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Bandai Namco on Little Nightmares 2, Tori and why Europe is ‘the future of the group’

Gamescom 2019’s Opening Night Live was full of announcements and reveals, from The Witcher 3’s release date on Switch to that unsettling Death Stranding’s gameplay presentation that we can’t stop thinking about. But in the middle of the two-hour show, there’s one announcement that really drew our attention: Little Nightmares 2.

The first entry, developed by Malmö-based Tarsier Studios, was a surprise hit in 2017 and has since been the crown jewel in Bandai Namco Entertainment Europe’s publishing portfolio, and a symbol of the company’s transition from distribution to IP creation.

Little Nightmares is one of the most successful IPs we’ve created,” says Hervé Hoerdt (pictured top), SVP marketing, digital and content at Bandai Namco Entertainment Europe (BNEE). “Obviously you don’t just turn a company from distribution to IP creation – it takes time and we need to shift all the skills, competencies and marketing to IP creation, in terms of production, because usually our production skills are more at the end of the process and now we’re more at the start of the process.

Little Nightmares’ main character Six

“So while we still have many other unannounced projects, this is the one we want to focus on in the short term because this is the one that had the best fan reaction. I think we are now at 1.6m units [sold for Little Nightmares]. So it’s showing that the reception is good. And we feel like this is unique enough in terms of atmosphere and targeting a different audience that we should accelerate on this one.”

BNEE had big aspirations for Little Nightmares from the very beginning, talking about making escape rooms, movies, TV series, comic books and more around the IP. Looking back, Hoerdt admits that they were maybe a bit too eager – and it sounds like a second entry in the franchise is a more down-to-earth goal to start with.

“If we think one year back, we had a lot of ambition that we would do comics and TV series and everything, and I need to admit that we are late,” Hoerdt says. “We are still learning. We did a comic but only two or three issues. It was not what we had in mind. We’ve been facing some complexities with the animation studios. Because these guys invest, they want to keep a part of the IP, they want some ownership, and we’re not ready to go in that direction. So it’s more complex but we learnt a lot. And we’ve sorted this out and proudly announced Little Nightmares 2. And obviously we have a full plan again for this IP, working very closely with Tarsier. There’s much more for Little Nightmares.”

Hoerdt points out that BNEE has already released mobile game Very Little Nightmares too, which acts as a prequel. That move sums up two of BNEE’s big goals going forward: IP creation and mobile.

TALK THE TALK…

Bandai Namco announced the creation of Bandai Namco Mobile in early August, to strengthen the firm’s mobile forces in Europe. That will translate into the opening of a mobile branch in Barcelona, Spain.

Hoerdt notes that mobile is “more predominant in Asia” for Bandai Namco but that BNEE “can’t stay outside of this business.”

He continues: “We are doing well in mobile but through the content that is coming from Japan, with titles such as Dragon Ball Dokkan Battle for instance. But here we are just providing the marketing support. And then five years ago we created a mobile team in Lyon, of ten people. We have had some successful launches such as Pac-Man 256, Asterix, Tamagotchi. I think we’ve been successful in terms of downloads while continuing to learn how to monetise this. We didn’t lose money, but it wasn’t super profitable.

“So the decision has been made to accelerate, to create a separate entity, the one you mentioned in Barcelona. So we just announced it, it’s not open yet, but it’s showed the ambition that, yes, we want to grow this part of the business. It should be around 30 per cent of our business. Today it’s not significant.”

And BNEE has the perfect product to grow this part of the business, though it’s not strictly speaking mobile: Tori.

“Mobile should be around 30 per cent of our business.”

 

Tori is an “augmented interaction ecosystem” aimed at children, developed by Iskn and published by BNEE, that presents itself as a tablet, various accessories and cardboard creations, with the latter coming to life on screen. Rings a bell? When we suggest this could be Bandai Namco’s answer to Nintendo Labo though, Hoerdt’s reply is unequivocal: “We don’t answer to anyone. We go our own way.”

He adds: “We want to make ten per cent of our revenue outside video games. Actually we’re going to accelerate a bit more on this one. So we’re contemplating many projects like music concerts, escape games, innovations. We have an innovation lab, and we were contemplating things like drones or edutainment. And [Iskn] came with this technology that is patented and it was really exciting to us.

“We worked together on this for three years. We started with four or five people and I think we are now more than 80 people working full time on this project. So the outcome is this new entertainment platform. It’s a whole ecosystem and it’s bridging physical and digital. And we have as much off-screen activities as we have on-screen activities.”

Tori launches on October 2nd and is compatible with both iOS and Android, though the off-screen aspect is crucial, Hoerdt insists.

“We’ll start with four apps and a parental app because we want to develop the skills of the children, so on the parental app you can see the progress of your kids,” he says. Said skills include creativity, problem solving, motor coordination, executive functions, social skills and more.

He continues: “[Tori] is not an answer to anyone, it’s just something we started three years ago. The truth is that the reception from the press was like: ‘Oh there’s some similarities [to Labo]’. There are some similarities in the way we want to address and develop the six to 12 year old market segments. We want to develop children’s skills, we want to enter edutainment.”

However BNEE wishes to go further than this with Tori: “We’re also having projects on the other side of the spectrum, with older people, the silver economy. We could use this board to detect and improve Alzheimers. But there are many other projects we have. So this is part of a global strategy and has nothing to do with Nintendo, with full respect for what they are doing. And I feel like we have something much stronger. The vision is that we have our own ecosystem and we’ll open it. We’ll open it to any publisher that wants to do something and we’ve already had discussions with many big IP companies such as Universal, Warner, Lucas, Ubisoft.”

We interrupt to ask more about a potential partnership with Ubisoft: “It’s still in discussion,” Hoerdt dampens. “We’re aiming for it but we need to convince them that the platform is solid enough for them to invest. So it would take some time. We have a full map of content that we can sustain on our own and the strategy would be to have these guys on board and to have a whole ecosystem and many many applications.”

The toys-to-life market hasn’t necessarily been the healthiest lately so Bandai Namco potentially has a lot of effort to put into Tori to ensure its success. But Hoerdt insists it’s not toys-to-life: “Toys-to-life you just put your figurine on a deck and nothing happens, you don’t play with the figurine, whereas here you have what we call the Mirror Play technology. Everything you do [off-screen] is happening [on-screen]. So that’s the big difference.

Jungle Rescue is one of the launch apps for Tori, in which you can use the catapult to knock down things

“It works with an energy bar, which is a magnet. So you can make something of your own, then you put in the energy bar and it will come to life. So it’s more powerful and it’s all about fun and creativity, there’s no limit. Whereas, again, toys-to-life, you have this figurine but once it appears on screen, you play digitally. And we really want to balance like 50/50 on-screen and off-screen activities.”

Tori’s launch product, the Explorer Pack, will set consumers back £149.99 – quite a premium price point, though Hoerdt says this is a “sweet spot” based on BNEE’s research and the price is likely to be reduced once there are more compatible apps. In terms of sales expectations, Hoerdt wouldn’t share figures but says: “We do it the other way around: what’s the risk we want to take in terms of production capabilities? We have [production] machines that can do 30k units a month. So we’d start with one machine. We started production in early July. I won’t disclose any figures but that gives you an idea of the magnitude.”

Europe will serve as a proving ground for Tori, before a potential launch in the US, he adds: “We’ll see the product’s reaction and everything, we’ll be able to duplicate the production and feed the US market where we would be able to expand. So at the moment it’s a soft launch more than [anything]. It’s not the approach of: let’s put one million through the pipe and see what happens. We are a Japanese company, don’t forget,” he laughs. “So we’ll go step by step. I think the real peak will be holidays 2020.”

…AND WALK THE WALK

Despite being a Japanese company, Bandai Namco has seen a wealth of changes recently indicating that more and more trust and responsibility is put on the European branch, with the opening soon of a brand new European HQ in Lyon (France), bringing these efforts to fruition.

“[Bandai Namco] is still making 83 per cent of the revenue and profits in Japan. But this was 95 per cent five years ago,” Hoerdt says. “And we all know that we’re in a market that is going to grow. We have enough cash, we are sustainable. But like in all nice stories, there is always a but. And the problem is the demography in Japan. So we are the future of the group in the next decades. The future is [Bandai Namco] Europe or US.

“Our former boss, head of Europe [Naoki Katashima], is now also managing the US – showing that he did a great job here and that someone wants him to do the same in the US. So this new strategy, IP creation, innovation, new entertainment and many things we have in the pipeline, is really showing that we talked the talk but now we also walk the walk!

“We talked about this ambition one or two years ago and now you can see all the pieces of the puzzle coming together. And I think having a new office, having a new COO [Arnaud Muller], who is a French guy, is a sign of: ‘You are important to us. What you are doing is going in the right direction. We appreciate it, we show you support and we’re ready to invest’. And also, on the global scale, the new head of our Network Entertainment Unit, [Yasuo] Miyakawa, is a guy who’s made all his career in IP creation – he created Gundam and a lot of new businesses, concerts, and so on. And this is also showing that: ‘Yes, we understand what you are doing and we put a head who somewhat will be able to facilitate and to follow your strategy and to sustain and to invest’. So this is all shaping well. This is exciting.”

“We are the future of the group. The core identity was that there wasn’t one. There was Namco. There was Bandai. And we want something like Bandai Namco Entertainment Europe.”

 

BNEE has been investing in an array of very, very different projects to say the least in the past few years, testing waters in everything from Pac-Man’s interactive audio stories to a sensitive investigation of the horrors of the first world war with 11-11: Memories Retold.

And though it’s definitely refreshing to see a publisher try new things instead of just publishing the same old titles year-on-year, we suggest Bandai Namco could be losing its identity in the process.

“Not identity,” Hoerdt reacts. “But, yes, maybe – and this is something we discuss sometimes with Arnaud [Muller] and other executives like Wouter [van Vugt, BNEE’s EMEA PR, communications and events director] – we wanted to do too many things at the same time. Maybe we went too fast and we need to manage those shifts in communication. So we had… not challenges, but, yes, we need to reassess all the communication flow. Wouter is on top of it – they’re trying to improve the way we cascade information and everything. So it’s more internal challenges than losing the identity.

“I think we are strong enough now to build our own identity. And the way we see this is: we were a Japanese company and tomorrow we’ll be a global company with a foot in Japan and a foot in Europe. So we need to define this, the scope of this. It’s not clear yet, it’s not on a sheet of paper to be honest.

“I don’t think we’ll lose our identity. And maybe the core identity was that there wasn’t one. There was Namco. There was Bandai. And we want something like Bandai Namco Entertainment Europe.”

BIG FISH IN A SMALL POOL

As we go off on a tangent about how exciting The Dark Pictures Anthology is, we end up talking innovations in the games industry – which leads quite naturally to discussing the rise of new platforms and business models, starting with subscriptions.

Hoerdt believes the value of content available via subscription models is “too low” for the company to invest in the idea.

“Subscriptions are more of a threat, that’s for sure. Because the business model behind subscriptions will be based on two things: the number of hours played on your game compared to the total hours people played, and the number of games played compared to the total number of games. So, in the value chain, we see a lot of cascading and the value in the end is too low for us to be able to invest further in the content. So that’s a threat we see. But otherwise, generally speaking, it’s exciting, it’s appealing, it’s more opportunities going forwards for us.”

Talk of new platforms inevitably progresses to discussion of the Epic Games Store, and the opportunities that Hoerdt recognises it presents the industry, even if he makes it clear that Bandai Namco simply isn’t interested.

Artist impressions of Bandai Namco’s new European HQ, soon to open in Lyon

“It’s an opportunity to be honest,” he starts saying on the rise of new platforms. “We’ve been swimming in the same pool for years and this pool is made of 200m to 300m people and obviously the vision to be able to address 2bn or more tomorrow is very exciting. I think that’s also why it’s attracting a lot of money at the moment in the industry. People trust the gaming market to grow even bigger. So we see this as an opportunity and a way to address more consumers.

“Having said that, we need to invest more. While we invest for the current generation, it’s no secret that there’s a new generation coming so we need to put money and to invest in this new generation. On top, for the first time ever in 30 years, there’s a streaming platform [in Google] so we need to invest even further. We cannot do everything and, again, Japanese are not risk averse but we’re going slowly.

“The main focus for us is the consumer and the brand. And for each brand we decide what’s the best way to satisfy the consumer and to engage the widest audience possible. So for instance, I don’t see any point in putting Tekken 7 on Epic Store. It’s just another store… It’s fantastic, they have a lot of strength and [lots of] users, the business model is attractive to us because it’s more profitable but still, what their interest is, if I’m correct, is exclusivity and things like that. And this is not our vision. We want our content to be available for as many fans as possible. So I don’t think we’ll deal with Epic for instance, in the short term, at least as a start, while we have this strategy. But of course, we have very intense discussions and if they’re open, we’ll go there.”

This also comes on the back of Dontnod announcing in June a partnership with Epic Games Store for its next title, Twin Mirror, which will be an Epic exclusive for a year on PC – a PC version that until that point was going to be published by none other than Bandai Namco Entertainment Europe. The latter will still publish Twin Mirror on consoles, but Dontnod has acquired the rights to the IP.

Artist impressions of Bandai Namco’s new European HQ, soon to open in Lyon

However, one business model that Bandai Namco does want to embrace is streaming, Hoerdt says.

“I think there’s a misunderstanding: streaming doesn’t mean subscription. It’s not mandatory. And we’ve put some games there, we’ve made some tests, we announced already Dragon Ball Xenoverse 2 [on Google Stadia] but we also have more projects in the pipeline. Not on the first wave but there will be like two or three waves in the coming years so we’ll have some titles then and I think this is important for us to make this bet and to see how it reacts.”

Still on the topic of how the gaming landscape will evolve, Hoerdt says Bandai Namco could be looking into different ways of presenting its titles as well, in order to make a foray in emerging markets.

“We’ll need to be investing in different content. If we think about India or Africa, they have smartphones [rather than] computers or consoles. And they won’t pay €60 to play Tekken on a smartphone. So we need to think about different ways to develop the games, maybe free-to-start, I don’t know… A Tekken with five stages and ten characters and then different business models that exist: subscriptions, advertising, in-game currencies to upgrade the game up to the full experience… It’s challenging but interesting.”

TO INFINITY AND BEYOND

Little Nightmare 2 will introduce new character Mono

As we conclude our chat, and having already talked to Hoerdt in the past and kept a close eye on BNEE’s evolution, it feels like Bandai Namco’s European branch has reached an age of maturity thanks to the success of strong projects such as Little Nightmares, 11-11: Memories Retold, The Dark Pictures Anthology: Man of Medan and, soon, Cyberpunk 2077, for which it’s acting as distributor. And there’s still more to come.

“I mentioned the ten per cent of the revenue that we envision to do outside video games and I think this would increase in terms of ambition with our new CEO Miyakawa-san,” Hoerdt says. “Coming from music, coming from IP creation, I think we’ll make some announcements in the next few months and I think we’ll accelerate on new business. It’s not precise yet because we have more than 100 companies in the group, so we need to be careful not to overlap other businesses. But, yes, we’ll accelerate into live entertainment for sure, like meeting your fans face to face and providing a full experience. I think is something we want to accelerate.”

It’s difficult not to share Hoerdt’s excitement for what’s to come, as Bandai Namco Entertainment Europe seems to have finally found its prominent place between the mothership in Japan and the firm’s US branch.

About Marie Dealessandri

Marie Dealessandri is MCV’s former senior staff writer. After testing the waters of the film industry in France and being a radio host and reporter in Canada, she settled for the games industry in London in 2015. She can be found (very) occasionally tweeting @mariedeal, usually on a loop about Baldur’s Gate, Hollow Knight and the Dead Cells soundtrack.

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