To run any business or team properly, you have to have enormous self-belief that your strategy and vision is the right one.
Square Enix president and CEO Yoichi Wada doesn’t just have self-belief, he has one of the most surprising views on the future of the games market.
The man behind the most respected third-party Japanese video games producer thinks that the time is running out for the platforms it has built its business on. Games on consoles, he tells MCV, will likely have transferred to server-based streamed experiences within a matter of years.
Astute MCV readers will know Wada has long held this view – he predicted home consoles’ demise in these pages three years ago, predicting the dominance of the cloud within the next seven years.
When MCV meets him again at the Square Enix Europe Wimbledon HQ, it’s not just clear Wada is still convinced, but that his view is more assured. The switch could come by 2015, he now says.
Good thing, then, that Square Enix has invested so widely in online strategies, from MMOs based on Final Fantasy to download-only Lara Crofts, from backing OnLive to different iPhone game pricing (some of the industry’s most expensive).
And most recently: Core Online, a new in-browser HD service that streams back catalogue games over the web for free, provided users watch TV-style ads between gameplay sessions.
It’s the second online project from the firm’s new Copenhagen studio, which is also building a virtual world with browser games firm Bigpoint.
“As a platform Core Online is in very early stages,” explains Wada. “We are trying experiments of all kinds in this space.”
Square Enix’s rich online business sits next to a boxed product line-up that still does the business. Sleeping Dogs, a new IP released at a time when new IPs aren’t supposed to succeed, is currently riding high in the charts. It has two major blockbusters, Hitman and Tomb Raider, due either side of Christmas. So it’s no wonder that Wada almost downplays the innovations the firm is making on the web.
He describes the firm’s online activity as “relaxed experiments” and “a rough plan B”, adding: “We will continue of course the download of games and disc-based releases.”
But he’s being modest about a pretty visionary plan. Wada is still the only senior publishing exec to confront the elephant in the room for Nintendo, Sony and Microsoft. Valued partners they may be, but Wada says their hardware platforms are on borrowed time. Riccitiello and Kotick? They have still been too polite to be so blunt.
Wada’s argument for the rise of cloud games is compelling.
He said: “Previously when we used to think about how to make a game work, we only had to think about the game console, and now time has changed.
“But if you think about the previous 30 to 40 years in computing, we had host computers or a server, and the clients running on them. The pendulum has been swinging between them over time, from IBM on servers to Microsoft on PC and then back to servers with companies like Google and again back to host computers with Apple’s native apps. Currently, HTML 5 and Google Chrome has shifted back to servers again.”
Core Online has been built using a mixture of Square Enix and Google technology, to help the firm “cope with this transformational period in our industry,” said Wada.
“We have a polarised way of thinking,” he said of having both a cloud-based and traditional games business, but he’s adamant that in time the server will totally dominate.
“Currently only the CPU and the GPU remains on the computer side. But in the next five years or so, give or take a few years, there is a chance you won’t even need the CPU and GPU on the client side.”
Won’t that pendulum swing back to consoles when new Sony or Microsoft hardware arrives?
“I think there are two scenarios that will live in tandem,” he answers. “In one scenario, yes, the client [console] becomes more heavy. But also the server becomes more heavy. As an overall direction? It’s a shift to the server. 20 years from now I see cloud as dominant.”
This is Wada’s gut instinct strategy. It’s not formed via industry consenus, but it is sensible.
“Well, no one has given me any hints,” he jokes when MCV asks why he is so adamant. “I think we should be doing these things – and I want to do it.”
There’s even environmental benefits to a switch to the cloud.
“I own around 10 computers. One at work, one for business trips, three game consoles, two smartphones, an iPad, another tablet. All GPU, CPU and storage – that’s such a waste of resource. If everything in those can be on one server, that’s much more environmentally friendly. Of course there is a demand for a faster broadband infrastructure, but I think that will end up cheaper over time. Globally, as a trend, that points towards the server side.”
So when will Square Enix launch its first server-only HD game?
Wada considers his answer first: “Probably within a few years’ time.”
He’s swift to clarify that “we’re not going to do Core Online exclusive games”, and that much more experimentation about the delivery and promotion of cloud games needs to be done first.
“We are not at a stage to bet only on Core Online. In order for it to become the core of the group we need to have success in three different areas – technology, the business model and marketing. And I mean marketing a broad sense, from promotion of a game to community management.
“But if those three experiments are successful we might work out a tactic that means we focus on Core Online.”
Yet despite his coy answer, Wada has such confidence of vision MCV can’t help but think that for Square Enix, it’s a matter of when, not if.