Editorial: Why Japan’s games industry is not struggling

7 mins read

It wasn’t so much the kick-off point, but when ex-Capcom legend, Keiji Inafune, quit his post, after repeating on multiple occasions that the Japanese games industry is “in trouble;” it was the feather that broke the camel’s back.

Now, it’s almost canon in the press that Japan’s games industry is floundering. Western writers constantly note how few Japanese games appear in the charts. They point to any poor financial results as a portent of doom.

But it’s not really the case. The Japanese games industry has its fair share of challenges – but then so does the Western games industry (or did Activision not just shed a whole bunch of staff and IPs?). It’s evolving and changing, but overall it’s actually quite well placed.

So, in the interest of playing Devil’s Advocate, here’s a very different reading of what’s currently going on in the Japanese games industry.

The Japanese industry is maturing. This is not the end of the world

Any industry goes through a period of growth, and then maturing. It’s a natural part of the business cycle, and while it does mean that some companies disappear, it’s not a signal of doom by any means.

The Japanese market is, right now, going through that maturing period. The days where tiny startups can hit it big on a regular basis are over – though it still happens (usually when an especially talented and experienced veteran starts up his own company), for the most part the really talented startup developers are quickly acquired by the deep pockets of a major company. It leads to a small number of very big companies, but the overall value of the industry is not diminished.

Square Enix is, now, almost a company too big to possibly fail
Poor financial results are not a sign of woe

Over the past few years, just about every Japanese publisher and developer has posted some less-than-positive results. From Nintendo and Capcom, right through to the more niche players such as Marvellous, each has announced disappointing raw figures.

Again, this is a natural part of the business cycle – especially when going through a period of recession in the broader economic environment, which is precisely what Japan has been dealing with. The smart companies plan for this, with risk management contingencies and cost-cutting scenarios. Yes, it meant some companies had to pull back some operations – like Marvellous needed to do to focus on the more profitable Harvest Moon franchise than the risky releases like Little King’s Story, but the company itself has ridden the storm.

Little King’s Story was not a success. It also isn’t going to sink Marvellous

Japanese games are made for the – shock! – Japanese

This one really bugs me. Every time I see the Western press criticise the Japanese games industry, it’s on the basis that Japanese games don’t “sell as well” as the likes of Call of Duty in America.

It’s an amazingly self-centered view of the industry, and fails to take into account that Japan is a pretty big market in its own right, and the games were designed for that audience. After all, how many Western markets still have a weekly games magazine that is over 100 pages in size? Almost none. And yet, in Japan, there’s Famitsu.

Look at Tecmo Koei. Do the Warriors games sell well in America? No, not as a rule of thumb. Do they sell well in Japan? Heck yes. More than enough for the series to remain a reliable source of revenue for the publisher, in fact.

It doesn’t really matter how well Dynasty Warriors 7 sells in the West. It sold in bucketloads in Japan

When these companies genuinely fail is when they attempt to pander to Western tastes. Mindjack by Square Enix and Quantum Theory by Tecmo Koei are posterchild examples of why the Japanese should stick to Japanese experiences.

And to flip this silly argument around – the Xbox 360 sells horribly in Japan. Is this a sign that Microsoft is struggling? Of course not. Or is it a sign that Western gaming is failing that Western RPGs like Dragon Age under perform on the Japanese charts? No.

Of course, this is only a baseline view of the Japanese market – going in depth into the nature of the businesses over there is almost a topic for an entire business course, but I hope this view can get people looking closer at the Japanese market as a market in its own right, with plenty of money internally, and not a entire nation struggling to appease the Americans.

So, while the criticisms that the Japanese market struggles with fostering creativity (a complaint that can be equally levelled at the Western market, mind you, and has been levelled at the Hollywood for years now) are reasonably justified, it’s ridiculous to claim the industry itself is going anywhere. With Nintendo dominating the hardware sales, and the likes of Capcom and Square Enix and Namco Bandai making wise investments in social and casual gaming, the businesses themselves are placed just fine.

This is the bio under which all legacy DigitallyDownloaded.net articles are published (as in the 12,000-odd, before we moved to the new Website and platform). This is not a member of the DDNet Team. Please see the article's text for byline attribution.

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