Japan’s games industry is struggling. A combination of a difficult domestic economic environment, as well as the natural disasters that hit the country earlier in the year has led to a significant drop across the whole industry for the first half of the year.
The effects on the global games market is going to be significant. While Japan’s games industry has been eclipsed in terms of size by their American counterparts, it is still the second largest interactive entertainment industry in the world. When it struggles, the follow-on effect can bite us all.
Game publishers such as Square Enix, Capcom, Sega and Tecmo Koei become risk adverse. Investment in creating new game properties, new studios and new characters takes the back seat to creating the “sure fire” sequels. With fewer resources their ability to go on acquisition paths and adapt to changing market conditions is reduced, which is in part what has kick started the viscious cycle in which Japanese publishers are struggling for artistic and commercial relevance in the industry compared to their American counterparts. This was already happening before the new wave of Japanese disasters, and it’s only going to become more pronounced.
In short, it means fewer games get produced, and those that do aim to appease the greatest number of customers possible – taking risks within games also becomes a no-go zone, so the games that are produced tend to be a more steralised vision than a creative endeavour.
On the hardware side of things, we’re seeing the Japanese vendors Nintendo and Sony perform incredible stunts that boarder on the desperate that may well backfire on them in the longer term. Starting with Sony – perhaps the most threatened company of all right now because it also has had to contend with an obscenely expensive hack of its system.
Sony came to June’s E3, the major game’s show for the year, with a new, very powerful handheld console, the Vita. It’s an impressive piece of kit, but what surprised – and worried – me was the price: it’s being set to be priced the same as Nintendo’s vastly inferior 3DS technology. It suggests that Sony is undertaking a signficiant loss-leading approach to the console. That is not in itself unusual for gaming hardware as vendors typically make the money from game licensing, not the hardware, but you have to wonder just how much Sony is willing to accept loses just to get the console in people’s hands.
Nintendo meanwhile rushed the 3DS to market in a bid to capitalise before the end of its financial year, but it has been a less than stellar launch. The console has sold fewer units than expected, and there have been reports of bugs and system errors; characteristics unusual for the company.
It’s unfortunate to see the Japanese games industry struggle – and the full impact on the broader gaming community has yet to be really felt. While there isn’t any real short term solution, hopefully a new equilibrium can be found longer term.