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The Evolution Of Sega: A Conversation With Simon Jeffery

In an in-depth conversation, Gamasutra quizzes Sega's U.S. CEO Simon Jeffery on developer acquisitions, developing for a global market, the future of Sonic - and that inevitable hardware question.

Japanese-headquartered Sonic The Hedgehog creator Sega has long been an innovative and compelling creator of games -- ahead of its time for much of its history.

Its transition from a hardware manufacturer (Game Gear, Genesis, Dreamcast) to a pure game publisher, however, has been a work in progress - particularly in terms of building up a robust western division with its own product slate.

But in the past couple of years, the company has improved its status -- to the point where the company is the sixth biggest publisher in the U.S., according to recent statistics. And the suitability of games for the Western market has also increased, thanks to studio acquisitions including San Francisco-based Secret Level and the UK-based The Creative Assembly.

But where to now? Gamasutra had a chance to sit down with the CEO of Sega Of America, Simon Jeffery, who has been instrumental in changing Sega's fortunes in the west.

Topics included the transformation of the company's global development efforts, its acquisition of studios, and the importance of big-name talent (and the Sonic franchise) to its longevity and success -- and more.

The Transformation

My interpretation of Sega of America right now is that it's becoming something of a different company from Sega of Japan. I don't know if that's accurate, but if it is, how did this semi-autonomy come about?

Simon Jeffery: It was by design, very much so. I think we've strongly tried to make Sega of America feel like it's not a Japanese company. We want to resonate better with gamers in the casual market than I think Japanese companies have traditionally been able to do in the west for a few years.

The output from Japan (in general) right now seems to be geared around a small number of huge games which really resonate with the western market, but most Japanese content just does not anymore. So that's a pretty big change from five or six years ago, and it's a big change from last generation.

We're trying to make sure we don't make the mistake of being another Japanese company trying to be another Japanese company in the west. We want to build our success through building products for the west in the west, so there are not many Japanese staff in our office at Sega of America. We have a lot of autonomy now, and it's absolutely by design.

This seemed to be an initiative that coincided somewhat with your arrival. Was this an initiative you spearheaded?

SJ: It was part of the initiative by Sega in Japan. They were making a conscious decision to have the western operations have a western management team in place. They brought me in to set up a new management team and build it out to start building western content.

What were the major points you were trying to address when setting this plan in motion?

SJ: Taking that moment in time, it was a good time to do this. Sega had been going through sort of a control-alt-delete, and starting fresh with a start-up mentality. We were on the cusp of the next generation, and on the cusp of Nintendo changing into a different company and opening up a new part of the market. So it felt like the time was right for Sega to reinvent itself.

Really what I tried to do was ride that train and make the most of that point in time, bringing new people into the company and start building the kind of products that would get a leadership position in the next generation on the Wii and the DS, rather than just playing catch-up with everybody else, which is what we've traditionally done.

Well, that's a little harsh on Sega. (laughter) But anyway, starting with the Sega Gamers Day two years ago was when I was really struck by a different feeling that was coming from the company with things like Condemned 2. They were games that felt very iconic -- not very traditional Sega, but it felt like the company was building toward a new, "This is the kind of entertainment you can expect from us."

SJ: I would say that's a great observation, and thank you for that. It makes me feel good, because that's absolutely what we set out to achieve. I think that our ability to be successful is really down to being different from the big players. So much product these days is safe and formulaic, and therefore not particularly creative or interesting.

Sega's never really been the company to do that, so we've really tried to not seem like a mini-EA or a mini-Activision or anything like that. Games like Condemned, whilst not being traditionally Sega, we want them to feel like Sega, as part of the new look company.


Sega/Monolith Productions' Condemned 2: Bloodshot

The feeling I was getting was that while the Sega I grew up with is more or less gone, the Sega that is forming now is perhaps still a company one can rely on to bring a certain level of content. So it may not be the Sega that I knew, but it's a Sega that can be relied on, maybe?

SJ: That's absolutely where we're trying to get to. It's a struggle, and we're doing quite a lot. One of our big focuses right now is to improve the quality of the games going forward.

We really feel that we've gone through massive growth in the last few years, and we're bringing a lot of product to market. We've got fairly mixed results. Some of the product we're really happy with, and some of it not so much, but a year from now, we want to be happy with everything that comes out.

Do you see the handheld market as an opportunity for Sega to exploit further?

SJ: Very much so, and if you include the iPhone, even moreso. We've been pretty successful on the DS, and we're kind of shocked to hear that Iron Man is the biggest-selling game on the PSP so far this year.

With the recent success of the PSP in Japan, and it seems to be taking off in the U.S., we're going to look at that. The DS is a perfect machine for the Sega customers. Sonic Chronicles is something we're very excited about. We think it's going to be a very cool game, and we want to continue to do stuff like that.


The Relevance of Sonic

For games like Sonic, where did the impetus come from, in terms of trying to reinvent that series? It feels like the last couple of tries have been trying to figure out where Sonic is supposed to be in this 3D world. Is that coming from the U.S. side or the Japan side right now?

SJ: I'd say it's a combination of both. I think the Japanese side, at Sonic Team, have realized that old Sonic doesn't really gel with today's consumer and today's kids especially. We needed to do something to make something more appealing. That, and the market's gotten a lot more competitive, and Nintendo's success recently has been outstanding. So it was a collaborative effort with western Sega and Sonic Team in Japan to do some reinvention.

Part of that reinvention is also being completely made in the west with stuff like Sonic Chronicles being built by BioWare on the DS. That was something we had to strongly petition to Japanese management to allow us to do, but when they did, it's actually a great process.

How important do you feel mascot branding is, going forward? Obviously it's changed a lot since the old days.

SJ: Yeah, I don't think mascot branding is particularly relevant in today's gaming market, to be honest. There's very, very few. Nintendo has Mario, but they probably don't like the fact that people always associate them with Mario when they've got all these other games and brands and characters.

I would love for Sega to not be thought of as the Sonic company. I think we probably will be for a little while, but the more content that we bring out that's successful in other areas, the better.

And with a game like Sonic Unleashed -- this is perhaps too much digging down into one game, but it's still kind of telling a story and trying to make Sonic a different thing than he is, which is just a guy who's blue that goes fast. Do you think we're going to see any kind of flip back to simplicity?

SJ: I think Sonic Unleashed is interesting, and we think it will resonate quite nicely, because it is that, and it's doing something completely new with Sonic as a character. But then a large part of the gameplay is absolutely traditional Sonic -- 2D speed, and nothing else. We think that's really why it works quite nicely.


Sega/Sonic Team's Sonic Unleashed

I'm definitely looking forward to that part of it. I'm just hoping that I won't have to cringe through the rest. (laughter)

The Question of Studios and Talent

There was a lot of speculation that Sega would purchase Sumo Digital, because they've worked so closely together, and it was a big surprise when Sumo went to Foundation 9 and Sega brought in Creative Assembly. Can you explain the thinking on those things?

SJ: We're really close with Sumo, and when Foundation 9 asked us, they said they wanted to start buying studios in Europe, and they asked us who should they look at first, the first company we said was Sumo. We just thought it would be a really good fit.

We work with Foundation 9 and a number of their studios, and we've got a great relationship with them. I think we're their biggest customer, so it made sense to extend that and collateralize a lot of the work that that studio does with the stuff that Sumo does on our projects. Sumo's continuing to do work for us, and the relationship's not changed. In fact, the boss of Sumo is now the boss of Foundation 9 worldwide, so it's worked out quite well.

Creative Assembly was a very conscious decision to open up a new part of the market for Sega, a part of the market that Sega has not really been associated with at all. It was part of a drive to ensure that qualitatively, we could guarantee every couple of years we would have a triple-A, 95 percent-rated game coming out from a world-class studio. We've pretty much left them alone to build product the way they want to build product. I don't know if you've seen Empire: Total War yet, but it's absolutely stunning.

What about Secret Level?

SJ: Secret Level was a little technology house that was just down the road from us that was a pretty small company. They were building Golden Axe for us anyway, and we decided that we wanted to start an internal studio in North America.

So we went through all the motions of looking to hire studio heads and looking for office space and looking to hire producers. Then we suddenly realized that we've already got 40 people who have got a strong technology background already building a game for us.


Sega/Secret Level's Golden Axe: Beast Rider

It would be way more cost-effective and efficient to build them out, so that's what we did. We acquired them for a pretty small amount of money and built them out. If we hadn't done that, we wouldn't have been able to get Iron Man to market in the timeframe that we did.

Iron Man was qualitatively not what we wanted, but it's a game that was built start to finish in 14 months, and that's in the power of the studio to be in a great position to be building products going forward in a really strong manner.

Do you think that Secret Level can be built into a triple-A studio branch -- maybe you have a different view of them than I do?

SJ: Probably not a triple-A studio, but I think they're absolutely capable, with the right people, of building product that scores in the 80s, absolutely. They're not a Creative Assembly and they never will be a Creative Assembly, but as a work-for-hire studio, they've got some great assets, some really strong technology, a strong tools pipeline, and they're one of Sony's preferred developers on PlayStation 3, because their technology's so good.

And we're absolutely able to make the most of that. I think the design side of the studio... they don't have world-class designers, but they do have world-class technology and world-class art.


For your Sega world view going forward, where do you see the balance between those original, triple-A titles and the work-for-hire or license-based titles? Where's the balance for you?

SJ: I think it's a real blend. The Marvel business is going to be fairly significant for us for a few years, but we're going to grow out the kids and family part of the market again. It's where Sega has always been traditionally strong and a large part of the market is in that space right now, so we're building that out very consciously with products like Samba de Amigo and that kind of stuff coming along.

But we're also striving to improve on the original content. Our relationship with PlatinumGames is a big part of that. We really want to focus on... when we build original content, we know, in the market now, it's got to be good to be successful. It's got to be really good to be successful and be competitive, so we've got to spend more money building original content.

I think the balance has probably been to even out to one-third licensed product, one-third original product, and one-third Sega IP.

With the Platinum announcement, that was made here in the west first, as far as I understand.

SJ: It was made in the west first. Yes, that's right.

How is the Japanese side thinking of the western market right now? Because to me, that was a big deal, that PlatinumGames would announce in the western market first.

SJ: Well, Sega as a company is very profitable in the western markets, and the Japanese gaming market is very difficult right now. So Sega in the west is looked on very favorably. We're doing well, we're growing, every year our market share increases, we're putting out more product, and we're making strides to improve quality. So we're checking a lot of the right boxes for a big, important Japanese developer like PlatinumGames. They're extremely willing.

One of the reasons why they split from Clover and the various Capcom studios in the first place was to have more influence on how their games were brought to market around the world. I think they've often felt that apart from perhaps Devil May Cry, a lot of their output hasn't really gotten quite the commercial success in the west...

It's got the critical success, but maybe not the commercial success it deserved, and they want to be a big part of making sure that their products going forward are big sellers, so they've been really active in working with our marketing teams in the west on building plans out. All of their consumer research they've done in the west. They haven't done any consumer research on their games in Japan. It's all being done in the west because they really want to make sure their games resonate over here.

And the games that all of those creators have worked on have traditionally done better here, actually.

SJ: But not as well as they should have.

How big is your U.S. development staff?

SJ: Secret Level is 120 people, then we probably have about 60 full-time people in the product development group. Then several thousand QA people.

How important do you think U.S.-side internal development is going to be for you, going forward?

SJ: I think that whilst we're still looking and are always open to further studio acquisitions, we're probably not going to grow out the internal development more than it is now. We're establishing a pipeline that we're pretty happy with, and Secret Level is going to be building out some different kind of content which we'll be talking about quite soon -- not just next-gen stuff.

I don't think we'll be looking to grow internal development much more than that. However, if a potential studio acquisition came along that made sense, then we would absolutely look at that.

Sega Japan: Making it Work in the West

How do you feel you can maintain quality when including the Japan side and what sort of titles you can bring over from there? They're sort of on a different wavelength.

SJ: Because of what's happened in the Japanese market recently and how fast it's differentiated and fractured from the western market, we're able to be selective about what products we bring over from Japan.

We actually have a lot of say in the origination in some of the products now, so something like Valkyria Chronicles on the PlayStation 3, we had a lot of involvement in building that game, so it doesn't feel quite as niche-y as it would've if it was built a couple of years ago, for instance.


Sega's Valkyria Chronicles

How can you foster the creativity on the Japan side? I don't know if the western side is able to advise the Japan side, but it sounds like they're looking to the west for a bit of assistance. So how can you assure that something like Valkyria Chronicles is going to be the rule rather than the exception?

SJ: All the Japanese games that ship in the west now have to go through a greenlight process in the west, so they have regular reviews. We have an advisory board of people across the organization -- sales, marketing, and creative -- who have qualitative input into the stuff that's being built in Japan.

Valkyria Chronicles and Sonic Unleashed have had a lot of input from the west on the kind of games they were. If Valkyria Chronicles had been built three years ago, it would be a very different product.

What sort of things are you doing as part of the quality initiative? Who is overseeing these sorts of things?

SJ: We recently split our product development department into two, so we have a production silo and a content silo. Now we're about to appoint a VP of content, and on the way we're putting in an art director. We've got a creative director already.

So we're setting up a team specifically around qualitative analysis, measurement, and input on all the games we're doing, both internal and external games. This team will work with the producers hand-in-hand.

Before, we measured things by milestone, date, and budget schedule, not so much qualitatively. That's something which we're now doing. We're bringing in industry veterans to do that -- people who have done that before and know what they're doing.

Excellent. Do you want to say who any of them are?

SJ: Not yet.


The Fate of Sega's Big Names

What do you think is the importance of names in the industry right now? Sega had a lot of its name developers in Japan go away. Right now, there's Toshihiro Nagoshi, and not a whole lot else, though you do have the Platinum guys to rely on for the time being. But is it important in this day and age, or is it not? It seems to be for some companies.

SJ: I think it is still important. We're still working with [Yuji] Naka. The Prope relationship exists. They're building content. Nothing's been released yet, but we still work with them. The Platinum relationship is definitely part of it. We want to work with big-name people.

But part of that is not just because they're a name. It's because we know they're going to build great games, and that's the most important part. [Ed. note: Prope is ex-Sonic Team head Yuji Naka's independent Tokyo studio. No titles have been announced since its formation in 2006.]

Can you give any more details on the Prope project? Does he have an actual studio now?

SJ: There's not much being talked about right now or announced on that yet, so we probably can't say anything, other than we're working with Naka-san still.

Speaking of names, what has happened to Yu Suzuki?

SJ: Last I heard, he was doing some online stuff in China.

He's spearheaded an arcade racing title. Is he just really off in his own world?

SJ: Yeah. He's kind of his own man right now. Every now and again, he'll come up with an idea, and I don't think anything has come out of that yet, but we're still working with him. He's not an employee anymore, but...

I wasn't sure if he was still actually a Sega employee.

SJ: Not as far as I know.

[UPDATE: Jeffrey followed up with Gamasutra after this interview debuted, revealing that Suzuki is in fact still working with the company as a 'Creative Officer'.]

Revisiting Franchises, Platforms, and More...

I was amused to see the Phantasy Star Portable news, because it was like a lightbulb went off at Sega. "Maybe we should take our idea back from Monster Hunter!"

SJ: Right. (laughter) I think that's exactly what happened at Sega!


Sega/Alfa System's Phantasy Star Portable

Capcom has had difficulty putting that model forward in the west, but Phantasy Star has done okay. Maybe not as well as it should, but okay.

SJ: It's done okay, and there's still quite a lot of people out there playing it every month.

So do you think you can take that market here with that title?

SJ: I think that it's not going to be a blockbuster success, but I think it will be a niche success. I'm certainly hopeful that it's more of a success in the west than Monster Hunter has been. There is a built-in audience for it already there.

I think the crossover of the PSP ownership will work quite nicely, so we're fairly hopeful we can make something out of it. It's not going to be huge, but hopefully it'll be interesting.

How important do you think existing licenses are going to be? Obviously Golden Axe is coming back. That was a bit of a surprise, because I don't think anyone was expecting Golden Axe to need to come back. Do you think there's more from the past that will return?

SJ: Yeah, very much so. We've got a great, really rich catalog that people grew up with, and a lot of that old content is seeing a second life on the Virtual Console and Xbox Live Arcade. We're seeing rising demand and interest in some of those old IPs.

I think we're going to try and be a bit more strategic about which ones we bring back to life, but we'll continue to do it, absolutely.

Namco has been particularly successful with reviving its old licenses on Live Arcade and re-envisioning them. Is that something that Sega is interested in?

SJ: Yeah, very interested in it. Nothing we can talk about right now, but we're pretty impressed with what Namco has done with some of their catalog and contemporizing their IP and making it much more market-appropriate.

One thing I would say is that there's a lot of really excellent original content on the Game Gear that has not been revisited or rereleased. Is there any possibility for that kind of stuff?

SJ: Yeah. We're looking at arcade, and we're looking at Game Gear. The interest in digital delivery media and the iPhone has really caused us to look back to the past and the great golden days of Sega gaming in all formats, not just the Genesis. So absolutely we're looking back there.

Here's a ridiculous question that of course I must ask. Would Sega ever return to the console market?

SJ: No. A categorical no.

Shame. (laughter)

SJ: And you're not the first person to ask that type of question.

I was just organizing all of my stuff in my basement this week, and putting all the consoles into piles by maker, so that I could organize them. And Sega is just the biggest pile... yeah, anyway. (laughter)

SJ: Yeah, sadly it's going to stay in the basement.

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