You’re setting out a new vision for NBP in Europe. Can you summarise it for us?
Namco Bandai has a vast heritage in the games industry, with Pac-Man, Soul Calibur, Ridge Racer and so on. But it has never had a strong task force in Europe. Because of this, we acquired part of Atari’s European business to form Namco Bandai Partners.
We have set ourselves a challenge in widening the Namco Bandai portfolio. We want to be a major company – a top five publisher – in the games industry worldwide.
But we cannot do that with the current portfolio, which is mainly focused on Japanese games. We have Dragonball and Naruto, which are great licences that do well in some territories. But in places like the UK, we have an issue in trying to launch them.
To be one of the key publishers in the future, we need to develop Western, non-Japanese games. The fact that Namco Bandai has made the full acquisition of Atari’s distribution business is a sign that they need and want to grow. To run 16 offices globally costs a lot – to fulfil this potential we need to have a large and good portfolio.
We want to have games for kids and we want to be in the third person shooter, real-time strategy, first-person shooter and racing market. We want to be in every genre.
Is Enslaved a good example of your commitment to creating Western IP?
For me Enslaved is much more than a product, it is the symbol of the future of this company. The game looks incredible, the studio is well-known and everything is on track.
However, we need more consumer awareness. It’s important for consumers to play Enslaved because it could be the benchmark of what we have to make as a company. In five years Enslaved should be the most important franchise for Namco Bandai. Enslaved 2 and Enslaved 3 should be our Gran Turismo or Uncharted. We need to have this type of game in each genre and make a portfolio that is consistent. Our industry is built on sequels so we need to create franchises and Enslaved is a triple-A.
But you still have a lot of Japanese, anime products on your slate. Are they hard to sell in Europe?
In many European countries – such as France and Spain – consumers eat, sleep and live manga licences. However, the UK culture is quite different.
I am convinced there is a market for these games in the UK. We know that the potential isn’t as big as it is in other territories, but there is absolutely a community in the UK for Dragon Ball and Naruto, and it is up to the UK office to work with this community.
The problem is these franchises are not on UK TV anymore, so they don’t perform as well as they used to.
Going by your latest financials, is it fair to say that last year was a difficult year for Namco Bandai?
Whenever a company makes losses, it is a difficult year. But I don’t think many companies in this market made profit last year – apart from maybe Activision.
During this difficult time, Namco Bandai took the opportunity to make two acquisitions. One was the former distribution part of Atari, which was a major acquisition because you are buying a huge business with many offices and staff.
The other was publisher D3P that has titles such as Ben 10. It was hard but it was a time when Namco Bandai moved to secure growth and a strong line-up.
What’s the future of the D3P label?
D3P label has a very clear positioning. The D3P business has been fully integrated into Namco Bandai in Europe and will fully focus on kids product.
And how did Namco Bandai perform in Europe specifically?
We are not communicating on these figures. We are of course suffering from the market, but honestly we were very close to our forecasts.
The thing that has complicated the company is managing our inventory at retail. DS and Wii sales just stopped, and it cost our company a lot of money trying to manage that.
Namco Bandai bought a distribution business for boxed product just as everyone focuses on digital. Why do this, and what are your thoughts on digital downloads?
Today digital is a significant part of PC gaming. We are a Japanese company and Japanese companies are not known for PC titles. But we need to have a product on every platform – including PC – so in that sense digital will start to become more important for Namco Bandai. There is better margin and using a digital platform gives us direct access to the consumer.
But in terms of console, it is a little bit too early to say. The only real business model for digital on consoles is DLC because the consumer will always want to have the box because it is an expensive thing.
I think that today we are seeing the first big crisis of the video games industry. There is less money, there’s a high level of piracy, if you go into retail you’ll see 80 per cent of the shelf is made up of second-hand. And there is now a system of new downloadable sales that is becoming very strong.
I feel all the big video game companies need to join together in a worldwide summit to discuss the future of our industry.
We need to discuss with the first parties about the huge difficulties behind the current retail system. It is impossible for a publisher to make money on a £15 DS game, for example. We have to sell that game to retail for lower than that price and we have to pay all the marketing, production and distribution costs. This just isn’t a viable business model.
So what we need to do is discuss with first party and retail about their vision of digital sales and the future of the business.
What do you think the solution is?
I think that games are too expensive. With the cost of development and the retail margin, £40 is a fair price, but for the consumer it is too much. From September to December there are three new blockbusters every week, and consumers just can’t afford to buy them all. I feel a good price of a game should be around £20. But for this price we won’t be able to make a ten to 15 hour adventure. So for £20 we should offer consumers four-to-five hours of gameplay, then after that we can make additional money by selling DLC. This is one route the industry will look to explore for sure.
Has the bubble burst for the Wii and DS?
It’s a tough market. DS is the most successful platform ever, but all my kids’ friends at school have a DS with an R4. They have 100 games for no money. So yes, the market has collapsed for the DS and Wii.
I am very sad about this. One of the reasons the DS collapsed is piracy, it is very clear, but also it is a fantastic machine and very easy to develop for. It was possible for three kids in a garage to make a game for it.
We had a lot of product, and the average quality of a game on DS and Wii is very, very bad. So in the mind of the consumer today, to buy a DS or Wii game is to buy a game that isn’t very good.
You’ve got several properties for PSP – why support this platform?
We are a Japanese company and PSP is very strong in that country. God Eater has shifted 600,000 copies in Japan alone. We have quite a number of PSP games developed for the Japanese market, so we look at the ones we feel has potential, and as the development cost is already paid for, we just need to localise the product.
We will not do this for every PSP game, but if the game’s quality is good then we will invest in it. I think it would be a mistake globally not to have a good PSP line-up. If others won’t invest in PSP, then maybe there’s an opportunity there.
Square Enix and Tecmo Koei have expanded across Europe. Why are many Japanese publishers opening offices in Europe?
There is a big difference between having a sales office in London and having a distributor in every European territory.
It is very expensive to have such a large taskforce and develop enough titles to fulfil your network. And it is clear that the market isn’t heading in this direction – it is heading towards consolidation.
As other companies reduce their task force and look for one big partner in Europe, that can be us. Our resource and access to retail is unmatched.