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The Formation And Evolution of CyberConnect2

Japanese independent developer and .hack creator CyberConnect2 has made an enduring company and franchise, even while adhering to much stricter 'quality of life' than many Japanese developers. In a rare, personal interview, companypresident Hiroshi Matsuyama explains the firm's founding and how work/life balance became so important to him.

[Japanese independent developer and .hack creator CyberConnect2 has made an enduring company and franchise, even while adhering to much stricter 'quality of life' than many Japanese developers. In a rare, personal interview, company president Hiroshi Matsuyama explains the firm's founding and how work/life balance became so important to him.]

CyberConnect2 isn't the best-known developer in the world, but it's a unique company with an unusual history. The company, currently headquartered in the southern Japanese city of Fukuoka, got its start in the PlayStation 1 days as CyberConnect.

Its first two projects were PlayStation 1 games: a 3D platformer known as Tail Concerto, and an action game called Silent Bomber. Bandai released both of these games prior to its merger with Namco, and neither was commercially successful anywhere in the world.

CyberConnect2 co-founder and president Hiroshi Matsuyama first spoke to the western press in 2002, when he was at E3 promoting his upcoming game, .hack -- a serial RPG for the PlayStation 2 set in a faux 'virtual world' which was released in four chapters with anime discs included in the package to flesh out the story.

At that time, Matsuyama joked with his producer from Bandai Games, Daisuke Uchiyama, that this was the developer's last chance to prove itself with Bandai. It was clear that the joking was revealing the truth, though.

.hack went on to be successful beyond the expectations of the companies involved -- and it was also successful in the U.S. market at the time, where the anime boom was in full swing. The company, which had started with just 10 employees, had now split into two teams.

One was working on .hack games and the other working on fighters based on the immensely popular manga and anime series Naruto. CyberConnect2's latest Naruto game, Naruto: Ultimate Storm, was released for the PlayStation 3 last fall.

The company has also moved into film production; it produced a movie based on the .hack property, which debuted in Japanese theaters. Matsuyama sees this as a core of the company's business going forward.

One element of CyberConnect2 that's particularly unusual is the company's focus on quality of life; Japanese developers are even more notorious than Western studios for working their staff hard and burning them out.

Matsuyama here tells the story of the company's evolution, his own personal path from manga fan to president of a successful developer, and why his philosophy is so much different than even other successful independent development companies in Japan:

Obviously, you don't go from nowhere to starting a company, so I was wondering if you'd tell me about your background before you started CyberConnect2.

HM: Let's talk about things after college; you're probably not interested in my childhood.

Sure.

HM: (laughs) As a child, I grew up really interested in anime and manga, but I graduated from a university in Fukuoka, and through those four years of going to college -- I think a lot of Americans can relate to joining some sort of club or extracurricular activity while going to college -- I joined an organization that had to do with drawing manga.

The official title is, loosely: The Friends of Manga Research Club. A manga club, essentially. The focus was to draw manga, within the club that I had joined when I was attending Fukuoka University. So, as can be expected from a group that would form with such a purpose, everybody there enjoyed watching anime, reading manga, playing video games, drawing manga; so for four years, there was a group of people that just enjoyed these things and continued to pursue these things as a hobby.

The university that I went to is Kyushu Sangyo University -- Kyushu Industrial University, I guess you could say. Within that context, this university was the only university in all of Kyushu that had a fine arts department, and within that department there were a lot of friends that I had, and people that I knew there that liked manga.

So, since I had grown up as a child liking manga, my desire was to someday work for a company, drawing manga, or creating manga, or creating anime, or creating a video game. I had a lot of upperclassmen and same classmen that I had gone to school with, that would graduate and then get hired and work for an anime company, or would go to Tokyo... So I had seen a lot of that happen.

Even though I'd seen that happen with a lot of my upperclassmen -- they would graduate and then begin working for an anime company, or begin working for a video game company -- for some reason, after three years of being in Tokyo and working for these companies, they would quit, and return to Kyushu.

And each person that came back, they all had their individual reasons, but a lot of these reasons fell into things like they were having a really hard time living in Tokyo; life was difficult. They just were having a really hard time there. Or that the company that they were working for was off their rocker.

So they decided to return for a variety of reasons, but these would be some of the reasons. So, observing all of the things that had been happening, I realized that a lot of the people that were coming back from Tokyo were naive about the real world, or inexperienced.

So even though they would say, "Well this company is really screwed up!" in my mind, my question was, "What are you using as a foundation for coming up with such a decision? You're inexperienced. Have you worked for other companies? Do you even know what you're talking about, as far as what goes on in the real world, within society?"

So I had figured that if I were to leave, most likely something similar would happen to me. So I decided that I wanted to take the long way around, instead of take a detour.

In order to discover what it's like to work in society, I became a regular employee for a concrete company; a cement company. So, I figured that in life, while I was out there, I would discover what sort of things can be done with my strength, and what sort of things cannot be done no matter how hard you try... So I worked there with the hopes of discovering what realities in life were like.

Matsuyama used his three years at the company to understand the structure of doing business in Japan. "I learned that everything flows downstream, from the top down. That there is a vertical framework within this industry, and that at the very bottom, you can climb your way up to the top," he says. While he was still working there, one of his old friends from his university days contacted him.


Rejoining the Circle

And so we come full circle, all the way back around to the starting point: there was a classmate of mine that used to be part of my manga club back in university, and he had managed to get hired by a video game company in Tokyo, named Taito. And Taito was notorious for being very rigid, top-down; that it was a company that didn't let people creatively pursue the projects that they wanted to pursue.

There was a movement within that company, within one of the creative departments, to branch out independently, and form their own branch of their own company -- and the central person involved in that movement was my friend. And so, one day, I got a call to Osaka, saying, "Let's do this!" -- from my friend who was working for Taito in Tokyo.

At that time I hadn't decided that I wanted to settle working for the video game industry while I was still working for this concrete company, and I was at that time mulling over the possibilities of working for a video game company, working for an anime company, working for a manga company, working for a movie company... I wasn't sure what I wanted to do. But this invitation came from this friend of mine, and so I didn't want to let that go to waste.

At this point, Matsuyama used his free time to understand the video game medium -- doing research in libraries to learn about its history, and realizing that his perspective as a gamer growing up in small-town Japan hadn't prepared him for the role he was about to take on.

It is at that time that I realized, you know what, I could battle my way through life with this type of medium; that I could create things in this medium and succeed. It was at this time that I decided, "Alright! I'm going to get into this video game industry."

So I moved from Osaka back to Fukuoka, along with my friend who was working for Taito, and nine other people. So I moved from Osaka, and then nine from Tokyo, and we all gathered in Fukuoka, and we started a company called CyberConnect.

And so, I was an illustrator -- because I used to be part of this manga club -- and within the video game industry there are four things that are necessary: there is planning, there is graphics, there's sound, and then programming. These four things become the cornerstones of a video game.

And I figured that with my background, the fastest way forward would be to study graphics, as well as things unique to the video game industry -- the industry as a whole. So I focused on those two elements of the industry, and began to learn about the video game industry, and started the company with that in mind.

At that time, the nine people who had come from Taito had worked previously on Psychic Force and another title called RayStorm -- action type games. And so from those people, I learned what it is to make a console video game -- what is involved with the creation of a video game -- as well as how to operate a computer.

Up until that point I had never laid hands, really, on a personal computer, because I had worked for a concrete company, so there was no need for that. So I had no experience on working with personal computers, and it was at that time that I learned how to do that, along with what I had been learning from the video game industry.


Atlus/CyberConnect2's Tail Concerto

I feel like I understand something now, just because Psychic Force and RayStorm were two of the best Taito games for the PlayStation, and I can see the roots going toward Silent Bomber, almost.

HM: Yes, yes, yes, yes!

And so, while learning a lot of things from these nine people together, the ten of us worked on the Tail Concerto title and Silent Bomber. You could say that I had learned while I was working in this environment -- learning as I went, with these nine other people from Taito.

But these nine other people from Taito had made, you know, RayStorm, and Psychic Force, and so they were already at a professional level, whereas I started as a complete amateur, having absolutely no idea of what is all involved.

And so, I had to work three times harder than the rest of the other guys, because no matter how much I worked, there was just no way that my work could achieve the same level of the work that was being done by these pros who had been in the industry for a while. So I was at work basically 24/7. All the time, I was at work.


At that time, what was your role on the original titles? Because obviously it was only 10 people, so I'm sure you had a lot to do, but what did you personally contribute?

HM: Graphic designer -- 90% of Tail Concerto and Silent Bomber's background graphics, as well as the level design, was done by me alone. There were only 10 of us, and I did 90% of the level design and background graphic CGs.

You're well aware that I really liked both of those games, because we've talked many times about them, but at that time the company was struggling a little bit, because they didn't sell particularly well, and that must have been sad -- so if you could talk a bit about the company's early years. I remember way back when .hack was first announced, there was a joke that it was the last chance for the company.

HM: As written [in our brochure], only 150,000 units sold, worldwide, of Tail Concerto. Although you can't really say that that's a high sales figure, it did generate a lot of fandom, and enough fandom to essentially create cries for a sequel at this point. People had been demanding a sequel. So despite the number, it has generated quite a fandom on its own.

At that time, though, CyberConnect, as well as Bandai Games, had figured that they'd be able to sell more than that. So the desire with Silent Bomber was: let's create a game that would be accepted worldwide, would have lots of action, would generate a lot of fans across the world, and would sell well.


Bandai/CyberConnect2's Silent Bomber

So that was the desire that went into the creation of Silent Bomber -- the problem is that it sold even worse than Tail Concerto. And at that time, I knew the reason, you know -- I knew the reason why the game didn't sell. Despite the fact that it was the second title that we were putting out, it did not even reach half the sales figure of our first title.

The problem was with the method of creating the software: with the 10 people that were there, the development was approached from a democratic perspective. The nine people that were from Taito had had a rotten experience with the whole top-down chain of command.

Based on that background, everybody decided, "Alright, well, let's avoid that development approach." Rather than have somebody be the center of focus for proceeding with development, let's all pitch in; let's all have our opinion; let's all have our voices be heard, and we'll all work together cooperatively and create a video game together.

There were 10 people that founded CyberConnect, and more or less all 10 of them operated as equals, on an equal level -- but, in title, my friend from university, from the manga club, who worked at Taito, operated as president of the company, the CEO.

And at that point, I had already had experience with the real world -- I had been an experienced professional for some time, working for a company that has nothing to do with the video game industry -- so I had seen how business is done, and I looked at the business model that we had.

I went up to my friend who is president, and said, "There's something wrong with this model. We can't fight battles that we can win, and win, with this method. There are winnable battles that can't be won because of this method. We need to do something to change this business model, because it's wrong. Nobody is taking responsibility, there is no leadership, there is no direction, so we need to change it."

The problem was, based on everyone's sour experience with Taito, it was very difficult to proceed with changing the direction to anything other than an "everyone is equal" type of approach.


The Dawn of the PlayStation 2, and The Struggle for CyberConnect

So what happened?

HM: And it was in the year 2000 that something... happened. There was a happening. At that time, it was right when the PS2 was looming on the horizon. There was a presence of this oncoming approach of the PS2 platform. So I said, "Let's all band together and work on this new hardware platform. Let's all make games for the PS2."

And it was at that time that mobile games were taking off in Japan -- like i-appli for the Docomo network -- and it was at that time that the CEO, my friend, and I had an argument. I had insisted that we work together for the PS2 hardware, but my friend insisted that everybody go their own separate ways, or separately work toward making video games for the mobile market.

And my response was, "Why are we dividing our strengths when we need to unify our strengths and bring everybody together under an umbrella? Why are we dividing this thing that we have? Why are we splitting up into different groups?" And so we had an argument because of a difference in opinions.

And so, this is not a story that you hear very often, but the CEO left the company. My friend. Normally what you could expect for a company of that size is that if the president just leaves, the company would end up just disbanding -- that would be what the expected result would be, and in some senses that is exactly what had happened.

At that time -- the headcount had been about 20, at that point in time at the company, and there was a discussion between everybody. There were a couple of options. One option was: OK everybody, let's go out and try working for a video game company; each go our own separate ways and we'll all try to find jobs within the game industry. You work for this company, I work for that company; we'll all go our separate ways.

Or, the other option would be: let's start over. Let's start over, but please let me do the job of a president. Let's get rid of this whole democratic method of doing things, where everybody gets a vote. And up until that point, all 10 of the people that had created the company each pitched in an equal amount of start-up money in order to found the company.

I had appealed to all of the other members that were remaining and said, "I will buy out your shares in the company and unify the shares into one share, and I will have total ownership of the company. But at the same time, I will take all the responsibility for what happens to you and to this company. But, I have the confidence to succeed, and I will make sure this company succeeds." And so I presented that to the remaining members of the people that were working for the company.

And so, all the people remained, except for my friend, the former CEO, who left. All of them, the 20 people, stayed on board, and it was decided that they would go forward with my proposed plan.

But we also, in order to move forward with game development, we were a new company -- but we didn't want to act like the previous company never existed, either. And so it's for that reason that we decided to stick a 2 on the end of the company and create the name CyberConnect2.

I had been wondering about that for a long time.

HM: So the birth of CyberConnect2, as we know it today, started with the development of .hack for the PlayStation 2. And so my history within the game industry is as long as my company has existed, so I have been in the industry for thirteen years; as long as CyberConnect has existed.

In Japan there are about a thousand small-scale companies overall, and this is true even among small-scale video game development companies in Japan, but development companies that are even now, to this day, the size of 10 people or so, the mentality of these companies is very similar to the mentality of CyberConnect, back when it made Tail Concerto and Silent Bomber -- it's almost the same mentality that they have.

There are only 10, so everybody sits down and says, "Let's do our best to create a video game that is creatable within the scale of 10 people. And if we do that, then we'll probably be able to come up with something good, right? And if we do that, then our fans will join us, and they'll follow us; they'll continue to purchase the games that we make; they'll be following in our footsteps, and we'll be able to succeed doing that."

So that's the mentality that they have. They say, "Let's make video games within the limitations of what we can do as 10 individuals." And my opinion is that that's a mistake.

But in this era there are a lot of companies, particularly now in America, that are starting up to make games for, like, Xbox Live Arcade, or such, that sort-of bring back the democratic thing. It's almost like it's a movement. So do you see a value in that sort of thing, or do you think it's just not possible?

HM: What I'm talking about, as far as 'mistaken', is that at the time, there was no such thing as Live Arcade or anything like that, so video games that were made by one hundred people and video games that were made by 10 people both lined up in the stores for $59.99.

And the reality is that the consumer doesn't look at the title made by 10 people and say, "Wow! For a company that has only ten people, this game is pretty good!" That's not how they vote with their dollars. They vote with their dollars by saying, "I like to play this game," or, "This game is fun," or, "This game is made well."

There is no, "Oh, it's pretty good for 10 people." There is a stone cold reality with the consumer, that it all boils down to, that you have to compete as a company of 10 with companies that are 100 in size.

The reality is that the consumer is going to end up buying what they like, and at the point where the company is making excuses for itself, saying, "Well, for 10 people, this video game is pretty good..." -- at that point, the company is making excuses for itself. There is something wrong with that.

The reality in the consumer market is that people buy what they want. It's a mistake to approach that market and say, "Well, what can we make?" You know, what is possible? What can we make? You look at what the consumer wants, and you say, "OK, I want to make something like that! But, oh... We don't have enough people. So we can't make it."

That frame of mind is a mistake. If that's the case, add more people; change the environment that you're working in enough to accomplish the goal. And so, it is with that mindset that our company has been evolving forward.


The Japanese Developer with Quality of Life

You talked about, earlier, how Japanese developers have a reputation of being very hard to work at. Obviously America has struggled with this too. You have a policy of quality of life, which has been a major issue, globally, for game developers.

I don't know if you were at the awards last night, but when they accepted the award for Fallout 3, the developer told the story that his wife went on vacation without him, with his kids, and said, "This had better be a really good game," when she left. So, it's the same everywhere. And it was a sad story.

I want you to talk about how that happened; what caused you to launch into this new philosophy?

HM: The reason is, I experienced back when I was CyberConnect 1, for three years I basically lived at work. I paid rent on an apartment that was empty; that I never lived at.

Because of the fact that I was an amateur entering into a world where there were other professionals working, I had to work three times as hard as everybody else -- and that was a reality that I couldn't escape: no matter how hard I pushed myself, there just wasn't enough time, because I didn't know the industry.

And so, I had to stay at work three times as long as everybody else. And so, I had that same reality, where I had no life -- no quality of life -- because of having to stay at work all the time. So I am very well acquainted with that whole idea of being enslaved by your company and not being able to go home.

So, true to the whole "living at work", literally: there was a kitchenette at work, and in the evening I would do as much as I could, and everybody would be working, and then they would go home, and then there would be nobody at work, just completely empty, and I was alone, by myself, working on things, because by the time evening came, there wasn't enough time during the day to finish what I wanted to finish.

So, I hadn't quite finished yet, and I was looking at what I had made, and wasn't satisfied, so I'm having to fix what I had done during the day. And I was looking at other people's stuff, and wasn't satisfied with what they had done either! So I was messing around and fixing the things that they had been making during the day. So I was there all night long.

But, what I would do is, I would stick my head under the warm water spout, and wash my hair in the kitchenette, and strip down and take a towel and take a sponge bath. And since there's nobody there, I can completely just take it all off. But that's just how I lived, day after day! And I lost a lot of weight.

Basically, I was able to take catnaps in a chair, right around when daybreak would start coming, and there's a little time to take a nap for a few hours, in a chair, at work -- and then work would start again. At the time, pulling all-nighters wasn't a big deal, because I was 26, but as the years and days progressed, I realized that the effectiveness of my work got lower, and lower, and lower.

Which is to be expected: as you're pulling all-nighter after all-nighter after all-nighter, you're going to end up not being able to work very well. And so, literally, my heart and my body was in ruins. I had worked my heart and my body to ruins.

And it's then that I realized, full well, that this is not healthy. And on top of that, my work is not efficient. And so I was forced to come to that realization because of my predicament.


Namco Bandai/CyberConnect2's .hack//G.U. vol. 1//Rebirth

And that's what changed your philosophy.

HM: So, the first reason for why I have such a philosophy is that staying up late every night, pulling all-nighters, reduces the effectiveness of one's work. I've realized that all too well myself.

The second reason is, these other nine people who have been working for Taito, when they started working at the company, they were working with the same rules that everyone else in the industry works: no one comes in in the morning. And so, I'm there, but no one else comes in in the morning.

There would be people who'd come in midday, people who would come in mid afternoon, and other people who would not come in until evening. People were working at different hours; they would come and they would go at different hours, and all day long there would just be kind-of a sluggish, slackish pace of work with everybody, because they just kind-of worked whenever they wanted.

And my thought was: why aren't people working when they're working? Why is there no rule? Why is there no direction? Why is there no establishment of 'outside hours are outside hours; work hours are work hours'? You work during work hours, and you're supposed to do your job.

There was no guidance, no rule, no establishment that basically forced people to have to sit down and say, "OK, it's work time, so let's work, and really get down to it." And so I realized, this isn't right; this isn't good; it's not effective for a company to operate under these circumstances.

There needs to be rules; there need to be guidelines on when people can be expected to show up at work, and when you're at work, do your work. So, do what you're there to do, and don't just drag it out all day and be sloppy or lazy with your work hours.

It also happened that the timing was really bad for that company, in that there was a super popular title that was popular worldwide, called Diablo, and people would just totally lose themselves in this game. They would roll into the office, you know, late morning, and they would play Diablo from morning to evening. Some of them would do some work, in the early part of the day when they came in, in the late morning, and then they would start lunch.

So they'd be eating lunch while they're playing Diablo, during their break -- but then the lunch break would progress, and they would still keep playing, and then the end of the break would approach, but they would still keep playing, and it's like there's no end!

They can't figure out where to put the game down. And so, before they know it, it's evening, and so now they're saying, "Oh, now I'm tired, so I'm gonna go home." So that kind of situation occurred more often than not.


That happened at the company I worked at, at the same time.

HM: In my mind I was thinking, "There's got to be something wrong with the people that work here! It's the people that work here that are screwed up! This is messed up... There's got to be something wrong with the staff..."

And so, I would go on meet and greets to other companies in Tokyo, and learn what they do, and just tour their office, meet people, and network with other people in the video game industry. Everyone was doing the exact same thing, everywhere I went. Except for Nintendo. Nintendo was the only one. But everybody else, what are they doing? They're playing Diablo.

My office starts work at nine o'clock in the morning, and so other companies -- other deskwork and video game companies -- often start work at 10 o'clock. That's pretty normal, pretty standard practice. I start at nine. So recently there have been some cries from staff members in my company, you know, "Why don't you change the hours from nine? Nine is early! Change it to 10 o'clock, please!"

And my response is, "Well, I hear Nintendo's hours are from 8:45. Maybe I should set you up with an interview with those guys..." And at that response, everybody just shuts up, and they back off of that -- but that's been a cry that I've heard from my office, and that's my response.

It's not like the discussion that you heard with Hideo Kojima: the sad reality of the video game industry is that everybody is a slacker. Nobody is able to accomplish anything. That's the reality. And I think that that's a wrong reality.

The reality is that people say, "Oh, well, I'm no good, and so it's understandable that what I make is also no good." And so everybody is just complacent at accepting this low quality standard, this bar that has been set because everybody has said, "Oh, well, because everybody is a slacker, clearly nobody is able to accomplish anything. So, it might not be good, but it's understandable that somebody would be able to not accomplish much at work." And that mentality is screwed up.

People need to take the attitude of, "I can." We need to have this attitude of being able to accomplish something; having a positive attitude of, "I'm going to go, and I'm going to do something." They need to change out from this whole attitude of, "I don't care," or, "I can't do anything, because I'm no good, and therefore I don't care." Either mentality, even if it's understandable from the low bar that's been set by the video game industry, is unacceptable.

And so, at the time when CyberConnect2 was founded, that day, I set up rules for my company. Until then, I had been at the very bottom, and so everybody had been calling me "Matsuyama-kun" -- and so I said to everybody, "From now on, you're callin' me shachou." You're calling me "president". Don't anyone ever call me Matsuyama-kun ever again! Furthermore: Office hours start at nine o'clock. They end at six o'clock. No eating candy at your desks!"

(laughter)

I set rules, and I said, "Everybody will abide by these while at work. When you're at work, do work."


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