I've been left with the impression -- and obviously it's hard to get statistics -- that the console download services in Japan are not as successful as they have been in the Western markets, where the uptake on particularly Xbox Live has been very, very strong.
RI: I think there are some challenges in Japan, because traditional retail is so powerful -- and we respect them, and obviously work with them closely. So, there are waters that we have to navigate here.
But, absolutely, when basically 100% of the homes here have T1 equivalents going in, when I can go a half mile deep into a train station and have five bar 3G, as well as two Wi-Fi networks to choose from... The connectivity in Japan is tremendous. And I think that it's inevitable that consumers will want some choice, some convenience. Not all consumers will, but to those that want it, we should be offering games for download.
I think it's more of a surprise, almost, that the Japanese market actually hasn't taken off as much with download product as I think it could.
RI: Sure. I don't think that all the publishers have been willing to make a 100% effort to provide download options on all their games to the mass market consumers. That's a fact. I mean, I know that.
I don't know if you're familiar with the game series Disgaea.
They released a lot of downloadable content for Disgaea 3 on PSN, but then they recently put out a Blu-ray disc that contains that PSN downloadable content, that you can buy at retail. That's got to say something about the Japanese market, but I'm not sure what exactly.
RI: It's a very unique marketplace... Intellectually, emotionally, there's just some fundamental differences. The Japanese -- I'm going to somewhat contradict what I just said about downloads business, because Japanese love physical media as well. There's no piracy here. So, there's a number of things that add up, in a way that downloads doesn't become a means to the end for piracy, if there is no piracy. Even on DS...
There has been some piracy with the R4 card, though.
RI: Yeah. A little bit. But a very, very small market. Very, very small -- very little activity, and certainly not very measurable relative to the huge successes that we're seeing on DS and PSP games.
When you look at Japanese movie theaters, a large portion of the movies will be Western, and a lot of them will be really big hits. The Dark Knight was, when it came out, it was the best selling Blu-ray ever, at that point, in the Japanese market. Do you ever look at that and say, "How come we can only sell in five percent of the games?"
RI: Absolutely. Well, you know, it's a couple things -- and I'll speak in both directions. It's not all rosy; it's not all perfect in terms of setting us up to be 20 percent of the market here in Japan.
I'll give you some data. The music data is really hard to glean because there is some music piracy here in Japan, but if you look at movie box office here in Japan, in 2002, 75 percent of box office revenue here in Japan was from Western content. Today it's about 35 percent. So, it's a double-edged sword.
One is, we know based on production values, we know based on a number of different things, including, in a 75 percent scenario, heavy marketing from the studios, that Western content is appealing, and can do well in Japan, even with the impact of the internet. And more and more viral buzz.
Even with the emergence of a very healthy and vibrant studio system for movie making here in Japan, that is not just cranking out our perceptions of Japanese content, like Godzilla and whatever that might be in history, but great movies. Even with that, Western content is still at a healthy 35 percent.
So, on the one hand, the internet, viral, the healthy Japanese film industry that has grown, has caused 75 percent to become 35 percent, but, whether 75% in this day and age is unachievable? Certainly for Western games market, in this marketplace. But if I'm getting anywhere close to 35 percent, I'm much happier than I am at 5 percent.