GS: You mentioned that Microsoft has a difficult structure for Japanese developers. Why is that?
RN: One thing is the cost. Man-month cost is very high. Not salaries, but being a Microsoft employee is expensive. We have a fixed amount of budget, and with Microsoft's man-month cost, we can only do so much. But if we move the company (external), per-person, per-month cost goes down, so we can do more. So that’s one thing.
Recruiting was another problem. We had to recruit a lot of people, and Microsoft as a company has a very high bar to hire people in. The person has to be generally superior in all areas, but game specialists, in general, are often great in one area and not so great in others. It was very hard to meet all of the hiring criteria that Microsoft had, so it was hard to hire people. Stuff like that.
GS: And how did AQI come together?
RN: Mr. Nakayama, the founder and former chairman of Sega, left Sega.
GS: When was that, again?
RN: Right around when they were doing the Dreamcast, (Shoichiro) Irimajiri was the head of Sega, and Nakayama asked him to do all the console stuff, while he himself was doing arcade only. Then around 1997 or 1998, he started a human resource outsourcing company. It was very successful, and it went public. Then he wanted to come back to the gaming industry. He's an old man, but he's very passionate. He started a company called Cavia, a development studio, in 1999 or 2000 with a lot of people from Namco. Then a former Sega executive, Yoji Ishii, founded Artoon - just around the same time. He asked Nakayama to fund a little bit of it, so Artoon started with Ishii's own money, but also Nakayama's money as well. It was kind of a brother company: one managed by Ishii, while the other was managed by Nakayama. After five years, they decided to merge together to make it bigger - big enough to go public.
Just around that time, Microsoft asked Nakayama to establish a formal company - that's Feelplus - and moved Microsoft people in and started hiring people to do Lost Odyssey. So Nakayama hired Cavia and Feelplus, then Artoon merged into this group and (he) made it AQI Group.
AQI is a holding company as well as a publishing arm of those three studios, but those three studios mainly make games for first-party publishers like Microsoft and other third-party publishers. We went public last week.
GS: I thought that Artoon was started by [original Sonic Team member and Nights into Dreams director] Naoto Oshima?
RN: Ah - yeah. Ishii and Naoto Oshima. So now Ishii-san moved to be head of AQI, the holding company, while Naoto Oshima runs Artoon. Two guys started it, really.
GS: What was the reason to come together? Was it just to make a bigger presence for yourselves, or was it because of dissatisfaction with other publishers?
RN: Financially, Nakayama wanted to make his company public, but Cavia itself was too small to do that. He then asked Ishii-san if he was interested in joining. That's one thing. He also wanted to make the company a publisher, and to do that, since AQI was a new publisher, he needed a bigger presence.
GS: It’s a little different, but it sort of reminds me of ESP (AKA Entertainment Software Publishing, a support company for members of the Game Developers Network in Japan, including Treasure, Alfa System, Game Arts, Bandai and CSK, but mostly in terms of sales and PR).
RN: Oh, yeah! You're really familiar with the Japanese industry!
GS: I never really understood what ESP was doing. Was it a more loose connection than AQI?
RN: Yeah, I think so. In our case, three studios are 100% owned by AQI, so it's one capital. ESP was just a business deal with multiple companies.
GS: And then Game Arts bought all the shares, and they got the majority of their shares bought by Gung-ho. Anyway, I heard that Mr. Nakayama was funding and advising developers behind the scenes, even when he was doing the human resources company. I heard that he was influential in helping other people start studios too.
RN: Yeah. He's rich. Really rich. He started the company, and managed Cavia for a while, but then he left Cavia as a managing director, so what he's doing now is investment. He's not a board member anymore. He's just a majority shareholder of AQI now, but he doesn't participate in managing the company. He owns many other companies, and a lot of people come to him for consulting. If he finds those ideas interesting, and he funds those people.
GS: I was actually speculating that he might be funding Seeds, Clover Studio's reincarnation.
RN: Yeah, that could be.