers are assigned. From the West's perspective the commercial opportunities for branded experiences within Home have long been lauded, so is it a surprise to Sony?

With the platform launching tomorrow, and with the inclusion of a number of high profile brands initially, it might well not be a problem for now - although the long term viability of just how lucrative it could be can only be answered in the coming months and years.

Part two, which includes visits to Capcom and Sony, will follow next week.

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