Square Enix president looks ahead

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."