How does one of the world’s oldest games publishers build its reputation on the global stage and prepare for the online tidal wave that will up-end the console business? Michael French speaks to the head of Square Enix to find out…
IT’S EASY BUT UNFAIR to paint publisher CEOs as ruthless, profit-hungry monsters. But on paper Yoichi Wada is cut from that very cloth.
The former chief financial officer of Square ascended to the role of CEO at the start of the decade to maneuver the firm through three audacious deals.
The first was a merger with RPG rival Enix in 2002, followed by the acquisition of Space Invaders firm Taito three years later. He completed the triumvirate this May by securing a strong Western operation via the acquisition of Eidos.
Square Enix is now one of the biggest publishers in Japan, and a global heavyweight.
So yes, on paper that reads like the work of a master strategist. And it is. But spend just a few minutes with Wada and he’s clearly more than an opportunist – he has a clear vision for the future of the industry.
One minute he remarks on the irony of a busy boss not having enough time to play his team’s creations, the next he’s passionately defending claims that the Japanese market is in a slump (he’s also the chairman of Japan’s ELSPA-equivalent CESA).
THE BIG VISION
Right now, Wada’s big preoccupation is keeping Square Enix relevant globally. Games have never been so popular to so many different audiences, and never been spread across so many platforms. Wada wants his firm to be there on every one, and courting every gamer.
“Games as a form of entertainment only have only 20 years of history, but it is something that will be penetrating all over the world in the years to come,” he tells MCV when asked about his decade spent expanding the publisher.
“It can penetrate into all sorts of demographics, so we have to base our corporate strategy on this. There are a lot of cultures to address, and we need to cater to the numerous platforms as well. We have to take in a lot of genres – that explains our regional spread.”
The biggest challenge for Square Enix is a commen theme: harnessing online. And, as we revealed last week, Wada believes that in the long term content delivered to TVs and computers by high-seed internet will grow so potent as to make consoles redundant.
“In 10 years time what we traditionally call ‘console games’ simply won’t exist,” he explains. “Somewhere around 2005 the console manufacturers’ strategy shifted. In the past the platform was hardware, but that switched to the network. A time will come when the hardware isn’t even needed any more.”
He’s not just talking about the current fad of social games (even though he has charged a team in Japan with working on social games for that market), but the wider issue of delivering content to connected platforms.
“Depending on who we talk to the issues around social and browser games is risky,” he says, adding that even the term ‘social games’ is too specific.
“But it is a an important area to address because it isn’t related to any consoles and doesn’t need specific hardware to run it, just applications, on the client-side.
"I believe that these types of games are going to be spreading and growing dramatically – especially in areas like Asia which does not have as many penetration of consoles. Its penetration power and destruction capability mean it’s an area we must tap into.”
Destruction capability – Wada chooses his words carefully, but even then the answer is dramatic. He is convinced that a transformation is due.
CHANGE OF PACE
Emphasis has been placed on both growing the Square Enix business and spicing up its heartland property Final Fantasy. Hence on the one hand the Eidos buy, new social games development, and studio collaboration between its entrenched Tokyo and new Montreal teams – while pushing Final Fantasy XIII as a highly massmarket property and releasing new MMO Final Fantasy XIV.
“Final Fantasy is our flagship title – so there is no way we will relax our attitude to it,” Wada asserts when asked how such a traditional franchise vies with the new digital frontier.
He also baulks at the idea that Final Fantasy, which has been countlessly iterated, is getting tired.
“I have thought about this for a while and a when a game has a good backstory and game world it’s something we cannot exhaust,” he says. “On the surface it might seem exhausted, but it’s what behind it that counts – we create different, highly immersive stories with each game. Take Mickey Mouse, he doesn’t seem exhausted. There are a lot of stories associated with him.”
Final Fantasy XIII is one of those big, epic stories – but now it has subtle tweaks such as a Leona Lewis soundtrack to give it more Western appeal.
Beyond that, though, comes PS3 MMO FFXIV. It’s not Square Enix’s first such game – it successfully run FFXI on PS2, Xbox 360 and PC over the last six years, but it was outshone by World of Warcraft, the genre’s posterboy.
Yet come next year Square Enix will be having to fight not just Blizzard, but also EA, LucasArts, Atari and others claiming to have the next big MMO.
Wada won’t rock the boat too much, though – the shrewd accountant in him says the business model for FFXIV will be the now-traditional mix of subscriptions and item transactions, plus sales of the game on disc.
“The basic model hasn’t changed.” But he says the firm has learnt lessons.
“In our first MMO we didn’t set up the transaction model that well. We thought that it would be a benefit for users, but that we wouldn’t have to charge. We soon learnt that there are a lot of people who want that kind of model, so we would like to introduce more pay-as-you-use items into the game.”
As the industry gears up for that new wave of MMOs, Wada sees an opportunity: He reckons that when WoW players look to switch, it won’t necessarily be to another Blizzard MMO.
“WoW is a tough competitor – they are very good. But whether you are talking about EverQuest, Ultima or Lineage there has never been a company that has continuously had the successful number one and two MMOs,” he says.
That leads back to his view that nothing can be taken for granted in the online space. But does he really think consoles will die out? Isn’t that a problem for the ecosystem of format-holders, developers and publishers the industry has cultivated?
“First of all the distributors and sales firms will see a big negative impact,” he concedes. “But since 2000 the format holders have known this shift was coming. Instead of relying on the hardware layer, the network becomes the operating system. That move away from clients to the network is something Microsoft has done – moving from clients to the server is something Sony has done.
“That is an over-simplified explanation, but philosophically it is how we distinguish what is happening in those companies.”
Press him on a larger timescale, however, and then he plays it safe.
“It’s tough to say at this moment,” he says, referring to the looser ten year timescale – but makes it clear the transition’s inevitability appeals to his hunger for expansion.
“The exact timing at which [consoles] will go away is hard to determine – but it will happen. With that you can see that any kind of terminal becomes a potential platform in which games can be played – that’s exponential growth in the potential growth of gaming. The potential size of the market is enormous.”