How Long Will Google and Apple Reign?

INTERVIEWER  Even though there has been a shift toward mobile phones for Japan’s game industry, social network companies like DeNA and GREE, which got their start by providing mobile Internet services via NTT Docomo’s i-mode, have seen their grip weaken on platforms in Japan. Now Google and Apple are the dominant platforms globally. What do you make of this situation?

SANADA  From the perspective of game vendors like me, it’s preferable to have multiple platforms in competition with each other. At the same time, you’ve got to have a stable market framework, rather than some sort of chaotic situation, to prevent confusion among users and make it easier for marketers to know what games will sell for certain platforms. There are low-quality imitation websites and content out there, so for novice users with little experience of surfing the Internet it can be hard to know which ones to choose. It would be better to have a certification system in place to indicate content that’s of high quality and can be used with peace of mind.

If a single company dominates the market so that there is no counterbalance, that company can dictate all of the conditions when it comes to royalties and other factors. Ideally, if there were three companies, for example, each would have around a 30% market share. Having three main companies to deal with would make life a lot easier for vendors.

INTERVIEWER  What are the prospects for the rise of a third major player to join Google and Apple, allowing game vendors to shift their focus among the three platforms flexibly?

SANADA  The history up to now has been a back and forth between horizontally integrated platforms and vertically integrated ones, where one wins out but then is surpassed by the other in turn.

More specifically, during the so-called “Wintel” era, every maker relied on Windows software powered by an Intel or other compatible CPU. This was a world where makers were integrated horizontally via those two mainstays.

What brought that era to an end was the rise of vertically integrated Apple. Apple took the approach of being integrated vertically from the bottom all the way to the top, with Apple computers using the company’s hardware and running on its proprietary operating systems, and software being sold through the Apple Store.

So the only thing that is going to end the era of Apple’s vertical integration is another wave of horizontal integration. Personally, I see great possibilities for the HTML5 market, which will be a universal platform for running everything, whether the devices are on iOS or Android. The rise of the HTML5 market could topple the era of vertical integration. Soon I think we will be seeing HTML5 games rising to prominence.

INTERVIEWER  Does this mean that the third major platform could come from an Internet company with a system that enables fees to be collected for HTML5 titles?
          
SANADA  The two key features of any successful platform are the ability to charge fees for content and the capacity to attract new users. Another strong point is its attractiveness to content creators. There are not many companies out there with a system in place to offer all three of those features; in Japan, probably only Rakuten, Yahoo, and Line. If those three companies start to make HTML5 content accessible to their users, the current situation is likely to change. In the United States, the main players would be Facebook, Amazon, and PayPal.

Chinese Gaming’s Unique Aspects

INTERVIEWER  Turning to Asia, it seems that the Chinese market has been the focus of a lot of attention lately. What are the possibilities for the emergence of superstar game creators in China of the caliber of Horii Yūji [Dragon Quest] or Miyamoto Shigeru [Super Mario Brothers], who might be able to make careers for themselves in Japan or at the global level?

SANADA  Only a true creative genius can come up with the sort of epoch-making games that rewrite the whole rulebook. But it seems to me that game development is heavily influenced by the experiences game creators had as children. The games that they loved as kids have an influence on the games they create as adults. It’s sort of like how the food you ate as a kid can change your physical constitution. We can clearly see that the sort of “cuisine” that smartphone gamers are consuming in Europe and North America, China, and Japan differs widely.

In the case of Japan, a lot of people played Final Fantasy or Dragon Quest as kids. The sort of games that sell well in Japan and are mass produced have been an amalgam of role playing and action, whereas in Europe and North America the market leaders have been first-person shooters, even when it comes to smartphone or casino-related titles. So you can see that the creators themselves want to play to the sort of games they grew up on.

The game creators in China today, meanwhile, grew up playing online games and had no experience playing console games; they also did not play the sort of Western video games that were available in Japan. So they’re creating kinds of content that are quite unfamiliar to Japanese gamers. This is one reason why it’s hard for game creators who have specialized in that Chinese market to make a career for themselves in the Japanese industry.

The Chinese market, incidentally, is probably going to end up becoming larger than the European and North American markets combined, so you need to have a strategy for that market. But since it’s necessary to tweak the rules of games a bit for Chinese players, at KLab we hope to thrive in that market by making adjustments for their needs at the planning stage.

Japan’s “Well-Balanced” Industry

INTERVIEWER  What are your thoughts on the talent pool for the Japanese game industry?

SANADA  Traditionally, Japan has tended to rely on individual superstar creators for game production. But with the development of smartphone games, it has become necessary to improve management so that a project team can pursue a common goal in a well-coordinated manner. And this, of course, also requires extensive technical knowledge to support the formation of such teams.

Game producers in Japan tend to have experience with online games as well as role-playing and action games on consoles, and sometimes they even play games from Europe and North America. I think it gives Japan an edge in game development to have many producers with this sort of “well-balanced diet.”

(Based on a March 5, 2015, interview conducted by Rick Masuzawa, a member of the Nippon.com Editorial Committee.)