The entirety of the Japanese game industry currently finds itself in a most precarious transitional phase. Japan, who had overwhelmingly dominated the console space since the mid 80’s suddenly gave up that position which it had so far so effortlessly held come 5 years ago. The reason was simple enough; the costs of development on current generation console hardware were prohibitively high. In addition for some years their once prosperous domestic console market had shrunk in tandem with the portable side being given a clear preference by consumers.
As early as 5 years ago the PS2 which overwhelmingly dominated the previous console generation still managed to strike a good balance in terms of development budget and domestic return of investment. Come this generation and this balance was upset in a way that few Japanese development studios and their long held art studio approach to game development could financially afford, nor justify.
In short Japanese developers chose to migrate where all the revenues of their own domestic market were headed, the portable space. Nindendo’s DS platform proved to be a most welcome milieu in that regard. The hardware was modest in terms of specifications, keeping graphical ambitions and costs of development low, and in turn creativity high. Sony predictably took the luxury portable gaming route by aiming for PS2 caliber games on their own new portable platform, the PSP.
Thus the PSP is an interesting case study, for despite its success in its domestic market, if one takes note of average sales numbers per title it becomes clear that it failed to meet Sony’s own ambition of recreating the lucrative PS2 era console market in portable form.
The PSP did however mange to carve for itself a good niche of the domestic market with its higher caliber games, but Japanese consumers and developers alike showed a clear preference for the DS, and its more varied, more interesting game library, not much caring about the lower caliber of graphics, which often were not even 3D.
The reason for this is easy enough to surmise, with development budgets being so low smaller studios could afford to pursue risky concepts, and the variety born of this risk taking attitude was what made the DS prosper when the PSP, and its smaller library of higher fidelity games failed to garner as much attention.
These observations, however, are soon to be things of the past for Japan is about to undergo a most curious hardware cycle. Nintendo seems to be abandoning their traditional prudence and are about to raise the bar of entry for domestic productions to around PSP levels, Meanwhile Sony, once again, is aiming high, very high indeed, by trying to bring high definition caliber gaming to the portable space.
Following the last 25 years of console hardware cycles these developments might have been easy enough to predict, but a dire change of factors makes one question the sanity of maintaining this steady course down the path of Moore’s law.
An analysis of changing factors:
Let us examine the changing factors that are putting the entire Japanese industry at peril. Firstly, ignoring domestic Japanese sentiments, the western zeitgeist regarding the future of portable gaming is pretty evident. The current darling is Apple, the newcomer success story to the portable gaming space who singlehandedly usurped the so far unfocused mobile phone gaming space, and made it legitimate and visible.
I was employed in mobile phone game development for several years leading up to Apple’s launch of their app store, and let me tell you, before Apple it was a horrible, horrible mess. A profitable one, if you possessed the esoteric knowledge and skills enabling you to safely exist in the none-standardized, none-centralized mess. Apple brought with them central focus and exposure and as a result they saw such a success that few in the west today feel there is next to them any room left for or indeed any point in dedicated portable gaming platforms going forward.
The problem with this sentiment is that people in the industry are a rather shortsighted and excitable lot who adhear to the gold rush mentality. They are only too eager to declare the latest source of gold the future, the sole and only future, which is a dangerous way of thinking. Leaving alone any discussions regarding wither or not Apple’s success will actually supersede Japanese dominance in the portable gaming space it should suffice to say that Sony’s approach in particular does not seem to sync very well in harmony with western portable sentiments going forward, especially given SCE’s track record for realizing their own potential.
Alas none of this matters much for the domestic Japanese market because mobile phone gaming has enjoyed a much more prevalent existence in Japan for a quite a long time and Apple is not likely to change any of that one way or the other for the average Japanese consumer. The Japanese market functions on dynamics entirely divorced from what makes the western markets tick, and the factors that have made Apple such a raduiant success in the west are not transferable to Japan.
Thus the Japanese dedicated handheld gaming market exists in its own bubble, the very same one that made the PSP a great success there, and the DS a phenomenal one, while these successes were rather disproportionately reflected in the western market, which only sees a fraction of the staggering number of number of Japanese portable releases localized and made available outside of Japan.
Thus, much as it is today, the Japanese industry who has by and large abandoned console development will depend exclusively on domestic sales of portable titles for their future sustenance. It therefore becomes of great import to see how Nintendo and Sony’s future portable strategies are likely to affect the fragile dynamic of their domestic market.
By Sony aiming for PS3 quality games on a handheld platform they are putting the entirety of Japan's now almost exclusively handheld focused game development community in a very precarious situation. Despite the PSP's second fiddle success by aiming for PS2 quality productions the sales numbers were far from promising. Japan's healthy situation of the PS2 era where console game development were costly, but usually resulted in a good return of investment was only poorly reflected on the PSP whose games required a similar input of resources.
When SCE designed the successor hardware going from the original PlayStation to the PS2 the bar was raised, but it did so in wake of the PlayStation being a phenomenal success that dominated the market and had many sales success stories, thus the move made sense. Despite that there were at the time of the transition many complaints by Japanese developers who felt that the required increase in development budgets were alarming, and indeed the bar being raised did no doubt cause some number of casualties. In the end though things ultimately worked out for the better and the PS2 saw a similar number of sales success stories, if not more so. This success however did not carry over to the next generation successor the PS3 and in turn domestic console development suffered a large scale desertion among its ranks. Now Sony is preparing to repeat this move, only with the PSP being a shadow of the PS2 in terms of sales successes.
The average PSP game brought in only around 10.000-50.000 domestic unit sales with most titles averaging sales falling around the 20.000 mark. 500.000 to above a million selling smash hits like Monster Hunter were never anything but rare anomalies in that system’s life time. Overseas sales were much less promising in PSP’s case where the sales prospects of most games were not even worth the cost of localization.
It is very hard to imagine sales averaging in the 20.000-50.000 range supporting such a stark generational leap in terms of portable development budgets when going from the PSP to the NGP. Of course Nintendo is not promising to fare any better by raising the bar from the previously established SNES/N64 low with their immensely successful DS that in many way has acted as life support for the entire Japanese development community to suddenly jump to PS2 level production values now.
It is hard to imagine how Nintendo and Sony respectively could have approached a portable hardware cycle refresh any differently. But their doing so, seemingly with little regard given to the realities of their own situation is bizarre indeed. Nintendo might not be faulted for thinking that they can afford to raise the bar and still manage to maintain their current level of success, which is doubtful with Hannibal being at their doorsteps in the west, and their own domestic market being historically better off with a lower bar of entry. But it is hard to imagine Sony expecting their PS3 in your pocket strategy to somehow work out in the end.
With core gamers showing a clear bias for console gaming in the west, and the PSP’s fledgling software sales history in that market combined with the zeitgeist being opposed to the idea of a powerful dedicated portable gaming platform the writing seems to be on the wall. It is therefore very curious to see Sony put such a strong focus on the western market with their NGP.
Most of the titles that Sony showed off for their NGP unveil were portable iterations of their most successful western IP’s and this with good reason. If few Japanese developers were brave enough, and possessed the financial prowess to stick to the prohibitively expensive current generation console development, then it will be a stretch to think of any who would want to take the risk on a portable of all platforms, and one whose predecessor historically had such modest average unit per title sales.
What might the future hold:
There are some who think currently, that by putting current generation console hardware into a portable Sony might help graduate the largely portable focused Japanese pool of developers to step into the high definition fildelity development era. Thus they see Sony’s NGP in a most auspicious light, one that might in time help Japanese developers return to glory by way of high definition console development after they have already successfully mastered the craft on portables. Alas looking at the historic average for even PSP caliber games it is evident that domestic sales numbers for portables cannot possibly support such endeavors in any meaningfully successful manner.
At best the level of domestic creativity witnessed on the largely risk free DS platform will diminish heavily in the transition from DS to 3DS, and the number of small time supporters barely getting by developing for the PSP will similarly see a sharp decline when the NGP raises the bar far and above their economic reach.
The worst case however, and the far more likely scenario, is that this one two punch of new expensive platforms making the last refuge of domestic development obsolete will be like a trap door swinging open under the already fledgling Japanese development community and that market will see a cataclysmic collapse.
Alas, the often cited remedy, western focused console development as a cure has never been anything but a mirage borne of faulty logic. A logic that was as faulty 5 years ago when everyone was convinced of its authenticity as it is now where dozens of disastrous outcomes of such endeavors serve as evidence to the contrary.
One must not forget that even the western console development milieu has seen a drastic change in the last 5 years, and this mostly due to the rising cost of console development. Australia like Japan has showed signs of not possessing the financial prowess to cope with the rising costs, and their tribulations have been the stuff of many a headline. Everywhere else the market has seemingly been increasingly funneled to cater to the narrow interests of the most populous gamer demographics, and the reduction of variety is clear to witness.
However unlike Australia Japan had its domestic portable market to fall back on, so here is hoping that said market can grow to meet the demands of NGP/3DS caliber development, or else the Japanese hardware manufacturers will effectively have helped snuff their own domestic software makers and the industry as a whole will be all the poorer for the loss.