EA is one of the largest publishers in the world and a fully global organization -- but doesn't have much penetration in Japan, which is still one of the most vibrant and successful gaming markets, globally, even in the midst of a downturn.
That seems to be changing. During the week leading up to the Tokyo Game Show, EA Japan hosted an event at the opulent Mado Lounge at Roppongi Hills, an upscale Tokyo complex that mixes offices, shopping, theaters, and museums.
The event featured the company's first Japan-developed, Japan-targeted title to be released in some years: Tsumuji, a Zelda-like adventure game for the DS starring a young ninja. It may not be released in the West at all.
Gamasutra got a chance to speak to the president of EA Japan, Rex Ishibashi. Ishibashi was instrumental in the late '90s deal that partnered EA with Square Soft for the releases of Final Fantasy VIII and IX, among other games, and has an even longer history with the company.
Here, he describes the company's strategy for Japan -- its new approach to working inside the market, to both bring Western games to prominence and to deliver games that originate in Japan and can sell globally. He also discusses the state of the Japanese market -- providing insight to a prominent territory that is, nevertheless, not always well understood by outsiders.
Though this event seems to suggest something of a rebirth for EA Japan, you've been in the Japanese market for some time.
Rex O. Ishibashi: So it's been a long time, you know; call it almost 20 years. The games industry has changed a lot -- platforms, everything else. EA has had good years, has had some not so good years, here. But generally we've been consistent; generally we've been consistently profitable.
At the same time, what we measure ourselves against is our huge success, and our market share in the West. And while we don't expect to have the same market share here, there are some ways that we can approach the business a little be differently, and gain some traction, to arrive at a good place as a Western publisher operating here in Japan. Including what you saw, the game that we started with right over here, Tsumuji; some locally-developed content.
EA, in the past, in Japan, has done some locally-developed content, but it hasn't for some years, correct?
RI: It hasn't. It's been up and down in terms of the studio effort overall. We have everything from MySims, and the MySims franchise, which is actually developed by a Japanese developer, but EP'd and managed out of EA headquarters, or [EA Redwood Shores], out of the EA Play label.
But this is what I believe in. There's two parts to the strategy: If you look at the success of Western content in Japanese gaming, it's always hovered around five percent market share. We think we can grow that a little bit -- and grow it mainly by producing great games, and more deeply localizing those games for the marketplace.
So, given my experience with EA -- I used to be with EA from '97 to 2001, in fact connections with EA going back to the '80s, when it was first founded, really -- and then rejoined EA in December of last year, to head up EA Japan. But just based on the relationships I have with the studios and the label heads, we're getting involved at the development stage, and letting people know exactly what Japan would want.
We're being very selective about not saying we can publish all the titles, and all the titles are appropriate for Japan; we're being very selective about the types of games we bring in, and that we think can do well here. So that's one half of the strategy, is really to more deeply localize, be much more selective and focused about what we bring in to the marketplace.
And then secondly, develop original content. Because, again, even if we help grow Western content market share here in Japan by 100%? That's a 10% market. We're still not addressing the 90% market, in the second largest video game market by country. So, we're starting to do games like Tsumuji, and there are some other things down the pike that are exciting.
Is Tsumuji being developed by an external studio?
RI: It's an external studio, but closely managed by Taka [Murakami], and a team of four people including Taka.
Do you guys have any development teams operating in Japan now, under EA's direct ownership?
RI: Yes. Taka's team -- Taka has developed great DS software; Taka was involved with -- I always mention this -- the development of Sony Aibo. He's a creator, and a creative, in the true Japanese vein, and he has a very balanced team, who don't actively code, but are always in Osaka working with our external developers.
So your strategy is experienced developers managing external developers closely. That's how you're pursuing it right now, in Japan?
RI: Exactly. Exactly. The other thing to mention is our EA Partners group, which is part of the EA Games label. We struck a relationship with Grasshopper Manufacture. So this is Suda-san. Working closely with Mikami-san, the developer of Resident Evil originally. And we're even involved in that development -- just given distance, given time zones, given language. So Taka already has two projects that he's active with, and there will be more projects coming down the pike.
Is Tsumuji a test case? It sounds like you already have some things in motion.
RI: We already have some things in motion. The global publishing organization outside of Japan, while they haven't made firm commitments, and while we haven't made firm announcements, we're very excited about what we're doing here. And it's clear that, one: EA is committed to this marketplace. We're not going away. And two: that for us to grow in this marketplace, we have to expand beyond western content.
Speaking specifically of the Grasshopper game, and other projects that might be in the works. You were talking about bringing Western games into Japan. So are any of the projects that you're working on global projects? Is Tsumuji just primarily for the Japanese market?
RI: The launch in February is absolutely Japanese. We're still discussing internally the global reach that this game can have. I think we're taking the approach of strong launch in Japan; let's see how it launches; let's see what the interest is, with respect to buzz outside of Japan, and make a decision later on.
I think we'll make that decision by the end of the year. I'm already actively in conversations with the executives in EA about doing that; we just haven't made that commitment or that announcement yet.
And then, when it comes to other products that you're working with EA Japan, are those global targeted, or primarily Japan targeted?
RI: Right. Great question. Well, if you look at the Japanese games charts, maybe about 20 percent of the games that are published here in Japan -- you know, franchises that we all know: Final Fantasy, etc. etc. -- have global reach. There's a lot of games that get developed here that only stay here in Japan.
Clearly, with game budgets being what they are, on next gen especially -- PS3, Xbox, even on Wii -- and frankly, in terms of the ROI we expect on the development dollars? Our eye is certainly global. We're not looking to develop niche products that from the get-go we're saying "it only plays in Japan".
I've been left with the impression, at least with the Grasshopper game, that that's definitely a global reach title. Grasshopper's games definitely, I think, particularly resound with western audiences. Maybe in some cases more than they do with the Japanese audience.
RI: Yeah. I think they are quirky. I love them, and I'm not sure if that's the Japanese gamer in me, or the American gamer in me, that loves them. But, I mean, they resonate on both sides of the pond. I'm excited because I'm going to ship it in Japan, frankly. I love Suda-san, I love working with Mikami, and we're big believers and supporters. The game absolutely is intended for global. The game, with Suda at the helm, absolutely will appeal to the Japanese as well.
Obviously, EA has very strong marketing in the West, but I think maybe the people at EA's organizations -- without being too overgeneralizing -- may not have the familiarity with dealing with non-Western titles in Western markets. Do you think that could potentially present a challenge for some of your stuff?
RI: I used to be with EA from '97 until 2001; I'm the one who brought in the Square/EA partnership. We did a pretty good job of marketing the Square products where we moved millions of units, so... I think great product speaks for itself.
Obviously, with a franchise like Final Fantasy, there's a built-in market for it already. But I think great product will sell.
Great product targeted to the Japanese market is going to be incredibly important, especially from Japanese creators, and we have confidence that with the sensibilities that we have as a global organization -- and as well the market muscle that we have in Europe and North America -- that the right titles brought over from Japan to North America and to Europe will sell well.
Are you delivering feedback to your development teams about what you think will make the games appeal to the West?
Do you have a process for that?
RI: It's an organic process. It's a challenge in both directions; it's a challenge to have too much influence from the West on Taka's team, as they develop a game like Tsumuji.
And at the same time, I am incredibly respectful to all the teams, and the executive producers that we work with -- on Dante's Inferno, Army of Two, and some of the other key titles from the West that we expect to bring to Japan -- about at what point do the changes make the game not the game that they want to develop. And so I am incredibly respectful of that.
EA has been so strong in the Western territories, but if you can do it right, you could actually expand your market share a lot in Japan. Like you said, it's the second biggest country territory in the world, so it seems like it's an obvious target, but it seems like it's so culturally...
RI: Yeah. My perspective on that is, and the analogy I'll use, is: Fox Network, probably about five years ago, probably about seven years ago, did a bunch of programming for Saturday morning cartoons, of 'fake anime', if you will -- anime developed in the West. And they were trying to ride the Pokémon wave, and some other things. And ultimately, those shows ended up being pretty good vinyl, as opposed to real leather. In the anime circles.
And I think, in the past, EA, with such a Western-centric development engine, if you will, was always taking a very Western approach to Japanese games development. And I think -- I know -- the company is willing to -- case in point: Tsumuji -- make the break and say, "Hey, you know, rather than send a great American chef, or French chef to go cook great Japanese food in Japan, let's get the Japanese to do it."
Obviously this generation, Japanese developers have had some difficulties getting to where the West was, because the West had that PC heritage that allowed people to really transition, but there's no doubt there are a lot of really talented people in Japan, that have the abilities. So with a company to support it, like EA, I can see the potential.
RI: Right. And the argument I give is -- and at the risk of sounding overly dramatic -- the Japanese games industry, by history, and by the success of game publishers and developers, is like the Hollywood of the games industry. There's no other collection of developers who have had true global success -- in Japan and outside of Japan -- except for Japanese developers.
Even in EA, historically, with all of our big budget titles, etc etc, and an eye toward cracking Japan, has never had huge success in Japan. So, my own perspective is, while there are games that are a challenge, that don't do well in the West, and never make it to the West -- while there's certainly difficulties in making that transition, and appealing both locally as well as globally, we believe that we can tap into a network of great games developers initially, and eventually start to bring them in-house, who know exactly how to do that.
I'm always amazed when I sit down in a room with Suda-san and Mikami-san, with their perspectives about games, and how different it is, from what I hear at EARS, for example -- where I spend one week out of every month, by the way. And it's not better, it's not worse; it's different. It's just Japanese perspective, and Japanese approach to games, that, again, has shown a long history of being able to sell well here, and sell well globally.
And how big is your organization, EA Japan?
RI: Yeah, EA Japan in total is about 65 people. It's marketing; it's the local development team which is relatively small; we have a dedicated CDS localization team that's working with all of the studios about everything from game tweaks to game localization, from simple language and audio, to something deeper.
We have the challenge of also dealing with CERO, which is the ESRB of Japan. Japan, Korea, and Germany are probably the most stringent in terms of ratings, and the ability to get violence and sex through in a way that allows the game to even be released in Japan.
So, you know, again, part of our job in identifying the right titles, is to say, "Some of these titles may have to be tweaked a little bit to even be releasable in Japan." And we'll do the tweaking. We'll do the tweaking along the way. And the goal is, of course, a simultaneous ship, globally. Even if the version here in Japan is slightly different.
And you're refining that process, I'm gathering from what you've been saying.
RI: Yeah. Absolutely. We've already had a couple successes with it this year, and we're refining the process even more. And the beauty is, I think finally the studio teams are looking at EA Japan and saying, "We have a team over there that communicates well, that understands our business, and is asking for the right things." And clearly the market is there, the ducks are quacking, we should feed them.
When it comes to games like Need for Speed, that are not as culturally steeped -- compared to, say, Battlefield, I can see that not playing in Japan. That's just my own estimation.
RI: Sure. Sure. Battlefield 1943, which we released download-only in Japan, is our best selling title in the last 12 months.
I'm sure you've spent time in Japanese retail, here. Store shelves are incredibly crowded, turnover is incredibly important. It's hard, frankly, as a Western publisher, to get the attention that a Dragon Quest is going to get -- a game that is specifically made for this marketplace.
So, eliminating some of the retailer biases, and being able to go direct to consumer, is an important step for us. And I don't think we're publicly discussing the downloads, but again, a tremendous number of units over literally the first six days after release. We're getting upwards of 60~70% conversions on trial-to-buys.
I've been left with the impression -- and obviously it's hard to get statistics -- that the console download services in Japan are not as successful as they have been in the Western markets, where the uptake on particularly Xbox Live has been very, very strong.
RI: I think there are some challenges in Japan, because traditional retail is so powerful -- and we respect them, and obviously work with them closely. So, there are waters that we have to navigate here.
But, absolutely, when basically 100% of the homes here have T1 equivalents going in, when I can go a half mile deep into a train station and have five bar 3G, as well as two Wi-Fi networks to choose from... The connectivity in Japan is tremendous. And I think that it's inevitable that consumers will want some choice, some convenience. Not all consumers will, but to those that want it, we should be offering games for download.
I think it's more of a surprise, almost, that the Japanese market actually hasn't taken off as much with download product as I think it could.
RI: Sure. I don't think that all the publishers have been willing to make a 100% effort to provide download options on all their games to the mass market consumers. That's a fact. I mean, I know that.
I don't know if you're familiar with the game series Disgaea.
They released a lot of downloadable content for Disgaea 3 on PSN, but then they recently put out a Blu-ray disc that contains that PSN downloadable content, that you can buy at retail. That's got to say something about the Japanese market, but I'm not sure what exactly.
RI: It's a very unique marketplace... Intellectually, emotionally, there's just some fundamental differences. The Japanese -- I'm going to somewhat contradict what I just said about downloads business, because Japanese love physical media as well. There's no piracy here. So, there's a number of things that add up, in a way that downloads doesn't become a means to the end for piracy, if there is no piracy. Even on DS...
There has been some piracy with the R4 card, though.
RI: Yeah. A little bit. But a very, very small market. Very, very small -- very little activity, and certainly not very measurable relative to the huge successes that we're seeing on DS and PSP games.
When you look at Japanese movie theaters, a large portion of the movies will be Western, and a lot of them will be really big hits. The Dark Knight was, when it came out, it was the best selling Blu-ray ever, at that point, in the Japanese market. Do you ever look at that and say, "How come we can only sell in five percent of the games?"
RI: Absolutely. Well, you know, it's a couple things -- and I'll speak in both directions. It's not all rosy; it's not all perfect in terms of setting us up to be 20 percent of the market here in Japan.
I'll give you some data. The music data is really hard to glean because there is some music piracy here in Japan, but if you look at movie box office here in Japan, in 2002, 75 percent of box office revenue here in Japan was from Western content. Today it's about 35 percent. So, it's a double-edged sword.
One is, we know based on production values, we know based on a number of different things, including, in a 75 percent scenario, heavy marketing from the studios, that Western content is appealing, and can do well in Japan, even with the impact of the internet. And more and more viral buzz.
Even with the emergence of a very healthy and vibrant studio system for movie making here in Japan, that is not just cranking out our perceptions of Japanese content, like Godzilla and whatever that might be in history, but great movies. Even with that, Western content is still at a healthy 35 percent.
So, on the one hand, the internet, viral, the healthy Japanese film industry that has grown, has caused 75 percent to become 35 percent, but, whether 75% in this day and age is unachievable? Certainly for Western games market, in this marketplace. But if I'm getting anywhere close to 35 percent, I'm much happier than I am at 5 percent.
People in the West are well aware that Japan has its own pop culture, but I don't think until you come here, you really experience how vibrant and pervasive it is. Everyone knows, "Oh yeah, people in Japan watch our sitcoms, or our movies, or whatever." But you come here and you see just a wide, wide variety of domestic content, and you realize...
RI: It's something that the head of our EA Sports label, Peter Moore said -- who used to work with Sega, used to work with Microsoft, of course, has done plenty of business in Japan. It's so true. The good and bad about Japan is: when the Japanese move to the other side of the boat, they all move to the other side of the boat.
So what's incredibly interesting to me, and to your point about vibrancy, is the reinvention that Japan continues to go through. The fashion that, literally, I was seeing at the beginning of the year -- and again, seasons aside -- the fashion that I was seeing at the beginning of the year is no longer relevant.
The long lines that I was seeing outside of H&M, for example, as young girls and boys in Tokyo were learning about H&M, and the coolness of the fashion, those lines are gone, and those lines are all in front of Forever 21 now. And so, it's amazingly vibrant, and reinvents itself; it's not afraid to change.
I was running into a few of the EPs, and I didn't know their experience in Japan, and they said, "Oh, yeah, I was here three years ago, and I kind of understand what goes on at Akihabara, and what to expect at Shinjuku," and I'd say, "No you don't." I mean, it'll look familiar, but at the same time, fundamentally, it has changed dramatically.
No different from the fact that, calendar year to date, the Japanese games industry is 70% handheld. You know, when I say that, people at EA say, "But that wasn't true two years ago," and it's... Of course not!
So, to your point: pop culture, just the overall attitude of the Japanese, is one of newness, freshness, willingness to change. No problem with throwing those old pair of jeans away and buying a new pair that I feel I should be wearing.
And I think, from a content perspective -- save for of course the great loyalty of franchises like Dragon Quest; frankly, Need for Speed has done very well here; our belief that we have all the pieces in place to get FIFA back on its feet here, relative to Winning 11 -- the Japanese are willing to change, and we need to know that, from both taking advantage of it, as well as making sure that we're developing the best games on franchises that have historically done well here in Japan.
Speaking of the fact that 70% of the market is handheld based: is that a strong focus for you? Obviously the first title you've announced under is, but...
RI: Yeah. It is. You know, we're realizing, too, that there's a lot of attention, and a lot of debrief and education that I provide in some of the market information to the executives at Electronic Arts worldwide.
As I like to say, "gaming on the go" -- the combination of mobile, and the fact that there's 135 million people in Japan, and 115 internet enabled handsets. The fact that there's 45 million DSes; so basically a third of the population has a DS. The fact that there's 16 million plus PSPs here -- relative to home console, which is: 10 million Wii, 4 million PS3, and 1 million Xboxes.
Is gaming on the go a trend that we're going to continue seeing spread to the West, and how deep will it really go here in Japan? I know, culturally, why gaming on the go is popular here: long train rides to work, long train rides to school, public transport is very efficient and reliable, the internet-enabled subway stations.
It's market trends that I think EA has to react to -- to be successful in the marketplace, but also that EA is monitoring closely as potential harbingers of what the rest of the world might start doing.
I don't know if you can speak to this, but obviously the PlayStation brand has always been very, very strong in Japan. There has been a downswing on the PS2, but not yet a reuptake to the PS3. But it's been strong, and it's hard to say how much of that was based on the fact of content, pricing, and availability and stuff like that, and how much of that was actually just a cultural shift away from TV gaming.
RI: I think it's a combination of factors. I think the most complicated is time and place. History doesn't necessarily repeat itself here in Japan, because, again, the mentality, the willingness to change, the willingness to adopt new ways of playing games -- handheld versus home, for example, you know, might be much more active than we're seeing in the rest of the world.
If you look at overall interactive entertainment revenues in Japan, including mobile, including online, the industry is growing. So, PS2 certainly got up to, I believe, what, 22, 25 million? Something like that, here in Japan. Relative to the 4 million or so [for PS3], based on Famitsu data. So, there's some catching up to do.
Price has a lot to do with it. There's just a number of factors that have to be considered. It's a very long conversation around Blu-ray; it's a very long conversation around DVD players, which the PS2 was, of course. There's a number of factors, I think, that play into the dynamism of the Japanese industry, and why we're not seeing 25 million PS3s in this marketplace right now.