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Wednesday, Dec. 11, 2002
CHALLENGES LURK IN THE PRESENT
Game writers hope merger buttresses their kingdom
Can the heroes of Final Fantasy and Dragon Quest join forces to save the declining kingdom of home video games?
The presidents of the nation's two top game software firms say they can, recently announcing a plan to merge on April 1 to create the nation's most powerful video game house, with those two blockbuster titles at the fore.
In an interview with The Japan Times, Square Co. President Yoichi Wada and his Enix Corp. counterpart, Keiji Honda, said the main goal of the merger is to establish a larger presence to prepare for emerging multimedia platforms, including online games, cell-phone games and the next-generation home game consoles expected to debut around 2005.
"A leading company's research and development team exchanges information with only one or two (software) firms" when developing a new product, explained Wada, who will become president of the new Square Enix Co. "That's true of hardware makers, telecom carriers and other service providers."
"The strong presence (of the new firm) is necessary to forge such a partnership," added Honda, who will become its vice president.
Square is known for the Final Fantasy series, which has sold 42 million units worldwide, while Enix is famous for its Dragon Quest series, which has sold 30 million copies in Japan. The two are no doubt the nation's most popular titles.
But dark clouds are looming even over these industry leaders, as the domestic market has been shrinking in recent years.
According to the Computer Entertainment Supplier's Association, the domestic game market shrank 9.9 percent year-on-year to 264.1 billion yen in 2001 for the fourth consecutive year of decline.
Association officials attribute the fall to such factors as the reduced amount of time consumers devote to games, turning instead to other forms of entertainment like the Internet and what's available on their mobile phones.
The game industry is now pinning its hopes on the newly emerging multimedia platforms, and cross-industry cooperation is considered a must, as Wada pointed out.
The potential of overseas markets is another factor prompting the two companies to merge.
Enix launched its online game service in China in January, and the number of registered users has exploded, already reaching 6 million.
Unlike the sluggish domestic market, the two firms' overseas sales have been steadily growing in recent years, as Square has maintained a strong edge in Europe and the United States, and Enix has advanced into other parts of Asia, particularly China.
"We're in different regions (of the world), so there won't be any friction," Wada said.
The new company will definitely be more aggressive overseas, but this will be mainly through reinforcement of marketing and sales channels, not via development of games that specifically target the tastes of foreign customers, Honda said.
"We know the domestic market best," he said. "We should first make a game that will be accepted by one certain market (before shifting attention to other countries).
"The video game market is one of the few markets that the Japanese have created from scratch. I think we succeeded because we did something original, and we must keep doing that."