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On November 26th I visited the Toei Kyoto Studio Park for the Uzumasa Sengoku Festival. I’ve posted my photographs here. The Toei Park is cinema theme park with sets that are still used along with all sorts of activities for visitors like a Ninja show. It is a bit of tourist trap, but that is part of its charm for those who want to be photographed in “authentic” settings as you will see. The Uzumasa Sengoku Festival is a two-day festival dedicated to Japanese Warring Period transmedia (manga, anime and games) which made is a perfect venue to study the interplay between media and/for fans. For the festival there was a pavillion dedicated to gaming where local game companies had booths, there were special events and some of the houses in the “historic” Kyoto setting were used by companies to promote new products about popular warring period anime and related media. Above all the cosplay (costume play) fans came out in droves to pose for pictures in the recreated streets of old Kyoto.
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Much of the discussion around the games industry here in Japan is taken up by the difficulties big companies like Nintendo are going through. Given that the big companies dominate the scene and that game studies here pay a lot of attention to industry, this means that most discussions with games researchers eventually circle around to the downturn in the industry and what Japan can do about it. But, what exactly is the problem with the Japanese games industry? Here are some of signs that worry games researchers here:

• Smart-phones are replacing dedicated mobile game systems like the Nintendo DS and the Sony PSP in terms of game sales. A story in the Globe and Mail points to a blog entry by Flurry blogger Peter Farago asking Is it Game Over for Nintendo DS and Sony PSP? (Nov. 9, 2011) The is based on US data that shows that between 2009 and 2011 Nintendo and Sony went from owning 81 % of the portable game software market to only 42% of the market.
• Nintendo posted its first ever loss. Nintendo is losing money as reported in a story in the Globe by Yoshiyuki Osada and Isabel Reynolds, Nintendo to post first every annual net loss. On Thursday, Oct. 27th, 2011 Nintendo said it expected its first annual loss ever and attributed it to weak demand for the 3DS (due partly to lack of games that exploit the 3D) and a strong yen (which affects Nintendo because a large percentage of their sale are exports.)
• Japanese game developers seemed to be slow to take advantage of the emerging markets of social games and casual games. Japan’s largest social network Mixi, for example, doesn’t seem to be gaining members and their operating profit is dropping. Most developers seem to be designing games only for the Japanese market leaving the global market to others. Only recently is DeNA moving their Mobage gaming network to Android and iOS and the Android version isn’t getting good reviews.

There is another side to the story. As Ashton Raze puts it in a the Telegraph Super Mario 3D Land review (Nov. 18, 2011),

While current talk of Nintendo is often mired in share prices and falling stocks, it’s easy to forget that they also make games like this; joy-filled, effortless romps, pure blue-sky gaming that can easily be hailed as the reason to own a given system.

Nintendo has also been here before. Osamu Inoue in a somewhat enthusiastic book Nintendo Magic documents how Satoru Iwata (the current president of Nintendo) led the company to record profitability after the poor performances of the Virtual Boy, N64, and GameCube. Eventually they got it right with the DS and Wii. Nintendo has the cash reserves and creativity reserves to weather poor years and systems that aren’t hits. The question is whether a strategy of focused on selling tightly coupled systems and software will work now that smartphones are powerful enough to be mobile systems, and gamers are moving to casual social games and large-scale virtual game worlds all playable on PCs? Who needs dedicated mobile systems or consoles?

Some of the questions that come up when we discuss the perceived downturn are:

• Is there really a problem? What is the scale of the downturn? Is it the Japanese game industry in general or particular companies like Nintendo or just a strong yen?
• What are the causes of the downturn? Is it due to a failure to anticipate new gaming models from MMORGs to social games? Is it due to conservative thinking by management in the industry? Is it due to a dominance of console/system thinking? Is it due to a strong yen or poor global business strategies? Or is it due to a shrinking population of new players and developers?
• What can government do to help? The Japanese government has traditionally not supported their manga/anime/game industries the way they were involved with other industries. There are signs the government is now getting involved – is that a good thing? Does coordinated planning work?
• What are Japan’s strengths? What can they build on to resurrect the games industry?
• What role can the academy play in this? What should be taught? What sort of research would benefit the industry?
• What should be next for the games industry in Japan? Should they keep on doing what they do best or should they refocus? How can industry, academy and government together reinvigorate the export industry?