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The Man In Charge Of Reshaping Square Enix's U.S. Division

Amidst a growing and thriving industry with exciting platforms and audiences in every direction, Square Enix U.S. president and CEO Mike Fischer sees plenty of opportunity but also reasons to be cautious and thoughtful, as he outlines in this extensive interview.

About a year ago, Mike Fischer stepped into the role of president and CEO of Square Enix's U.S. division. We first spoke to him very soon after he joined the company. Since that time, he's clearly been making decisions on how the U.S. division slots into the global corporation, which has the twin development pillars of its Japanese studios, based primarily in Tokyo, and its European organization, the former Eidos, and its array of owned studios.

He is clearly not insensitive to the changes in the market, and sees a lot of opportunity ahead; he also seems convinced that some of the trends that are grabbing the headlines now may only be fads, and is trying to chart a steady course for a division of the company that has primarily acted only as a publisher of games developed in other parts of the world by owned studios up until this point.

Fischer, who got his start 20 years ago at Sega in Tokyo and has, as he told us previously, "worked in the international marketplace for quite a few years" sees the industry growing and thriving, and for this reason has licensed Wakfu, an MMO developed by France's Ankama Studio, as one of the first products of his tenure at the helm of the U.S. organization.

To find out more of his plans, in this interview conducted at last month's E3 show, read on.

What have you learned in the last year?

MF: Well, that's the one question I wasn't ready for! What have learned in the last year? I think the one thing I've learned is that there is no such thing as a stable period in our industry. Our industry has been going through a period of transition for the entire 20 years I've been in it, and so the first thing that I learned is that that's never going to change.

So I think that it's really not about getting your business to a point where everything's fine, it's about creating a culture where you're constantly driving the change and staying at the front of what the trends are.

Can you give me some examples of things you see the company doing now that speak to that?

MF: Well, some of them I can talk about. Some of them are projects that haven't been announced.

But I think you've seen announcements already about our continued focus on a more net-based business, and I am in a very unique position in my role here, as the head of the U.S. organization, because I have the great Japanese content coming out of the studios in Tokyo, but I also, now after the Eidos acquisition, have this lineup of Western games.

That leaves me and my organization free to really pursue a lot of the more leading edge opportunities in online and social games. And I'm obviously looking at not massive games on an FFXIV or FFXI scale, but smaller, more agile opportunities. One of them you see here, Wakfu, already, that we've picked up. That's developed in a partnership with Ankama Studio.

And we're looking at a lot of projects along that type of opportunity, where it may not necessarily be a big internal project, but we can be smaller and agile. What frees me up to do that is the fact that I have the fantastic lineup like you have here of Final Fantasy XIII-2, Deus Ex, Hitman, Tomb Raider, Heroes of Ruin, and that gives me a stable platform that allows me to do a little bit more risky, a little bit more creative opportunities.

You can't be risk averse when you're throwing your weight into new areas. Risk aversion is for the console space, where there's a well-defined audience and a well-defined target, right?

MF: Yeah, exactly. And we're fortunate, because we have some big franchises there. I mean, it's tough to come in with nothing, but it helps me to be able to know that I can plan on a steady business throughout the year, and then take a few risks here and there to try something new.

Whether it's through acquisition or through internal imperatives, you've seen some of the other traditional publishers push hard on social and mobile. For you, most of that stuff has come out of Square Enix in Japan so far. Do you want to grow both out of the U.S. at this point?

MF: Well, yeah, as you pointed out it's been 11 months, so clearly there's a lot that we're working I'm not ready to announce. But the thing for me is that we're not necessarily coming out with completely different strategies for each region. It's not as though we're focusing on the U.S. organization to do A, Europe to do B, and Japan to do C. It's just a fact that with the big content coming from East and West, I think it's a little bit more liberating to go out and try new things, but that by no means is a signal that they'll be doing less anywhere else.

They released the Lara Croft Guardian of Light from the Eidos Studios that's now on iOS, but I think you're going to continue to see them looking at opportunities there. Japan obviously released [Facebook game] Chocobo's Crystal Tower, so we're doing our feelers.

I'm also interested at looking at some collaborations where we can mix IP that we find in the U.S. with some of the teams and the support from Japan as well. So a whole lot of opportunity there but, for now unfortunately, no names or release dates.


You were building a studio organization in Los Angeles internally but rumors suggest the studio is not around anymore.

MF: Well, "studio" is a pretty big name for what we were doing. We had a small internal team that was working on a project, and I read a lot of those news sources that are that are really focusing more on external projects -- but we're still going to need a lot of internal resources to support that.

So what kind of resources do you want to have in Los Angeles?

MF: I mean, obviously, we're looking for producers, creative directors -- that type of work -- in addition to a strong sales and marketing team.

And that's mostly people who are going to be interfacing with external teams who will be working on projects?

MF: That's my thinking right now. The advantage that we have -- again, because we have such strong lineup and strong IP -- it helps us attract first tier partners, so that brings a big advantage, and I'm also lucky because we do have an organization really, from top to bottom, that's passionate about games, and that includes myself.

I grew up a gamer, my entire career is in the games industry, so even though right now things like social gaming is already hot, and it's attracting a lot of VC attention, I'm not confident that a lot of that interest will still be there in a number of years as some other category becomes hot down the road.

We've got an organization here whose passion really is built around that. That gives me confidence in a long term success as well as just the fact that the trends that right now happen to be hot in the gaming area.

You'd like to build around games for gamers, primarily, is what you're saying?

MF: No. How you define the gamer is very subjective. And I think that obviously we have the core Final Fantasy fans, as well as the action and adventure fans that have come to us through the acquisition of Eidos' studios. But I think that the definition of gamer as "official hardcore gamer" is a very artificial definition and I've just seen all kinds of interesting ways people try to force industry definitions on the consumer.

So, for example, in the industry we make a hard definition between say an RPG and an action-adventure, but if you talk to consumers, they may see things in terms of fantasy or science fiction. They're a completely different blend, so I think sometimes we force artificial definitions, and "gamer" is one of them.

Now, the fact of the matter is, right now television networks are canceling soap operas because so many of the official soap opera audiences are playing games. If they're playing more games an hour than a college student, who is the gamer?

I also think you're seeing the maturation of the gaming audience. So someone who played Final Fantasy VII back in 1997, they're still playing our games, but they're in a very different part of their lives and they may be playing some games in a different way.


Heroes of Ruin

You know you signed a deal with n-Space for Heroes of Ruin. I cannot remember the last externally Western-produced Square Enix game.

MF: Well, Front Mission was built by Double Helix here, and I'm trying to think. Obviously Dungeon Siege III was a completely made in the U.S.A. game. We did that through Obsidian Studios, we managed that internally, and again that's another example I should go back to, in terms of using U.S. resources.

We have an internal producer, our biz dev team delivers the opportunity, we acquired the IP from Gas Powered Games, we hired an internal producer who managed the game through Obsidian, and it's launching in a couple of weeks. So that's a type of model that, I think, is going to be easy for us to manage. We have the resources, we have the assets. It's not necessary for us to hire the internal studio to make these projects happen.

So Heroes of Ruin follows along a similar path. That, in fact, is being managed through the Square Enix Studios out of the UK. So there's a lot of cross-pollination that you see. Dead Island, that we're helping to sell and distribute here in the U.S., is obviously developed in Poland from a German studio. That introduction was made to us by our sister company, so there's a lot of cross-pollination that's happening right now.

It seems like your opportunities are to shift into a publisher that doesn't rely just on its own studios.

MF: Well, but understand -- yeah, this is all being done from the context of, I have these fantastic internal studios now, Square Enix Europe or Square Enix Japan, that are providing that for me. So my goal for Square Enix in America is not to replicate what we already have, but to do some things that we're not. And that's why I'm looking at these things, like external partners, or licensing and publishing agreements the way that we are, because I already have world-class traditional games coming at me from both organizations.

If you look around, I don't know that there's any publisher right now that has that kind of globally-balanced product the way that we do. And there have been Japanese companies that have made big investments in Western publishers, or Western developers, but I don't think anyone has ever delivered a lineup the likes of what you see here on the show floor. So because I have that, I can take advantage of the opportunity to do some of these smaller, more agile projects.


What are your thoughts on launching new IP? Square Enix has very strong IP, from Final Fantasy to Hitman to Tomb Raider. What do you think about the need to launch new IP, to continue to grow new IP for the company?

MF: That's my passion. There's line of people outside my door every day trying to put classic Eidos or Square Enix properties, slap on whatever is the flavor of the month type of game, and that's really not something that we're interested in doing.

I think the reason our franchises have been so long-lived and strong is that they really are owned and managed by people with a passion for that. We don't just see them as properties to exploit, but really as the heart and soul of our company. So I'm really looking at the opportunity to work with new IP, and I think that's the opportunity for us to create some new value for the company.

I think that the importance of new IP is not just an imperative for Square Enix. It's one for the entire industry, and I am one of the biggest cheerleaders for Take-Two's success this year because whether it's, you know, LA Noire or Duke Nukem or Mafia or Red Dead Redemption, the fact that they're going out there, launching IP and being successful, makes retailers more willing to go out and support our new IP as well.

I realize Deus Ex is a classic franchise, right? But as far as most of retail is concerned, they still treat it as new IP. We're lucky we have a hardcore base of fans that are driving that word of mouth, but I think as an industry, it's in all of our best interest to do as much as we can to continue to drive new IP, reinvesting the money that we make from our classic franchises.

None of us can afford to rest on our laurels, and just continue to turn out old franchises. That has to be part of a system that creates new IP as well. And of course if you look at Final Fantasy, you know those games continue to be new stories time and time again. People look at the big numbers, but the fact of the matter is that's not recycling old content, that's continuing refreshing the brand so that Final Fantasy itself simply becomes a standalone brand, not necessarily a fixed set of characters and worlds.

To return to what you said about old IP being new IP: Duke Nukem is way old, had not been active. And as you said Deus Ex had not been active. You're saying if something's not around consistently, the way Final Fantasy is, retail views it as not a safe bet anymore?

MF: Right. Well, if you came out with a sequel of a game that sold two years ago, retail is going to look at what it sold two years ago and add or subtract some factor and tell you what you're going to do now.

When you are launching a Duke Nukem, where they're not going back to see what the original game sold and benchmarking it, they're looking at what you're doing to build that into a successful new franchise. As far as they're concerned, you're starting from zero. So from a PR or community management, obviously there's a great legacy you can build on, but when it actually comes to being at an industry trade show, it's a completely different dynamic.

It seems like games at E3 this year are very same-y. But it also seems that people are hungry for new experiences.

MF: It's like, show me your new idea and I'll tell you whether it's either going to fail because it's never been done before, or it's going to fail because everyone is doing that already, right? And that's the trap that you fall in, but the fact of the matter is, a game isn't great just because it's original, or because it follows something traditional.

It's great because it's great in its own right, and I think you've seen great games that follow in classic gameplay mechanics. There are some fantastic shooters that we've already seen, and there are breakthrough new games that you're seeing as well. So I think it's a trap just to look at something just in terms of that.

There's been a lot of speculation and sort of you know about where we are in the PS360 generation. How do you feel about where we are, and how much time we have left, and what we can accomplish in this generation?

MF: Well, at the end of the day, I think it's really more for the gamers to say than it is for the publishers or even the console owners. I think with the introduction of Wii U, you're also starting to see asynchronous platform introductions. It used to be almost like there was a starting signal, and everyone was like a year on one side or another, and it was like pushing the restart button again, and again, and again.

And with Nintendo coming out the way that they are, and the timing that they are, I think it creates a unique opportunity. So it's not like all the bets are double or nothing all at once, and I think you can have an interesting point, I think, where you're starting to see somewhat more staggered releases.

Now I say that with no knowledge of what the other platform makers are doing. I'm speculating. I think you're also starting to see that other platform -- you know, the PC and browser -- becoming a much more significant factor in games than you ever have before.


Is that why you decided to dive into Wakfu?

MF: Oh, absolutely. Absolutely, and another nice thing about it is it is, it takes some of the strengths that we have, in terms of knowledge of our audience and the RPG world, but it's also helping us leverage it into a whole new place, and with a partner that is very well entrenched there already. So that's the type of one plus one equals three synergy that I'm looking for in the projects that we either pick up or we drive.

Is that a free-to-play game, or is it a subscription game?

MF: It's kind of a hybrid free-to-play. So there's a subscription component to it, but there's also a free-to-play microtransaction component of it as well.

Are microtransactions something that interest you particularly from a Square Enix perspective?

MF: It does, but I don't believe that there's going to be any one single dominant model in the years ahead. I think if there's one thing that I see now, it's a diversification, and we're a big enough company so that we can't put all of our bets all on one business model if we wanted to, anyway.

And for us, it's not about picking winners in the different platforms, it's about having great IP and fitting that to the best platform for it. We want all of the platforms to succeed.

It's funny. I remember people saying "I'm not sure if the industry can support three consoles. It's always been two consoles, two consoles, two consoles, I'm not sure if we can support three." And now, I hear people get worried that we might not have three big console platforms at one point.

So it's kind of funny. When it looks like the number of platforms is going grow, people are going to worry. If there's speculation the number of consoles might shrink, you've got everybody worried. The fact of the matter is, it's not the number of platforms that's important, it's the health of those platforms, and the growth of the market. I don't see what's happening in the browser based or free-to-play, or social market cannibalizing overall industry sales. What I see is it adding to it.


Wakfu

You've got now a situation where we have three consoles, two handhelds, smartphones, Facebook, web downloadable, web browser-based. There's a tremendous variety of things going on.

MF: I think that, to some degree, there's a fallacy that some people are applying to the future of our industry, based on what happened say, for example, to music. Where -- I'm not an expert on the music business -- but there's a perception that the shift towards digital music downloads has hurt the overall growth of the recording industry.

And let's just say for the sake of argument it has. I don't think that applies to games, because the switch to digital downloads for music didn't bring any more people into the listening to music market. Everybody was listening to music, everyone is still listening to music. But in the case of games, what this transition is bringing, is a whole new audience, and more ways to play.

So in the past if you had to sit down in front of your TV, now you can do it in front of your TV, your computer, your iPad in bed, your smartphone while you're outdoors, your work PC while you're in the office and your boss isn't looking. So I think the same trends that have threatened the other media are actually strengthening us.

Yeah, we're at a very tumultuous -- I would even go so far as to use that word, it might be a little melodramatic -- time in the industry. Where not only do we have trends in opportunities, like this year is the year where suddenly Android is viable. It was predictable, but I don't think people were, all the same, prepared for it. Probably because they were too busy trying to get on iPhone by the time Android started to take off.

MF: People panicked when Super Nintendo took over from NES. Our short memory is really remarkable, and I see this. Certainly this is a tumultuous time, but unlike some of the other console transitions that we've had in the past, some of the changes in our industry, this is the first time I can recall where we're talking about our audience significantly growing.

It's growing on a regional basis as more parts of the world open up to gaming, and it's opening up on a generational level basis, both as the gaming audience is growing older and gaming, and new audiences are coming in. So I mean yes, there's a tumultuousness in the sense that every change brings in new winners and losers, but I'm probably more optimistic now than I have been in my last twenty years in the games business.

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