The Decline of Big Japanese Gaming (with Video)

Konami is getting out of the traditional video game business. Given their output (or lack thereof) the last few years, the comically bad way much of that content has been promoted and recent events in particular, I honestly don’t see how it can be interpreted any other way.

As a huge fan of many of the games bearing their name, going back to the early 1980s, that’s actually something that it pains me to say. Once a juggernaut of video games, the company’s releases have dwindled in recent years, with only two console games coming out in 2015, Metal Gear Solid V: The Phantom Pain and the latest entry in their soccer series. It’s interesting to see because while the amount of titles they’re putting out has shrank, the investment in them certainly hasn’t. Metal Gear Solid has always been among the most expensive game series to produce and judging from what we’re seen so far of MGS V, it looks like at least a few dump trucks full of cash were involved in its creation as well. Therein lies the core of the problem in my opinion.

It’s no secret that AAA console and PC gaming is an industry that’s in some deep trouble right now. The costs and time required to make these games are going up exponentially, far quicker than the audience size needed to make them viable, yet the prices have largely remained the same. The industry is littered with examples of how companies have tried to adapt to this, usually meeting a consumer backlash for it. Big budget gaming seems to be filled with only the safest of bets and sequels. The corpses of many developers and publishers that either couldn’t adapt or didn’t in time also are plenty. Given that many of the big Japanese names are both still around and showing a profit, you may think things are rosier over there but that couldn’t be further from the truth.

While console sales in the west are still doing reasonably well, the Japanese console gaming business is cratering. If you think mobile gaming is exploding over here, it pales in comparison to how it is in Japan. It’s now the dominant way people play games there and many former console players are dumping that past time in favour of just using their phones. As someone who thinks the majority of popular mobile games these days are creatively bankrupt, free-to-play scumware, that’s disheartening but it is what it is. Big budget gaming is very much in decline there but because of the nature of Japanese business culture, it’s not manifesting the same way and unless you follow the business side of the industry like I do, you might not see it.

Many Japanese companies tend to be very diversified and do business in a bunch of often unrelated industries. Not all of them to be sure but it’s not an uncommon practice. Much of these operations either aren’t consumer facing or don’t operate in the west so we don’t hear about them. For example, what do you think of when you hear the name Mitsubishi? Probably cars and maybe home electronics at one time right? Check this out. They’re an extreme example but this is pretty common practice, even among video game companies. Remember Jaleco from back in the day? They now focus on real estate and finance. Seriously. Konami is no different. Many people don’t know that two of their biggest business pillars are slot machines and if you can believe it, health clubs. I’d love to hear the story behind why and how they decided to get into that business.

While many western companies who couldn’t handle the bigger risks of AAA gaming simply imploded, the diversity of many of their Japanese counterparts means that while they appear to be healthy, it’s not a sign that all is rosy in their gaming divisions. Capcom, Sega and many other Japanese names once synonymous with big gaming are either shying away from that field to focus on mobile or other ventures and some like Sega have just straight up said as much. An exception to this is Square Enix but they have also decided to focus heavily on western centric games development through their acquisition of Eidos Interactive and properties like Tomb Raider, Deus Ex, Hitman and others. It hasn’t always worked out for them but they’re still making a go of it nonetheless and they are still profitable as a whole. There’s also been a litany of smaller Japanese game development studios that have either ceased development or been acquired recently, largely by mobile publishers.

The reality is that the Japanese gaming industry is getting hit just as hard or even harder than the western industry, their companies just tend to be more skilled at diversification and being able to pivot from one industry to another. Don’t forget that up until past the PS2 era, Konami was cranking out games left and right and had a number of different studios running. At this point, they have Kojima Productions (a name since disowned in all the drama), their soccer team and the team that works on music games, that’s it. Those game developers aren’t going to suddenly find work making slot machines or working as fitness trainers so while the Konami corporation may be fine, that’s still a lot of game developers who are out of work. Almost anyone you can think of from that company with fame in the industry is gone and by all accounts, Kojima is also out the door after MGS V ships. The Super Bunnyhop video I linked above makes the salient point that while the cost of making Metal Gear Solid games has gone up and up and while the series still makes money, it’s making less each time. In the world of “public company thinking”, that’s not a good thing and it appears that Konami has just decided that this business isn’t worth it any more. Given the current climate, you kind of can’t blame them (even though it also appears the company is run by a brutal dictator who doesn’t care much for his employees) but it’s still sad to see.

While it’s good to see that these companies won’t go away, the sad part of it is that many of them sit on a vast wealth of games and properties that many still remember fondly. However, since they aren’t going under, they aren’t in danger of losing ownership of those and in general, big companies like to sit on every property they can, even if they aren’t using them. When Midway went under, their properties went up for auction. Warner Bros. bought most of them and as a result, we have great games like Mortal Kombat X that we might not have had otherwise. Similarly, a lot of well-liked THQ properties were bought up and some things are happening with those. In the case of Konami, they have no real incentive to either sell their stuff to other companies that will do something with them or even license them out. Most of them will either just be sat on and stagnate or will get used to make slot machines or crappy mobile games that have nothing to do with the games except the name and some characters. If Sega and Capcom choose to get out of big games, the same thing is likely to happen and many would say it already has. That really sucks from the perspective of someone who has a lot of fondness for these games and would love to see someone get a chance to take a modern crack at them.  Sure, these companies could one day decide to return to big budget gaming but that’s a hard business to start from scratch in and unless it suddenly becomes far less risky, why would they?

What this all points to is that the AAA gaming industry in Japan is experiencing the same struggles as the rest of the AAA gaming industry, it’s just manifesting in a different way because Japanese and western businesses operate in very different ways. This is a real bummer for me because while I’ve played a ton of great smaller games, I don’t like where influential elements of the indie game development community are trying to steer that stuff and franchised to Hell and gone or not, AAA games can provide experiences you simply can’t get from smaller games. As a technology enthusiast, I also like to see the envelope pushed and AAA games do that, arguably they have been instrumental in pushing a lot of computing technology forward more than other fields. Retro style, pixel art platformer “exploration games” are not going to be what drives technology and new ideas forward. I think a healthy games industry needs a good mix of big and small stuff and more and more, it seems like the bigger side of the industry just can’t figure out how to make it sustainable. In the west, that means a lot of closed doors, in Japan, it more often means pivoting to another industry. In either case, a lot of talent loses work and that’s not good for anyone.

It’s an interesting time to be a gamer and particularly one who grew up with the game from a lot of these companies that seem to be backing away from them. Not to say that the AAA industry didn’t and doesn’t have a lot of faults but the general rule of thumb is that the void will be filled by something but I don’t think mobile free-to-play crap and indie art pieces that barely even resemble games are the best thing to fill it either. It appears that the gaming business in all places is undergoing not it’s first revolutionary transition but arguably it’s biggest and most impacting. I hope when it all shakes out, there’s still a good place for those of us who like the big stuff as well. We shall see.

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One Response to The Decline of Big Japanese Gaming (with Video)

  1. Pingback: My Bold Predictions for 2016 | Geek Bravado

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