Three of Japan’s biggest video game companies are making drastic changes to the way they do business.
Those three companies are former gaming hardware company Sega, RPG specialist Square Enix, and the notoriously post Hideo Kojima Konami. While their approaches are different, they are all reacting to the same situation.
That situation being the state of the video game industry worldwide, not just in Japan. While video game software as a whole reached unprecedented growth in the last two years thanks to the pandemic, today things are considerably different. The war in Ukraine has complicated the effects of the pandemic, leading to fears of recessions around the world. While the worst has yet to come to pass, the tumultuous economic conditions are creating a lot of uncertainty, and not every company is doing well.
Square Enix is already well known for struggling, in spite of being one of the biggest video game companies in the world, with successive financial hits like Final Fantasy XV and Nier Automata. When one of their own producers agrees that their biggest franchise is struggling, you have a problem. Most recently, they have had a string of poorly received non-Final Fantasy games, including Balan Wonderworld and Babylon’s Fall.
In the past few years, Square Enix let go of a number of Western game studios and their properties. This includes IO Interactive and Hitman, Crystal Dynamics and Tomb Raider, and Eidos and Deus Ex. Today it seems the company does not want to fully own the game studios they currently own anymore. While the details have yet to be revealed, the company is looking for an arrangement where other companies will have a partial stake – possibly partial ownership – of their franchises and future games. They also have an interest in NFTs, the full extent and reach of which is still not fully known.
Konami’s troubles are more well known, if they have been a few years old. The company has many businesses in non-video game fields, including health clubs, casinos, pachinko machines, and properties like Yu-Gi-Oh. Given they are not fully dependent on video games, it perhaps should not have been a surprise when the company ousted former board member and lead developer Hideo Kojima over management disagreements. What’s less remembered is Konami proceeded to gut their staff of many veteran game developers. In hindsight, of course, the company seeks an about turn on their move away from video games. Following a series of small scale rereleases of their classic video game library, such as Castlevania Advance Collection, the company has gone for a huge push on their other classic horror franchise Silent Hill.
Lastly, Sega has had continued struggles since they left the hardware business. While the company now does have a solid library of consistent franchises, including Yakuza/Like A Dragon, Total War, and Persona under their subsidiary Atlus, the company as a whole hasn’t been consistently successful, and is still looking for a business model that will get them to that place.
Sega’s big plan is a perplexing project they are simply referring to as a “super game”. Sega president Haruki Satomi describes it as
“a game so revolutionary that it attracts far more active users than any of the group’s games to date.”
Sega has also expressed an interest in NFTs separately, so it seems this super game is a completely different project. It’s really hard to decide what to make of these plans as of now.
It isn’t unheard of for all three of these companies to take unusual moves to stay in business. They have all did so before, but now seems particularly uncomfortable given the unpredictability of the markets. Hopefully all three find a way to stability and we can continue to enjoy more games from them in the future.