[Grisham]

Square Enix, Sega, Konami are preparing big changes to their business

Everyone's got a plan to deal with rising development costs.

www.axios.com

Square Enix, Sega and Konami, three stalwarts of the Japanese gaming scene, are making risky bets that will change how they do business.

Driving the news: In reports to investors over the past two weeks, the keepers of Final Fantasy, Sonic and Castlevania have made it clear that the status quo is not working well enough.

• They cite a mix of rising development costs and a need to find financially prudent ways to create global hits.

The boldest moves are underway at Square Enix, where the publisher is courting outside investors for its development teams, potentially leading to a day when external firms have a stake in the creation of the next Kingdom Hearts or Final Fantasy.

• What that means for how projects are greenlit and budgeted is unclear, but it'd be an unprecedented approach for a big game publisher.
• Square Enix's old model of fully owning studios has "begun to produce side effects of a scale that we cannot ignore," company president Yosuke Matsuda said in the company's recently released annual report, citing swelling costs.
• The company's risk avoidance explains its decision earlier this year to sell most of its Western studios and franchises, including Tomb Raider and Deus Ex.
• Square Enix is also pushing hard into blockchain gaming. In a presentation to investors on Monday, it promoted its newly announced interactive NFT art project Symbiogenesis and new investments in a blockchain payment platform, a blockchain medieval strategy game and a collectible NFT trading card game.

Sega's big swing will be a "super game," a mysterious project promised by the end of March 2026.

• The company wants to create "a game so revolutionary that it attracts far more active users than any of the group's games to date," Sega president Haruki Satomi said in a recent note to stockholders, projecting lifetime sales at ¥100 billion, or $683 million.
• This comes amid a concern that the company's "profit margins are still relatively low vis-à-vis the competition," as noted by co-COO Shuji Utsumi.

Konami, which had pivoted away from making sequels to globally popular franchises in favor of a focus on Japan is now getting back to its old ways a bit, with recent plans for a slate of new Silent Hill games.

Between the lines: All of these companies are searching for growth amid a stagnating Japanese market.

• Mobile gaming had been a lifeline for some time, but growth in that sector has slowed partially due to increased competition from Chinese game makers, MST Financial analyst David Gibson tells Axios: "The Japan mobile rivers of gold are no longer growing."
• That is forcing Japanese game companies to develop plans to generate global hits in console and PC, Gibson says.

The bottom line: It's telling that another long-time Japanese publisher-developer, Capcom, got through earnings season without having to promote any pivots.

• That's likely because Capcom is already where its Japanese peers want to be, with its regular cadence of releases for its globally popular franchises Resident Evil and Monster Hunter — the latter of which even U.S. publisher EA now wants to compete with.
• On Tuesday, Capcom announced the development of a Monster Hunter mobile game, in partnership with TiMi, which is part of the globally successful Chinese gaming company Tencent.

 

[DonDonDonPata]

These are the same issues they complained about at the onset of PS3/360 generation, and those same problems of content-creation and long-term support for games have only worsened. They'll all follow Nintendo's route -- quite surprising that Japanese company's strategy was not mentioned -- of scooping in third parties and partnering with other big devs to develop spinoffs and B-tier games and mobile entries, which Nintendo views as advertisement for their overall brand. Bandai Namco + Nintendo is the pattern they'll follow.

 

[Soodanim]

Unless NFTs are somehow big in Japan, I don't think that's the way to go. Public pushback despite celebrity and big company endorsements, investments, and partnerships haven't worked.

Konami capitalising on demand thanks to the absence of their big franchises is smart. People missed them because they went away.

What's interesting is that they all look to Capcom, who's currently killing it through traditional output, but wondering what they can do differently to Capcom to succeed. Strong IPs presented well = success.

 

[Nobody]

SE "pushing hard into blockchain gaming"...

Konami partnering with Bloober Team, the studio behind Resident Evil Re:Verse, Bad Robot...

SEGA creating a "SuperGAAS" that they aim to release in 2026...

Just stop doing stupid shit, how hard can that be?"

 

[GreyHorace]

It's good that Japanese companies are now becoming more competitive globally after some silence during the previous generations. That said, here be my thoughts:

Square Enix - I think they're absolute bastards in investing in blockchain gaming. They should focus on what they do best, which are rpgs. And I don't mean milking Final Fantasy to death. It's good that they're releasing new IPs like Octopath Traveler, but how about some of their old stuff? Wouldn't it be cool to have a new Vagrant Story? At least they got rid off Eidos after the way they fucked up Tomb Raider and Deus Ex.
Sega - A super game? Last time they hyped something like that, what we got was Shenmue. And while it was revolutionary for the time, it certainly didn't set the world on fire. Hopefully what they give us now will live up to the hype.
Konami - Bringing back Silent Hill was a good call, but damn it they've got so much more awesome IPs they could revive. I'd like see some new Castlevania games for one.

I guess they got tired of Capcom absolutely killing it with their recent success and would now like to compete for the global market.

 

[John Day]

I don't think SE's aim with blockchain games is for us regular consumers, but to attract the whale b-bros and the like.

Ya know, have them invest on that shit for more money.

Not sure that's a good idea or bet, but there IS a consumer base that eats that shit up.

Then again, that market has been going down for a while right? I have no idea how they see gains on nft's and blockchain as a sure thing to bet on.