By Hiroko Tabuchi at the New York Times: TGS report and interview with Capcom's global development boss Keiji Inafune.
First some facts, from the TGS report:
Inafune says that excluding Nintendo, Japan's global share is now actually only 8%.Global sales numbers for the entire industry are hard to come by. But Japanís share of the worldís video game market, both hardware and software, has fallen to slightly more than 10 percent in 2009, from estimates as high as 50 percent in 2002, based on figures from the Entertainment Software Association, the Japan External Trade Organization, and the research companies DFC Intelligence and Enterbrain.
There are a bunch of insider quotes in the two-page article but the juiciest bits come from the Inafune interview, of course:Nintendo has been the major exception, a Japanese game company that has remained dominant. [...] But because the best-selling games on Nintendo consoles are largely made by Nintendo, the rest of the Japanese game industry has been excluded from that action.
Meanwhile, Japanís domestic game market is shrinking, down by 20 percent since 2007, to 549 billion yen ($6.4 billion) in 2009, according to Enterbrain.
During that time, the market in the United States surged to a record $21.4 billion in 2008 before a recession-driven decline to $19.7 billion in 2009. But that was still a total increase of 10 percent over two years for the American market, according to NPD.
As Japanese development studios struggle with declining sales, analysts say they are falling behind their American rivals in sheer investment power. A budget for a blockbuster game in the United States can approach $50 million, a figure few Japanese developers can now match.
On Monster Hunter as the quintessential Japanese game:I look around T.G.S., and everyoneís making awful games. Japan is at least five years behind.
Itís like weíre still making games for the last generation of game consoles.
Capcom is barely keeping up. The ideas, game play, design Ė thereís no diversity, no originality.
Q.: Why do you think Japan is so behind?
A.: A lot of designers, if they find a genre that works for them, they stick with it. A lot of designers just stick to a set formula.
That doesnít work any more. You canít just tweak the graphics, work just on image quality. You canít compete on that.
The business side is not keeping up with investment. You need to be prepared to invest 4 billion yen or more on a game, and then spend 2 billion yen more to promote it. But Japanese companies canít do that. So weíre losing out to the West in terms of investment in games.
Itís a vicious cycle, a deflationary spiral. Because you donít invest, you canít sell games, and because you donít sell games, you canít invest.
On management at Capcom:Monster Hunter is a Japanese game to the core, down to the controls. If we changed anything, it wouldnít sell in Japan any more. [...]
Lost Planet 1 was designed for the Western market. But the guys who made Lost Planet 2 were misguided. They made it too Japanese. They made it like Monster Hunter.
On Japan's only chance:Iíve been fighting for many years now to change these things [at Capcom] one by one. But the business side is resisting change. They think developers are stupid and donít understand business. Thatís why I canít be on the board of directors.
Thatís the difference between Capcom and Nintendo. At Nintendo, 80 percent of the board is from development. At Capcom, itís zero. All the business side cares about is protecting their own interests.
Itís actually too late to start entering the U.S. market now. That will take years. The next big market is China. My sights are on Asia. We need to learn from Korea. We need to go to China.
Japan is isolated in the gaming world. If something doesnít change, weíre doomed.