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The Business Of The Japan Niche


July 7, 2009 Article Start Page 1 of 3 Next
 

Most of the mainstream publishers -- other than those Japan-based companies which release their own catalogues in the West -- may have lost interest in licensing Japanese console and handheld games for U.S. consumption. But this is not true for a growing number of small-scale publishers who are all vying for the same pool of products and seem to be immersed in a rough-and-tumble bidding war.

Winning, they say, depends not so much on who spends the most, but on whose connections and relationships are the tightest. And on whose localization skills are the most impressive.

The expanding competition for imports is due mainly to a challenging economy that puts a premium on games that can be had for a lot less than Western-developed games. Not only is there an abundance of unlicensed console/handheld games in Japan available for cherry-picking, but in many cases the games are already finished and their quality can be easily gauged.

"That's the main advantage of licensing Japanese games," says Ken Berry, director of publishing at LA-based XSeed Games. "Your costs are set from day one. Which differs greatly from going in and investing in the development of a game that could be delayed, or whose costs could spiral out of control."

"In most cases, when you license a Japanese game, you get to play the finished product before bidding for it. Smaller publishers are starting to see that as a great way to control costs."

On the other hand, Berry says, most mainstream publishers seem to be ignoring the plethora of Japanese titles because there's not enough in it for them. A huge licensed hit might sell 200,000 units at the top end, he says, but "a publisher like, say, Activision, is probably used to selling well into the millions on a domestic title. There's just no comparison."

XSeed is into its third year of licensing Japanese titles in North America, having opened its doors in November, 2004 but not having published its first product -- Wild Arms 4, for the PlayStation 2 -- until January, 2006.

While XSeed has evaluated a few European titles too, Berry says that his company, because it is still fairly small, needs to stay within its niche for a while, making full use of its competitive advantages.

These include the fact that all of its people are bilingual Japanese and that its president and founder, Jun Iwasaki, used to be president of Square Enix USA, the domestic subsidiary of Japan-based Square Enix. "His connections to the Japanese game sector are very extensive and we rely on them first and foremost," says Berry.

"Throwing a lot of money" at Japanese developers is not as successful a strategy as cultivating mutually beneficial relationships with them, explains Berry. "We aim for long-term, multi-title deals," he says, "which is why some developers bring us their games even before they show them to other publishers."

For instance, XSeed has been successful at building a relationship with Namco Bandai which began with licensing its Retro Game Challenge for the DS.

"We had to negotiate with them for months and months to finalize that deal," Berry recalls. "It was a title we really liked and we knew their U.S. office wasn't bringing it over. So our president put in some inquiries, found that it might be possible to license it, and we stuck with it for months until we finally did the deal."

"That definitely eased the process for the next deal, which was for Fragile for the Wii. That just shows you how important it is to build a relationship if you intend to license multiple games from a developer."

Also in its arsenal -- besides persistence -- is XSeed's own in-house localization team, which enables the company to specialize in story-driven role-playing games.

"Our bilingual staff has no problem playing through a 40-hour Japanese RPG, understanding what the characters are saying, and judging the quality of the game," says Berry. "They enable us to redo voiceovers, which otherwise would have been very time-extensive and costly work."


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