GS: It seems like a lot of developers in Japan, especially big name developers like Tetsuya Mizuguchi and Atsushi Inaba at Clover are very dissatisfied with the current structure of Japanese gaming companies, because they all seem to be leaving to start their own thing. All the creative talent from Sega has left, for instance, except Yu Suzuki, but who knows what he’s doing. Why do you think that's happening?

RN: I used to work at Capcom, so I know why Inaba and Shinji Mikami – actually it was really Mikami - wanted to establish their own company. If a company becomes big and makes some big hits, the company grows. To keep a big company, they have to keep making a profit. To make a profit, a lot of effort goes into sequels for those megahits.

Also, when I was at Capcom, there were eight studios; it's interesting, because most of them left. Noritaka Funamizu (Street Fighter II and Monster Hunter Producer, now with his own studio Craft & Meister), Tsuyoshi Tanaka (who took over Funamizu’s position), Katsuhiro Sudo (spun out into a separate team by Funamizu’s group), Shinji Mikami (Resident Evil 4 mastermind), Tatsuya Minami (former head of Capcom Production Studio 1), Me, Yoichi Egawa (focused on mobile), and Atsushi Inaba (Clover Studio).

Shinji Mikami modern classic Resident Evil 4

GS: Did you get Okamoto in there?

RN: He was a manager. So back then, there was a portfolio balancing between those eight studios, and Mikami didn't like it. He felt as though he couldn't invent new things within Capcom's big organization, so he asked Okamoto to establish a different, inventive studio and do something creative. It doesn't have to be anything big, but he just wanted to do something more creative.

GS: Mikami doesn't seem to have formally left Capcom, according to some company statements. Is he with Seeds?

RN: He left. He's with Inaba, so he's with Seeds.

GS: Mikami is really impressive to me. When I played Resident Evil 4, for instance, I was really struck by how polished it was. It had an old style of gameplay, but felt really progressive.

RN: That's a good example. The things he creates are great, but that doesn't mean they'll be commercially successful. He was the one who chose the GameCube as the platform for Resident Evil 4, and from a business perspective, many people at Capcom don't think that was the right decision.

GS: How different do you find working in Japan versus working in the United States?

RN: It's very different. I feel like I've learned a lot from my U.S. companies. Back then in Japan, in the early '80s, you had to learn how to make games by yourself. There was no one there to teach you. It was your own learning, so I had my own style of making games. Then I came to the States, and I joined Broderbund.

They had a very sophisticated system, even for back then in 1988. They had a shared library, tools, multiplatform support, project planning, and project tracking. That was so new to me, and I learned a lot. I learned how to make games systematically, and I learned how to manage development teams - all in the States. I tried to apply those things I learned when I came back to Japan with my studio, and my team there, and it worked well.

GS: Do you think that there's more similarity between the two regions now than in the past, since that sort of interchange has been happening?

RN: It is (a bit more) similar, but still I think U.S. development is more planning-heavy, while Japanese development is more iteration-based. Japanese developers put a lot of time at the end into tuning or even scrapping things, but U.S. development is well-planned, so they make the game and finish it as-is. They don't like to scrap things at the end. If you plan it right at the beginning, that's great, but if your plan wasn't right, and you finish it, then it's done. In Japan they redo things a lot. It’s becoming similar though.

GS: What do you think it will take Microsoft to succeed in Japan, not necessarily financially, but in terms of really winning over the audience?

RN: Online. I don't know what's going to happen to PS3, so it’s (up in the air). Right now, in Japan, the Nintendo DS and the Wii are very successful, so many developers and publishers in Japan are focusing on the DS and the Wii, and very little on the PS3 and the Xbox 360. So eventually, most of the Japan-made games will be on either handhelds or the Wii.

They were ready to invest in the PS3, but the PS3 wasn't as successful as people thought, and it's expensive to develop PS3 games, so a lot of publishers now only do a couple of PS3 games, and many DS and Wii games. Then a little Xbox 360, because the 360 is successful in the United States. But its presence in Japan is small.

That was one of the reasons AQI started: to be uniquely positioned as a new publisher and developer. We invested heavily on 360, when no one else was doing that in Japan. We’re a 360-heavy company now. Back then, AQI thought the system would be more successful in Japan, but of course it wasn't actually successful. But, it turned out to be quite successful in North America, so our positioning is still OK. We make games for 360 not so much for the Japan market, but for the global market. Not many people do that.

Capcom does that, and does it successfully with titles like Dead Rising and Lost Planet. But very few companies invest in the 360 and very few do PS3 games. So what I’m saying is that you'll see a lot of Japan-made DS and Wii games in the next few years, but very few high-end games from Japan. For those high-end users, they’ll have to buy more Western games, even in Japan. I think they will start to get used to Western games more, if they want to play high-end games.

Capcom's zombie action game for the Xbox 360, Dead Rising

I think most of the Japanese gamers will go to casual games on the DS and such, but there will be a high-end gamer market. For those gamers, because of a lack of Japan-made games, they're going to start playing U.S. games. Then, I think the Xbox 360 will have a better chance.

Also, gamers will start using the Internet functions. Xbox Live is so sophisticated – on that point I think even Sony is behind, even after their most recent announcements, like Home. I think their infrastructure is still behind. If Microsoft has a chance to succeed in Japan, I think the Xbox Live services and new entertainment fully using Xbox Live are important.