Cultural differences not trade barriers frustrate EU video game makers
Japanese companies dominate the nation’s video game software market to such an extent that only one Western release snuck into the Famitsu top 100 annual sales chart last year – Activision Blizzard’s Call of Duty: Modern Warfare 2 in 77th spot.
Japan’s gamers spent ¥326bn on nearly 65m games last year, according to Enterbrain, publisher of the nation’s top-selling gaming weekly Shukan Famitsu. Square Enix’s role-player Dragon Quest IX for the Nintendo DS led the way with more than 4.1m unit sales. But overall, gamers plumped for products made by Nintendo itself, with the Kyoto-based firm grabbing a 20.9% lion’s share of the market.
These Japanese giants dwarf the foreign presence, which holds a market share of less than 2.5%, according to industry analyst Hiroshi Kamide.
“The last game by a European company that made even a slight impact was Ubisoft’s Assassin’s Creed, but it was nothing major in the grand scheme of things,” Kamide says.
He cites three major reasons for the poor performance of foreign games in Japan: publishers who are reluctant to spend and give games a major marketing push; cultural differences, such as graphic representations and plot; and a lack of branding.
Ubisoft, a French developer, established its Tokyo office in 1994 to localise games for the Japanese market. But despite a mere 0.6% market share last year, Steve Miller, managing director of the company’s Asian operations, believes it is still worth maintaining a presence here.
“There is a lot of potential here in Japan,” Miller says. “The video game market is worth over $3bn, and if we have ambitions to be even in the single digits [of market share], there are huge growth opportunities for us.
“If you look at it on a country by country basis, Japan is the second-largest video game market after America. We need to be in this market, plus we have to consider that Nintendo and Sony are based here.”
Miller believes the industry is accessible to foreign companies, saying, “There are no structural barriers that prohibit entry into the Japanese video game market. It’s a rather open market, and foreign firms are free to participate here. However, the preference of Japanese consumers for Japanese-developed titles means foreign firms have to temper their expectations before they launch any of their titles here.”
Several major foreign developers have found Japan to be a graveyard for games, despite impressive sales in Europe and North America. This can be partly attributed to the penchant of Japanese gamers for role-playing and adventure games, as opposed to Westerners’ preference for first-person shooters such as Grand Theft Auto IV – a global multimillion seller that topped the charts here on release, but soon slipped down the rankings.
Codemasters, a British developer that opened an office here in 2008 to localise and sell games made in Europe to the Japanese market, sees a variety in taste, even in what many would see as a single genre of racing games.
“Our Grid [track-racing] series has sold well in both Europe and Japan, but our rally games don’t do so well here,” says Kazutoshi Miyake, president of its Japanese unit.
“British and European gamers like to be able to drive in any direction they like, whereas Japanese like some kind of navigation to make the game easier to play.
“For this reason we don’t bring all our games made in England to Japan. For example, our new International Cricket 2010 game would be impossible. Although Japan has a team, it just wouldn’t sell.”
In addition to ensuring a quality translation that immerses the player in the world of the game, Miyake says Codemasters places great weight on voice acting, using actual commentators to really put the gamer in the driving seat.
According to Enterbrain figures, Codemasters held a minute 0.1% share of the Japanese market last year – something Miyake is keen to improve on by revving up the Japanese operation.
“There are many excellent developers in Japan,” Miyake says. “We have a future objective of selling games made in Japan in Europe and the States through our sales channels. Looking way ahead, we are also thinking of setting up a studio here.”
But Ubisoft’s Miller warns that several Western developers have fallen victim to their own accomplishments.
“Usually what happens is that publishers have a successful game in North America or Europe. They bring it to Japan. If it’s successful, they then tend to get overambitious and over invest,” he says. “They blow up the size of their office here and their overheads. They have to hire sharp programmers, graphic artists and musicians and designers and planners. All these people have to be bilingual and so your costs go through the roof.
“Trying to explain [to headquarters] the rationale behind why a game will appeal to Japanese gamers is a formula for disaster. It’s like Quentin Tarantino trying to explain to a Japanese executive why Pulp Fiction is going to be so good and funny. It’s not worked very well.”
Nevertheless, Miller sees plenty of possibilities for expansion: “There are untapped markets within Japan, such as the SNS and mobile phone markets. The opportunities for licensing and merchandising of video game characters are also huge, and remain untapped by Western publishers.”
UK games on show
UK Trade & Investment is leading a mission of British games companies to this year’s Tokyo Game Show at Makuhari Messe (16-19 September). Representatives of these firms will visit Japanese game companies and take part in workshops during the week. EURObiZ Japan speaks with Ben Chesson, the mission’s Tokyo team leader and head of inward investment at the British Embassy.
Which companies are coming?
Green Man Gaming, ustwo, Eurocom Developments, Dynamo Games, Atomhawk Design, Hello Games, Relentless Software, Games Consultancy and Digigraf srl [an Italian company].
Have you run such missions before; how successful have they been?
We’ve been running computer games missions since 1998. Many licences and partnerships with Japanese companies have been generated and some UK companies have set up in Japan.
British firms barely make a dent in the Japanese games market. Don’t you think it is a pipe dream to think such a mission will help companies make inroads?
It’s not quite that black and white. Japanese firms need Westernised content to be truly global players. British firms have had massive success in developing and publishing content in the past, and their skills are respected. This is why firms such as Sony Computer Entertainment have such a large presence in the UK. Paradigm shifters such as the success of the iPhone in Japan and online purchasing of titles are also altering the playing field.
What special qualities can British games firms bring to Japan?
The UK has a huge creative industries sector. For the games sector, this means a lot of high-quality companies offering innovative game play, publishing expertise, programming and support expertise. The UK has capabilities in everything from writing the storyline through to promoting the title or designing the chip on the device that the game is played on.
Visit http://chinwag.com/ukti/japanmission for further details on the mission.