The last decade has seen the balance of power in the gaming industry shift Westward. American company Microsoft carved out a beachhead in the console wars, while developers like Scotland's Rockstar North and California's Infinity Ward have been responsible for phenomenally successful series like Grand Theft Auto and Call of Duty.
The trend has not been lost on Japanese game makers. Square Enix president Yoichi Wada kicked off the 2008 Tokyo Game Show by likening Japanese publishers to heavy smokers that won't change their habits until a doctor gives them a diagnosis of terminal cancer. This year's Tokyo Game Show played host to a similarly glum assessment of the Japanese development community, this one from Capcom managing director Keiji Inafune.
Speaking with the New York Times, Inafune said, "I look around Tokyo Games Show, and everyone's making awful games; Japan is at least five years behind." He was particularly critical of game designers who find success in a genre and then stick to their established formula, saying that approach no longer works.
The industry's woes are by no means limited to creative shortfall. According to Inafune, there isn't enough financial support behind Japan-developed games as well.
"The business side is not keeping up with investment," Inafune said. "You need to be prepared to invest ¥4 billion ($47 million) or more on a game, and then spend ¥2 billion ($23.5 million) more to promote it. But Japanese companies can't do that. So we're losing out to the West in terms of investment in games. It's a vicious cycle, a deflationary spiral. Because you don't invest, you can't sell games, and because you don't sell games, you can't invest."
While Capcom has had success in the West in recent years with hits like Resident Evil 5, Super Street Fighter IV, and Dead Rising, Inafune said the publisher was "barely keeping up" with the changing industry. Lost Planet 2 in particular was a step back for the company, as Inafune called the developers who made it "misguided." He said they made it too much like Monster Hunter, which is exceptionally popular in Japan but has met with limited success in Europe and North America.
"I want to make games that travel overseas, but Capcom hasn't taken globalization seriously," Inafune said. "I want to study how Westerners live, and make games that appeal to them."
Inafune also pointed to other Japanese game makers who are succeeding. He noted Nintendo's leadership organization, saying 80 percent of the company's board of directors came from a development background and understand what is needed. He also praised Dragon Quest IX and Professor Layton developer Level 5 as forward-looking, saying, "In the future, they're going to top us."