Update: Square Enix Starts California Game Studio — A Portent For The Future?

Mon, Nov 17, 2008

Update: Square Enix USA president John Yamamoto has confirmed that the LA studio will be working on small downloadable titles, evaluating middleware solutions for Japan, and - perhaps - helping drive a multiplatform future for the company. Full interview at Gamesindustry.biz.

Original Story:

To say that of late, Square Enix president Yoichi Wada has been outspoken about the sorry state of the Japanese games industry would be something of an understatement. As chairman of the Computer Entertainment Supplier's Association (CESA), he keynoted the 2008 Tokyo Game Show in mid-October -- and spoke about little else. "Why has the Japanese industry lost its position?" he rhetorically asked. According to the chairman, the answer was primarily the Japanese developer's general unwillingness to globalize, to open up to new ideas, and to cooperate with others to succeed.

Days later, Wada made headlines by suggesting one way to facilitate cooperation would be through the formation of a "Japan Alliance," whereby different game labels would be consolidated under the corporate umbrella of a holding company.

But as for globalization, Square Enix apparently intends to lead by example. Last week, Square Enix surprised the gaming world by announcing a partnership with Gas Powered Games to co-produce the RTS Supreme Commander 2, and noting that the move was "a new cornerstone of its strategy to create games targeted primarily at consumers in North America and Europe."

And today, job postings have revealed that the company has set up an internal development studio -- to produce an "action-oriented original IP game" -- in Los Angeles, California.

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"Now, Western games are more advanced." - Yoshiki Okamoto, Game Republic

"It was once said that Japan molded the world's video game [industry], but that's becoming a thing of the past." - Hideo Kojima, Kojima Productions

"I think that North American and European process is much more sophisticated, and recently very well built to handle large-scale development." - Keiichi Yano, iNiS

"The technology base has shifted from Japan to the US and Europe." - Shuhei Yoshida, Sony Worldwide Studios

"I think America has always been better at creating unique products." - Shigeru Miyamoto, Nintendo

"I look at what American developers are doing and I think wow... Japan is in trouble." - Akira Yamaoka, Konami

Some of the most successful, influential developers in Japan agree: the video game industry landscape is shifting to the West. And according to statisticians at the likes of Capcom and Nintendo, that's where the money's at too. Where Nintendo devices are practically nearing the saturation point in japan, the market potential for both across the ocean is tremendous.

Faced with these facts, some Japanese publishers have decided the solution is to build games that appeal to the West... but it seems that this may come at the cost of the domestic audience. MadWorld and No More Heroes: Desperate Struggle are good examples -- in a climate where the likes of Dead Space and Gears of War 2 are getting strategically dismembered banned before they ever hit Japanese soil, neither of these wholly Japanese games have even been slated for release in their country of origin.

Furthermore, when it comes to hardcore titles, many attest that Japanese tastes in video games are fundamentally different from those in the West. Old school shmups and dungeon-crawling RPGs seem to have a larger audience in Japan, just as first-person shooters and action-adventure games may appeal more to those residing in the United States. And when those companies focused on satisfying particular tastes attempt to shift gears, the results aren't always pretty.

All in all, it seems rather ludicrous for Japan to drop everything and focus on the West -- but they may not have to, because over the past several months, the global recession has driven the dollar so low compared to the Japanese yen that it may make sense for companies to just set up shop here in the United States, and try to lure away developers who already know how to satisfy the audience Japan currently craves.

It seems that Square Enix is poised to do just that. And with its president Yoichi Wada in the game industry spotlight for publically recognizing a need for change, and so many Japanese game companies pointed in the same general direction, I wonder if others might follow suit.

Though we know little about the game the Los Angeles studio is likely to produce, the job posting makes it fairly clear that candidates need a good deal of experience with the Xbox 360 -- and the Nintendo Wii is mentioned as well.