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Made in Japan: Why Japanese games can rule the world once more

It's been a rough ride but Japan will rise again, says PSM3's man in Tokyo, Daniel Robson

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You have to hit the history books to understand why Japan's game industry has failed to dominate the western charts this generation. It all starts in the Edo Period, when Japan's rulers banned all contact with the outside world for nearly 200 years. It's an isolationist mindset that never fully went away.

Japan became hugely westernised after World War II and continues to nurture close political ties with America, but it has evolved into its own cultural groove. Recent sales trends in games, music, and film have shown that young Japanese people are beginning to reject western pop culture all over again. Meanwhile in the west, Japanese-made games have never been less successful.

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That's left Japanese game companies in a pickle: do they cater to the safe local market or the radically different tastes of the west? Most have taken the first option. Japan is a huge market, with a population of 128 million and a deep gaming culture. Why should Capcom, for example, change Monster Hunter to appeal to a global audience when the series has sold 21 million in Japan alone?

"Japan has become very much closed to the rest of the world," says Keiji Inafune, one time global head of production at Capcom, and now founder of indie studios Intercept and Comcept. "Japanese games used to sell better than any other country's, but western developers assimilated the best elements of Japanese games - God Of War is a total copy of Japanese-style games, and it's excellent! Japan has only just started to learn from American games in return, and now we're several years behind."

A MATTER OF COST
Japanese developers know how to exploit their home market, but if their games are going to appeal only to a Japanese audience, then there's a limit to the available budget. Shinji Mikami left Capcom to set up his own studio, Tango Gameworks. It was acquired in 2010 by ZeniMax Asia, granting Mikami the global platform and American-sized budgets that he hopes will give his games the edge.

"Hollywood spends a billion dollars producing a movie, and you can make an incredible movie with that sort of money, but Japanese studios don't spend anything like that," he says. "The scale of the budgets is totally different."

Hideo Kojima agrees. "The Japanese game industry has fallen to the point where Japanese movies are at," he said. "Because the scale is so small, we can't get the budget to make a game succeed on a global level."

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Added to this insularity, Japan's economy is in steady decline all round. Recent high-profile scandals at Tokyo Electric Power Co and Olympus have highlighted a culture of corporate conspiracy, collusion and nepotism. A lack of innovation has seen companies like Sony lose market share in TVs to South Korea, portable electronics to Apple in North America, and, yes, game software to American semi-newcomers Microsoft.

Cultural failure
Tight budgets hold developers back, but many blame Japan's culture of risk-aversion for the decline. While businesses in the west, and especially America, have long understood that experiment and failure is a vital learning process that fosters success, Japanese companies are terrified of losing face.

"You can't succeed without failing along the way," says Inafune. "Japanese people go out of their way to avoid failure, because we have a culture of hara-kiri [ritual suicide]. The samurai code precluded failure, and that code still lives on today."

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