Square Enix president looks ahead

  • By Walt Wyman, GameSpot
  • Posted Aug 1, 2006 4:29 pm PT

Company leader Yoichi Wada discusses the game industry's "growing pains," evolving business models, and the need for reformed copyright laws.

Yoichi Wada leads a double life as both president of Square Enix and chairman of the Computer Entertainment Supplier's Association, but he recently sat down with NBonline, the Web-based version of Nikkei Business, for some singular talk--on the future of the video game industry.

Wada has said in the past that gaming will move from an industry focused on game platforms to one focused on the games themselves. "That isn't to say the main role will switch from hardware to software," Wada said. "Rather, game content is branching off as an industry in its own right and is suffering growing pains in the process."

This predicament has been brought about by increasingly powerful hardware--everything from home computers to mobile phones can play games--and the diversity of media. "One no longer need rely on a certain game machine with a certain business model," Wada said. "Game content itself is starting to get its own defined market. The supply side [has to ask], 'How should we make our product, how should we deliver it to the user, and for how much?'...This is a new state of affairs, which I think is confusing both to the users and the suppliers."

The practice of selling games on CDs and DVDs at predictable prices makes it easier to plan budgets. But with the arrival of the Internet as a medium, "you can't even plan an estimate of income and revenue," he said. "This gives you the additional headache of figuring out how much to spend [on development]."

One way of getting around this is the monthly fee system many online games are using. "[But] this will not be the standard model of the future," he said. Microtransactions, for example, complicate the issue. "Should they be shipped on media or distributed through downloads? There is no one best method...[I]n the future there will not be just one business model, and it's worrisome that no one is preparing for this."

Regarding issues of intellectual property--the flashpoint for numerous recent legal debates--Wada believes that games must lead the way. "Almost all [other media] content is one-way: The supplier will always be the supplier, while the consumer will always be the consumer...The baffling thing about network gaming is that it's two-way. The content of networked communities is a joint product of the game's maker and the users."

Balance and fairness are needed in considering copyright issues, but there is too much ambiguity as to what constitutes permissible fair use, Wada said. "For example, the general feeling is that it's OK to broadcast online games live. However, people are starting to reconsider the practice of using game graphics to make movies and posting them on YouTube. The problem is that [these judgments] should not be based on the prevailing sentiment, but on rules."

"We wouldn't have gotten a game as wonderful as Counter-Strike without Half-Life. So the original rights must be preserved. However, any copy limitations would have hindered the development of Counter-Strike and prevented it from emerging," he said.

"We have to consider the reason why we have copyrights and rethink why the laws need to be changed. Further, we have to ask, 'How do we guarantee the laws will be effective?' We must complete each of these steps from scratch."

49 Comments

  • comthitnuong

    Posted Aug 7, 2006 3:44 pm PT

    i still dont get what redoing the copywrite laws will do

  • eric_neo3

    Posted Aug 3, 2006 1:08 am PT

    Talgrath I agree but this will mean war to the music industry, who only care about their own profits, and rich and powerful people arent always willing to change if it could affect either of their cash or power for the worst.

    I hope that they can fix the 'licencing' , 'right to use' and 'ownership' areas though, cause that would be moving forward instead of 6 steps back

  • Talgrath

    Posted Aug 2, 2006 8:53 pm PT

    Smart guy; though I would like to read what he thinks the solutions to this stuff should be, rather then just seeing him talk about the question I'd like to see him talk about the solutions, if only to see where he stands.

  • chikahiro94

    Posted Aug 2, 2006 2:59 pm PT

    Good read, and it seems he's aware of the how a game's community can add value to a product (I'm wondering if he's aware of the practice of PC game makers to release SDK's these days or not). The Yourtube issue is an interesting one - I'm sure while 99% of the stuff made is cool and all, that 1% could cause problems by presenting messages the company abhors ("Look! Squall thinks Nazi's are cool too! Lets kill people who aren't pure like us!"), or by someone making money off their IP ("Hey, want to buy the action only version of Advent Children?") - how should companies foster a community while maintaining control of what they own?

    Great stuff - hopefully they'll take a cue from companies like Valve, id, Epic, etc., in the PC market who have had lots of experience dealing with the needs of the developer & publisher yet have encouraged an amazing fan-based mod community and such.

  • WolfSkill5544

    Posted Aug 2, 2006 10:48 am PT

    smart guy

  • in2DarKneSs

    Posted Aug 2, 2006 10:38 am PT

    Basically what Wada means by "the general feeling is that it's OK to broadcast online games live. However, people are starting to reconsider the practice of using game graphics to make movies and posting them on YouTube. The problem is that [these judgments] should not be based on the prevailing sentiment, but on rules", is that people have no problem sending the games out there, but then in turn may have a problem with other people using those same graphics engines or programs to post on youtube or the like. He's saying that instead of people thinking well this is okay, but is this application okay, they should have rules governing it. To say what is okay and what isn't. Also, this may be way out to left field, FF games are cool and all but, where the heck is a freakin' chrono cross sequel?

  • samuelroberts

    Posted Aug 2, 2006 10:36 am PT

    Stop babbling, and release something in Europe sooner than 9 months after the US.

  • SolidSnake2020

    Posted Aug 2, 2006 10:27 am PT

    interesting.

  • Hellisunreal

    Posted Aug 2, 2006 9:04 am PT

    interesting points

  • vgjrockx

    Posted Aug 2, 2006 7:40 am PT

    QUOTE - mysticssj5gohan
    "Really? From what I knew, Korea was top of the line in terms of internet connectivity and broadband availability to the population at mass."

    I didn't say connectivity, I said familiarity. They really don't play games online as much over there. They are more into mobile and portable games. That's why the DS Lite is the top selling system over there and all the japanese games companies just decided to make mobile games. S.E. wasn't in mobile gaming three years ago but now they got like 6 or 7 mobile games coming. They aren't adapting to a global market. They adapt to what Japan does. If they were more in tune with what the rest of the world was doing they would have made an update to FFXI to make it somewhat like WOW, they would adapt more to the two analog control scheme that other xbox games use as standard, and they would know about how user communties make games viable years after being released. And for the record your right about connectivity the US is pretty much dead last in that. Although japan has the worlds fastest internet but they hardly know how to take advantage of it.

  • SemiMaster

    Posted Aug 2, 2006 7:03 am PT

    Is it just me or was that whole thing a bunch of malarcky? I had no idea what the heck this story said, let alone what it meant, if anything.

  • mysticssj5gohan

    Posted Aug 2, 2006 7:02 am PT

    Really? From what I knew, Korea was top of the line in terms of internet connectivity and broadband availability to the population at mass. Japan was second, and the U.S. was in the back with the lowest availability as a considerable amount of suburban and rural areas aren't privy to different choices. I know I have yet too see FiOPs come into my neighborhood let alone DSL...

    Edit: Might I mention, that due to previous experiance with Comcast, cable internet is NOT an option?

  • vgjrockx

    Posted Aug 2, 2006 6:40 am PT

    From what I've read before the japanese are behind the US and even korea in online gaming and internet familiarity, so for him to not understand the relationship some companies have between themselves and the communtiy of people who play their games shows Wada is behind the curve. He should've been asking this question about youtube and user created expansions like 3-4 years ago when Epic, Valve and others started releasing map editors for people to play with. Those companies already have a business model for S.E. to work off of. It's called let the users have fun and if they create something good then we buy it off of them and hire them on as employees. Xbox live and steam are the business models to follow for downloading retro, independent and original games. Expansion packs have been coming out on PC and Xbox for years, follow that business model. The only hard part about these business is the ability to predict howmany units you will sell. In that case predict low and if you sell high then you blow wall street away. And stop being paranoid about copyright issues. Stop pirating in big factories in china but let your community have fun with the elementary tools you release.

  • mhder

    Posted Aug 2, 2006 5:54 am PT

    It's amazing out of so much said by Wada, everyone takes just a small portion of it and starts guessing or complaining. And people complain about pricing or paying or copyright etc.. Put yourself in their shoes. It's pretty obvious that although everyone claims they want mature games etc, we're dealing with an immature crowd here that can't read or comprehend what's going on in the big picture. Things have to change, things are changing and the industry has to adapt. Wada answers questions with what seems like more questions.. that's typically Japanese ~ and philosophical...

  • RanXer0x

    Posted Aug 2, 2006 4:22 am PT

    Pipe dreams is all that comes to mind, when reading this; attempt to grasp at straws for a common benchmark for added content or "episodic" game products.

    He wants to see this form of transaction applied to a model across some factual board of hodgepodge. What he will get in reply is more drastic iterations of new and better ways that, in the particular topic, will never come to a single solid solution.

    We aren't talking about propritary hardware here. No, we are talking about fluxes from several veins of operation from just one, of many companies seeking to reach out to the people that are asking for (said content). This singular company might be held to other developers and distributors for a cut of this money, in turn, complicates the trickle effect and partitioning.

    He is essentally complaining about companies making more money that can easily be missapproprated or applied. A complaint vain and empty, as it is referred to as a growing pain and requiring new laws.

    Welcome to the Internet Yoichi Wada, your content is now unsafe and able to be consumed free-of-charged by most of the easy going public. This is a dangerous place, so please be sure to not stray too far away from the comfort zone we have made for you.

  • -Aegis-

    Posted Aug 2, 2006 4:16 am PT

    Yawn, boring. Hey Wada, just tell me when FFXIII is coming out.

  • elythemonkey

    Posted Aug 2, 2006 2:18 am PT

    Also if you really think about it. It's what Microsoft's Markerplace is doing all along. Leaders will lead and that's why XBL is being copied by all ( cough Sony/ Nintendo).

  • elythemonkey

    Posted Aug 2, 2006 2:15 am PT

    Nice, i agree that the industry must become flexiable and lead the way on media. Although his statements made more questions than answers, it should make others take notice and make media more widestream.

  • Digital-Devil

    Posted Aug 2, 2006 1:05 am PT

    I can't agree on you saying 360 owners dont like JP RPG's

    Honestly if it would send a blow to Sony like that would, do you think they would care?

    And also you see alot of "We're see this on the 360 soon" or" PLZ BE ON THE 360!" in FF topics

  • Myugenjin

    Posted Aug 2, 2006 12:46 am PT

    I highly doubt FF12 or any other major single player FF game would hit other console's. Simply because most 360 owners dislike JP RPG's . And the strongest selling module for SE has been with Sony!

    Now sure this WOULD all change if PS3 were a disaster! But from what i've heard SE is in talks of making a new multi-platform MMO thats not a FF11 sequel. Many software comps who've never touched an MMO or a STEAM like service are expected to release MMO's, user content, or microtransactions such as SE. Now he's just stating that problems will arise until there is a set "practice" much in the same way devs have in place 4 making single player games! Such as an MSRP for addons, monthly fees ect!

    So far the best model of this has been Halo 2's mappack in the since that 4 X amount of $$$ you get a sizable amount of content. Instead of each XBL user paying for each new vehicle, gun, or map that would limit/devide who plays on what games based upon how many mods they have! It would makes since for "episodic content" on Crysis to cost the same amount as "episodeic content" on Half Life 2. So basically a set price 4 games at $60, expansions/Econtent $?, and Monthly fees 4 all MMO's at $?

    (If Crysis were 2 go that route)

  • YoYo_Bridget

    Posted Aug 1, 2006 11:57 pm PT

    You forget osx, Japanese developers seem to hate the xbox for some reason....except Tecmo. lol. But who knows, it would be a smart financial move to release FFXIII on multiple consoles. It would show up on the 360 more so than the wii, cause we still don't know if wii would be capable of it. I mean...Nintendo admitted their console had the weakest processing power. But we'll have to see what happens, eh?

  • osxgp

    Posted Aug 1, 2006 11:50 pm PT

    Sounds to me he wants to expand on multible consoles, which is fine by me because compitition makes it better for consumers. Think about it! If Squenix puts FFXIII on mutiple consoles, it makes companies (Sony mainly) rely on other games to sell their systems. Besides, Squenix needs to broaden their market to those who cant afford all the consoles. Lets face it, there is no one console that has every game you want to play. Sony has FF series for now, Microsoft has Halo, and Nintendo has Mario, Zelda, etc. By expanding like EA does, it puts more money in developers hands to make more and/or better games for consumers.

  • EMAN2g

    Posted Aug 1, 2006 11:48 pm PT

    ROFL Counter-Strike...he better meant to say 1.6

    >_>

  • YEPEE00

    Posted Aug 1, 2006 11:31 pm PT

    jeez, abit let down. he sounds...deversive. "counter-strike", ae?

  • mastermind89

    Posted Aug 1, 2006 10:41 pm PT

    square's got a solid leader running them and i think its good for sum1 like him to reconize these overlooked complications. without such supervision, and/or revision of these issues could be largely problematic in uprising of new indie games.

  • kawakev

    Posted Aug 1, 2006 10:09 pm PT

    pip8184:
    That's not what he said at all... learn to read. He didn't position himself on the subject.

    His point was that it's not because everyone thinks it's ok that it should be the rules (something along those lines.)

  • DS_fan_atic

    Posted Aug 1, 2006 9:42 pm PT

    [This message was deleted at the request of a moderator or administrator]

  • OldWiseBob

    Posted Aug 1, 2006 9:15 pm PT

    A strong leader for a strong company.

    People can learn from him.

  • pip8184

    Posted Aug 1, 2006 9:00 pm PT

    he's saying posting ingame footage on YouTube should be ruled illegal?

    Shove that up yours, Mr. Wada.

  • FireEmblem_Man

    Posted Aug 1, 2006 8:14 pm PT

    "However, people are starting to reconsider the practice of using game graphics to make movies and posting them on YouTube. The problem is that [these judgments] should not be based on the prevailing sentiment, but on rules."

    What does this mean???

    I'm sorry, I am not trying to be a noob or not trying to flame here

  • digidevilwil

    Posted Aug 1, 2006 8:14 pm PT

    He has a good point on a great point on most of the stuff he says, but I don't fully agree with everything he says.. I think that SE does produce games of really high quality and presentation the games always have gorgeous graphics and such, but this is only the case half of the time. A game like FF7 dirge of Cerberus. To me they released it because they know FF and FF7 fans alike are going to buy it and they will get lots of money, because the quality of this game is very low compared to other games they have recently made like KH2 and FF12.

    The same can almost be said for the advent children movie, while the quality was absolutely amazing, and they probably did spend a whole lot of money making it, as a big FF7 fan I felt dissapointed in how aside from the characters and random easter egg references it hardly felt like it had anything to do with FF7 at all.

    I think SE has a mastery of attracting fans by releasing high quality games to get them hooked, and then throwing out a bunch of cookie cutter titles to put more cash into their pocket.

  • Knight_Rider_3K

    Posted Aug 1, 2006 8:10 pm PT

    If you can't handle internet distribution and a few YouTube videos, maybe you should just pack up your business now.

  • Digital-Devil

    Posted Aug 1, 2006 7:56 pm PT

    "One no longer need rely on a certain game machine with a certain business model"

    To me that hints at Square might be thinking of jumping ship, or atleast putting more on other consoles

    He brings up alot of good points aswell

  • Mush_Mouth

    Posted Aug 1, 2006 6:41 pm PT

    ...and with a name like "Writeous", you'd think they could at least spell...

  • Naruto

    Posted Aug 1, 2006 6:39 pm PT

    "Writeous
    Gamer_1001 no one care about your opinion..."


    Sony fanboy

  • jasonmacrillo

    Posted Aug 1, 2006 6:35 pm PT

    freakn fees.. i like free

  • Optimusv2

    Posted Aug 1, 2006 6:26 pm PT

    "One no longer need rely on a certain game machine with a certain business model," Wada said.

    Read between the lines.

  • Writeous

    Posted Aug 1, 2006 6:25 pm PT

    Gamer_1001 no one care about your opinion...
    And about what he said about the Copywite. For a Game so habe Detailer Copywrite laws that are stern would kid of turn the Gaming industry Topsy-terby.
    Which means alott of games would have the Free-Roaming ability, that we ALLL love in adventure games. And alott wouldent have Rag-doll Physics. & Madden wouldent have "QB pass Percision"

  • Des_Eagle

    Posted Aug 1, 2006 6:22 pm PT

    Again, there's a reason Square-Enix is the world's premier video game developer...

    They continually produce unbelievably good games (they're getting better despite what many may think...think FFXII....KH series), and based on this and other thoughts coming out of the big wigs, it seems that their business leaders have sense, too.

    This is what more companies need, and part of the reason EA is hated at times...Their corporate affairs think only of money, but it seems at SE they think of what they're producing before how much money they'd be getting. Luckily, everything's working out for them anyways.

    And the tidbit about games being important is SO true. This might sound weird, but that's why I'm buying a PS3 on launch day. Yeah, the extras included are nice, but its planned games (launch and beyond) just blow the socks off the other two companies' games (sorry, I need more than first party games and sci-fi shooters)...Or maybe it's just FFXIII (check the icon).

    Either way you look at it, this guy knows what he's talking about, and I just wish more corporate big wigs were like this.

  • sun_wyvrn

    Posted Aug 1, 2006 6:14 pm PT

    I can't agree with hplarjy more. Square Enix is a success for a reason.

  • arczero01

    Posted Aug 1, 2006 6:10 pm PT

    sounds good and makes sense to me

  • hplarjy

    Posted Aug 1, 2006 5:58 pm PT

    Another reason for Square Enix's success. Good leadership and heart.

    Keep it up!

  • Cartman86

    Posted Aug 1, 2006 5:54 pm PT

    A law that would make Counter Strike basically illegal would be very very stupid and I doubt would've ever been made. It's not a liscensed property and was made with tools that valve put out for people to play with. They didn't charge for it or anything like that. There is no need for any doubt in the case with CS. When you get into stuff like a remake of HL1 using HL2 then ok it could get sticky. Valve likes the idea, so there is no problem. However as this story points out there will be cases down the line where people do care.

  • gamer_10001

    Posted Aug 1, 2006 5:54 pm PT

    He's right about the "games leading the way". The only reason that I am not considering buying a PS3 is because the games don't pertain to me (not bashing the PS3).

  • GhettoGamer256

    Posted Aug 1, 2006 5:37 pm PT

    Very insightful. Very interesting.

  • new_orion

    Posted Aug 1, 2006 5:35 pm PT

    Chargin' for playing online sux......

  • noelveiga

    Posted Aug 1, 2006 5:32 pm PT

    That copyright bit was incredibly sensible coming from a big fish. Kudos. I totally agree, copyright needs to be redefined ASAP, and it must be redone considering both fairness, convenience and aplicability. I don't know what kind of model he's specifically thinking about but the proper abstract concepts are all there. I really don't know if the creative forces withing Square-Enix will keep fading in the future, but the business side seems to be in good hands.

  • mariomaniac92

    Posted Aug 1, 2006 5:27 pm PT

    How very Square Enixy.

  • -starter-

    Posted Aug 1, 2006 5:25 pm PT

    [This message was deleted at the request of a moderator or administrator]

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