TGS 06: Wada urges game-industry expansion

  • By Walt Wyman, Tor Thorsen, GameSpot
  • Posted Sep 22, 2006 1:19 am PT

In his capacity as head of CESA, the Square Enix president tells Japanese publishers to go after nontraditional gamers.

A long line of jet-lagged foreign journalists lined up at the overseas press registration booth in the cavernous lobby of the Makuhari Messe, longtime venue of the Tokyo Game Show. Today marks the opening of the show, which was presided over by two of the Japan's most prominent and outspoken game executives: Sony Computer Entertainment President Ken Kutaragi and Square Enix president Yoichi Wada.

Starting off the day was Kutaragi's keynote speech, which many expected would be a massive download of PlayStation 3 information. Simply put, it wasn't. The executive talked mainly about "big picture" issues for the console, showed a few game trailers, and avoided speaking specifically about the console's upcoming launch. However, after the event, he did tell reporters the lower-end, 20GB-equipped version of the console would come with an HDMI port--and enjoy a significant price drop in Japan.

Kutaragi ran a bit late, postponing Wada's address to the crowd. When the latter took the stage, though, it was clear he was there not as the head of one of the world's biggest role-playing game developer, but as chairman of the Computer Entertainment Suppliers Association (CESA), the game-industry lobby which is roughly Japan's answer to the Entertainment Software Association.

After first taking the stage, Wada joked that he "had absolutely no surprises in store," eliciting laughter from the audience. He then gave an overview of the current state of the worldwide game industry, which is now worth an estimated 1.9 trillion yen (about $16.3 billion) annually. Despite some analysts' gloomy predictions, international retail games sales have expanded an average of 9.3 percent annually over the last four years. If income from online games is added to the equation, that growth rate shoots up to 11.9 percent. "You will not find any other segment that enjoys such high annual growth," he told the crowd confidently.

Journos line up to hear Wada speak.

Ironically, given his position, Wada has been a longtime vocal critical of the game industry in Japan. In his hour-long speech, he once again stressed the sector's need to move forward. His message was clear: Wada feels there is a lot of potential for growth in the ever-changing game market--and publishers must take advantage of this, or be left in the dust.

"Games will have to cater to a much broader spectrum to succeed," he said. "The crisis in the game industry is not volume, but quality. As far as volume goes, there is no need for concern. If you take a business-as-usual approach, there will be a crisis."

The executive's thoughts on untapped game markets seemed to echo those of Nintendo, which is attempting to reach out to nontraditional gamers with its Wii console--and already has with its DS handheld, which is extremely popular among diverse age groups in Japan. He said that although people associate games with teenagers, 50 percent of men and two-thirds of women under 40 want to start gaming.

From there, Wada gave a brief overview of pivotal events in Japanese game-business history, such as how the original PlayStation's introduction of discs as game media slashed production costs. "The appearance of the PlayStation has created a richer system for game [production]," he said. "SCE has brought down the cost of the hardware, and they have redistributed the savings rather well to their customers."

Wada then mentioned how the proliferation of increasingly complex electronics makes virtually any device a potential game platform. "I think the industry can respond to this challenge, as all kinds of devices are available," he declared. "Devices found in living room, in your office, and on your desktop can be used for games. Games will be available in all aspects of your life. Thus we see a wider range of people, such as females, with a growing interest in games."

However, going after that wider audience means a fundamental rethink on how games are made, according to the executive. "In the past, game users were young men," said Wada. "We have to grasp the needs of new customers, as lifestyles differ from customer to customer. We need to choose what is best for them. Until now, gaming machines were specialized devices. From now, almost every electronic device will be able to play games. There are great possibilities, but it will be very challenging for developers, because each machine will require different programming."

The Makuhari Messe, longtime home of TGS.

The Square Enix chief also said that soon, games will no longer be confined to the flat screen. He gave many futuristic possibilities for graphics, such as the projection of images on retinas, output through robots, laser beam graphics, and holograms.

However, in the nearer term, Wada sees the biggest advances coming from networked gameplay over the Internet. "Communication with certain rules is what games are all about," he proclaimed. "Until now, only creators produced content. From now on, though, users will also produce content, and consumers can join game-creation networks." This, in turn, will change the emphasis of development itself. "The community itself may soon become the value of the content," he said.

The key to this new online paradigm, Wada asserted, was the massive exchange of data now possible between gaming machines. That, in turn, will also allow for "a historic change in cost" via digital distribution of games and new business models such as scalable pricing. "There are huge opportunities in the game market, but these require huge changes from the publishers," Wada concluded.

60 Comments

  • wellfeedmonkey

    Posted Sep 25, 2006 10:31 pm PT

    If any change for the industry is going to be positive then $400-600 for a console is not the answer. Would you rather play a killer fresh new title or surf the net and look at pictures on your console? The decision isnt hard. Iwata says we need to look out of the box basically but yet square keeps making sequels. Hypocrit. Hour long talkin hypocrite.

  • MajicManj

    Posted Sep 24, 2006 4:52 pm PT

    Humorguy_basic

    What is your reasoning to believe that gaming has no future?

    It has grown immensely in the past 10 years and continues to attrack new players and different players. The number of women playing has increased, the number of people older than 30 has increased too.

    Looking at the huge numbers of consoles sold by the Nintendo, Microsoft, SEGA and Sony over the years it would seem that the future is bright.

    The huge investment by Sony, Microsoft and Nintendo for this generation would seem to indicate that a majority of people see the industry growing. As evidenced by Microsoft entering the market this current/previous genertation.

    What current markets do believe will shrink? And why?

    Also, if the FPS market shrinks, does that matter? 1v1 fighters are not as popular anymore but other markets emerged to fill that space occupied and expand the overall market. These new markets include RTS and FPS. Casual games have also become extremely popular.

    If you have links of information or stats/facts I am interested in reading as to why and who says the current markets will shrink with no new markets emerging or a re-emergence of older markets.

  • Humorguy_basic

    Posted Sep 24, 2006 12:16 pm PT

    I have read and watched around 7 so called interviews of industry people talking about the market. I say 'interview' advisedly as I never see the interviewer respond to a statement by saying something like 'if what you just said is true, why is it that....?'

    From listening and reading what these industry people have said, I can only conclude there is not much life left in either PC or indeed console gaming.

    We are just going to see retro gaming continue to expand and current markets shrink, as we have seen now for the past 18 months. When the Wii does average numbers and the PS3 doesn't match even half the sales of the PS2 first six months sales, the picture will be clearer for everyone and then there will be more voices like mine.

  • _Sam_

    Posted Sep 23, 2006 4:38 pm PT

    interesting speech.

    yea, how is he a hypocrite?

  • Mkeegs79

    Posted Sep 23, 2006 2:55 pm PT

    Hypocrite? You guys are ridiculous. You think he can do it all himself? He is talking about the way we play games! He is not saying we should all make different software. That would be ridiculous. They make a lot of money on Final Fantasy and Dragon Quest series. Why would they suddenly stop. If they had a new format like a way to play on holograms then a Final Fantasy game would be played in a different way and can open up more possiblities. I swear Gamespot has some of the most immature readers.

  • MajicManj

    Posted Sep 23, 2006 1:17 pm PT

    Wow. That is a lot of anger directed at Mr. Wada.

    It seems misguided.

    Square did The Bouncer and Bushido Blade. Sure SquareEnix makes RPGs. Why wouldn't they? They sell, they are usually high quality, and they offer different types of RPGs. Kingdom Hearts, Final Fantasy Tactics, Dragon Quest, Radiata Stories, etc. These series all play differently and many have evolved. Also, why would SquareEnix develop for the XBox? Dragon Quest VIII sold 3 million copies in its first week in Japan, but doesn't sell as well outside Japan. Why would they develop a 3 million-plus seller for a system with less than 200,000 units sold in Japan? They wouldn't, because, simply, that makes no sense and is finacial suicide.

    Now they are developing a new DQ for the Wii. DQ Swords to use the Wii remote, that too can expand the market.

    Square also does try to expand the market.. Kingdom Hearts is clearly aimed at getting females and non-hardcore players to check out RPGs. That does expand the market. Also, prior to FFVII most people in North America did not play RPGs. It was a very small niche market. The use of cutscenes and CGI did make RPGs mainstream, thus expanding the market.

  • Maquis_UK

    Posted Sep 23, 2006 10:16 am PT

    a total hypocrite. final fantasy 12? FFX2? Dragon Quest 46? if he wants to see innovation and expansion, he needs to look outside Squeenix HQ. try Tokyo Nintendo, you dopey gomper.

  • Danthegamingman

    Posted Sep 23, 2006 8:39 am PT

    Dear Mr. Wada

    You talk expansion yet give barely any support to the Xbox 360. You sir are a hypocrit.

  • Humorguy_basic

    Posted Sep 23, 2006 6:26 am PT

    That's the problem right there - an industry that thinks a 'traditional gamer' is anybody who buys into graphics and high technology. 'untraditional gamers' are the one's saying 'why won't it run on my PC?', 'why are all games getting so alike?' Why are there so few genres any more?'

    This latter group ARE the gamers!!! And what service do we get?!

    I have seen an interview with Epic, the producers of the Unreal engine saying they only sold half as many of Doom 3 as they did Doom 2 because people didn't have the PC's to run it. Needless to say, the interviewer did not say 'well, write games for the PC's that ARE out there then!'. Which tells you something about games producers and something about the gaming media!

  • link3ri

    Posted Sep 23, 2006 2:14 am PT

    Yes, this war between fanboys is pathetic...

  • jakeboudville

    Posted Sep 22, 2006 9:48 pm PT

    interesting...

  • rarson

    Posted Sep 22, 2006 9:28 pm PT

    ElToRo_14, right on!

    The current trend of the two console companies is to push the tech further and further. How well do you think the game industry would do if ALL the consoles were $499? New tech is great but we need to get back to bringing it at reasonable prices. As it is, software has never been able to fully justify a $500 console no matter how good it is.

    High prices and lack of fun was the cause of the first crash. The market was saturated with average and below average games. The mass market isn't interested in whether or not their setup has 1080p instead of 1080i, as the mass market probably doesn't even own an HDTV yet (or maybe I'm just way behind the times).

  • ElToRo_14

    Posted Sep 22, 2006 7:00 pm PT

    Everytime theres an article on the ps3,wii, or the 360 there's always this little war going on int the comments section. It's ridiculous if you ask me. Anyways, its amazing that Wada out of all the people in the gaming industry would say something like this. But i think his speech should have been a real eye opener for most of you guys here at gamespot. If the Industry doens't start attracting nontraditional gamers then its going to crash. Maybe thats a little bit too harsh but you guys are smart enough to get the point.

  • blackIceJoe

    Posted Sep 22, 2006 6:11 pm PT

    I wonder if the 20 Gig PS3 got a HDMI port. I wonder if the 60 Gig PS3 one will now get another HDMI port just like it was shown at E3 05. I think if it is added that would be neat.

  • noxian

    Posted Sep 22, 2006 5:12 pm PT

    SergeStorms
    At a certain point in a gaming executive's career, is it a necessary resume builder to get up in front of a conference and journalists and predict doom for the industry unless it follows his advise? These speeches are getting pretty boring. You want to impress me with a future vision Wada? How about making a game that is not a rehash of the last successful game you made over and over and over. Start saving the industry yourself.
    --------------
    then don't jump up and down the next time an exec does the same speech, cause there wasn't much that was all that groundbreaking this TGS. Sakaguchi's Mistwalker RPGs looked nice but Blue Dragon came off as just another turn based, menu based jrpg. Lost Odyssey's presentation was nice but once again, a look at the actual gameplay would point out thats its still mostly presentation on top of the same conventions. And if you actually listened to what Sakaguchi said versus oogling the fact that its Sakaguchi, one might notice that his design goals for LO were eeriely reminiscant of everything that S-E said was their next-gen goals. thats just one example, but the point is there wasn't many speeches that weren't the same ol' PR releases.

  • SergeStorms

    Posted Sep 22, 2006 4:23 pm PT

    At a certain point in a gaming executive's career, is it a necessary resume builder to get up in front of a conference and journalists and predict doom for the industry unless it follows his advise? These speeches are getting pretty boring. You want to impress me with a future vision Wada? How about making a game that is not a rehash of the last successful game you made over and over and over. Start saving the industry yourself.

  • calvinx6

    Posted Sep 22, 2006 3:39 pm PT

    I Very SORRY WADA I Really mean two Thumps UP. i 100% agree with you.
    DS and Wii are the Future of this industry.

  • calvinx6

    Posted Sep 22, 2006 3:34 pm PT

    Two Middle Fingers up for WADA>

  • ResidentBio

    Posted Sep 22, 2006 3:19 pm PT

    you meant Shinji Mikami

  • JaMeS4418

    Posted Sep 22, 2006 2:00 pm PT

    wada is kutaragi's new sidekick. Pretty cool

  • Shakrano

    Posted Sep 22, 2006 1:32 pm PT

    No, the retina thing wouldn't be painful. However, if something happened to the machine, then yes it would become dangerous. Holograms would be interesting, but I doubt that's happening anytime soon

  • metdevthegamer

    Posted Sep 22, 2006 1:24 pm PT

    I don't like that "projection of images on retinas" idea. Wouldn't that harm or injure the eye in some way? The idea just doesn't sit well with me.

  • Rhubarb9

    Posted Sep 22, 2006 12:49 pm PT

    I don't like this

    it means that lesser games will intrest me as a young male ;D

  • faridmon

    Posted Sep 22, 2006 12:36 pm PT

    he is very wierd this time, he had good speech before and i respect Wada like i Respect Hideo Kojima and Shiji Megami, but he is full of him self today.
    i mean, he is talking about how he would invite nontradition gamers, and ironicly he is talking about the PS3 and how the Casuals and Cooking Mama players would consider this expensive Machine.
    i don't see my sister buying the PS3 and yet he is iverconfiodent about it.
    wierd.

  • gamer_10001

    Posted Sep 22, 2006 12:32 pm PT

    This was very insightful.

  • ShadoweaverCode

    Posted Sep 22, 2006 10:45 am PT

    why is wada, kutaragi's little sidekick? i know he also represents CESA alongside square-enix and he made his speech very CESA related and said nothing enix based but it just seems like if CESA was that important they could present (at least sometimes) without the presence of kutaragi (or maybe at a nintendo event?). if CESA is there presenting new ideas to invent new ways games are implemented, and sony feels the need to talk about ps3, it would seem like nintendo and xbox would have every right to show footage, even if it was something that we all have seen, just to make it more balanced. It just seems like a huge brainwash ceremony with kutargi up there going 'ps3 this.... ps3 that..' trying to get people to see how great the ps3 could be, then wada steps in saying how we can change the face of gaming altogether, i dont know just seems that if wada was presenting at any event that was either nintendo focused, xbox focused or whatever, that wada's speech would improve whatever speech was before it. Which is common, but only with people that actually work for that company. Sort of like a Miyamoto/Reggie speech vs a Kutaragi/Wada speech. Too much the same for wada not to be working with Sony.... perhaps CESA is a working production of SCEA?

  • joeamis

    Posted Sep 22, 2006 10:40 am PT

    All electronic devices, who is ready to play pong on their microwaves LCD screen? jk haha, good talk Wada.

  • DreamworkS12

    Posted Sep 22, 2006 9:38 am PT

    A BIG middle finger goes up to YOU Wada!! Japanese Devs... do what you want... don't listen to him! Pshhhh, telling them not to focus on us traditional gamers.. who does he think he is?? He wouldn't even have money in his pocket if it weren't for traditional gamers!!!

  • bamf03

    Posted Sep 22, 2006 9:04 am PT

    Trying to target non-gamers is not the answer. You can't come up with new IP's show them to non-gamers and hope they'll take the bait, they'll just turn away. If this new research is right that tells us that only 3.6% in the US are considerend to be hardcore gamers then what developers should be doing is targeting the other 96.4% and getting them to play more. Its 100+ millions of people who play only a around 8hrs a week according to the study. I imagine they're not big on buying games every week like some of us.

    Gaming is and always will be an activity that you do now and then (I am talking about the majority) it will never become a priority in your life.

  • ArchAngel2284

    Posted Sep 22, 2006 8:55 am PT

    wada is cool

  • Charlie2688

    Posted Sep 22, 2006 8:09 am PT

    Interesting

  • comthitnuong

    Posted Sep 22, 2006 7:56 am PT

    historicl change in cost.....i hope he means cheaper

  • The_Weekend

    Posted Sep 22, 2006 7:54 am PT

    Nice comments.

  • A-TEX

    Posted Sep 22, 2006 7:45 am PT

    All nonsense that means nothing for customers right now.

  • dreamdust

    Posted Sep 22, 2006 7:40 am PT

    "Huge changes..." Well, when SquareEnix makes a good game that's not an RPG then I'll start listening. lol

    I kid, I kid.

  • Silenthps

    Posted Sep 22, 2006 7:35 am PT

    How did playstation slash the cost of production? They obviously never heard of sega cd, saturn or dreamcast!

  • princeofgames90

    Posted Sep 22, 2006 7:02 am PT

    and how long does he think that "games will no longer be confined to the flat screen" short i dont think saw i mean they jest started using HDMI

  • NECR0CHILD313

    Posted Sep 22, 2006 6:46 am PT

    I'VE BEEN BLINDED! THE PS5 HAS BLINDED ME! DAMN YOU WADA WITH YOUR CRAZY RETINA IDEAS!

    Well, at least Ellen Degeneres will give me a Wii.

  • LordAndrew

    Posted Sep 22, 2006 6:38 am PT

    "SCE has brought down the cost of the hardware, and they have redistributed the savings rather well to their customers."

    Until now.

  • blacktorn

    Posted Sep 22, 2006 6:37 am PT

    Everyone has imagined hologram images since the 70's.Yet 30 years later there have been no advancements in it,or not that we know off.What is needed to make holographic images anyway?I gues the price of the hardware needed is in the six zeros at least

  • Dreski83

    Posted Sep 22, 2006 6:33 am PT

    A lot of this may come off as some crazy future jargin that seems many years away from now, but I got a good feeling that by 2010 this stuff will become the norm.

    only creators produced content. From now on, though, users will also produce content, and consumers can join game-creation networks." This, in turn, will change the emphasis of development itself.

    That statement alone tells me 2 things, the porn industry will find their way into online gaming cause people are lonely and have too much money and not enough places to spend it. Also, anyone else find it kinda cool but kinda lazy that a few big name companies are allowing gamers to create the game trailers?? Yea, just think of Final Fantasy being a major franchise that speaks totally for itself not only thru sheer numbers but fanboys who adore but pretty much could do the marketing for them. A bit aggressively I imagine, but if developers make the goods things still spread by download and word of mouth

  • Demonbob

    Posted Sep 22, 2006 4:27 am PT

    The Square-Enix chief also said that soon, games will no longer be confined to the flat screen. He gave many futuristic possibilities for graphics, such as the projection of images on retinas, output through robots, laser beam graphics, and holograms.

    Onto retinas? That does not sound safe. :p
    Holograms would be cool, but there's really no new NEWS here I don't beileve.

  • LorenaLarue

    Posted Sep 22, 2006 4:20 am PT

    It's big Big BIG. I'm talking Bigrigs kind of big. Where everyone is YOU'RE WINNER

  • thepyrethatburn

    Posted Sep 22, 2006 4:02 am PT

    Despite some analysts' gloomy predictions, international retail games sales have expanded an average of 9.3 percent annually over the last four years. If income from online games is added to the equation, that growth rate shoots up to 11.9 percent. "You will not find any other segment that enjoys such high annual growth," he told the crowd confidently.



    In a way, it is interesting to hear Wada say this given how so many within the industry itself have been bemoaning the rising cost of games and how things such as piracy and buying used games are threatening to sink the industry while others in the industry are have stated that the only way the industry will survive is through the use of microtransactions and monthly fees. It sometimes seems as if the industry has a split personality on the overall financial health of the industry.



    I'm also a little skeptical of the whole "digital distribution" that he mentions as this often seems to include Draconian DRMs or Steam-like measures where the customer no longer owns the game so much as he is leasing the ability to play the game.

  • jakeboudville

    Posted Sep 22, 2006 3:40 am PT

    very interesting

  • Brock_UK

    Posted Sep 22, 2006 3:10 am PT

    That's a bit harsh teknocack....a bit below the belt I might say old chap :O

  • eiru

    Posted Sep 22, 2006 2:54 am PT

    f u t u r i s t i c talk

  • EMAN2g

    Posted Sep 22, 2006 2:41 am PT

    EL 0h EL @ Funglip stup...missimformed n00b... xD

  • chikahiro94

    Posted Sep 22, 2006 2:40 am PT

    @soupboy76
    Actually, Square Enix owns Taito.

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