Video game analyst Hisakazu Hirabayashi said software makers face a conundrum over pitching Japanese-style role-playing games (RPGs) to the global market.

Square Enix Co., for example, has released RPGs that are enormous hits in Japan, including the “Dragon Quest” franchise. But the company must address issues concerning cultural differences if it expects these games to be popular overseas, Hirabayashi, who is well-versed in the history of the gaming industry, said in an interview with The Asahi Shimbun.

He also said Square Enix’s decision to give up on some hopeless titles was “healthy,” even though it will lead to financial losses.

Excerpts from the interview follow:

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Question: What is your view on recent trends in the video game market?

Hirabayashi: Game publishers are now generally seeing stagnant performances. One reason is that stable demand among stay-at-home consumers during the COVID-19 pandemic has subsided.

Another cause is that listed companies have refrained from launching adventurous game development projects over the past decades. Instead, they are pursuing safe operations in hopes of satisfying their shareholders.

Video game users have actually shown a conservative tendency to buy already famous products, but they also prefer brand-new series, too.

Releasing software titles solely from renowned franchises may cause consumers to feel makers are sticking to their own habits. Large game firms have no choice but to constantly combat declining sales.

Meanwhile, an environment has been established for everyone to develop and sell games via online platforms.

Indie gaming titles, such as “Suika Game” (Watermelon Game) and “Palworld,” have good reputations and exploded in popularity. Major developers are thus facing much more difficult business circumstances across the globe.

Q: What do you think of the 22.1-billion-yen ($140 million) loss reported by Square Enix after it suspended development of some software as part of efforts started last fiscal year to review its product lineup?

A: Big companies’ total development costs, including advertising expenses, for a high-end game priced at 7,000 yen to 9,000 yen are estimated at 10 billion yen through 20 billion yen.

Even smartphone apps would entail at least 3 billion yen. Suspending development of more than one title could easily lead to a total loss of 10 billion yen, so the announced figure is nothing surprising for video game industry insiders.

From a financial standpoint, Square Enix’s decision sounded really great. It is rather healthy for a company to be able to refer to its products still under development as failures. The company could say that because it has strong financial muscle.

Games in mid-development could be treated as assets if enterprises try to cover up problems instead of tackling them. For that reason, a company’s close examination that makes the scale of loss clear can be praised as a healthy move from the standpoint of business management.

Q: What do you think of the remark by the Square Enix president about “too many titles in our lineup”?

A: Entertainment offerings are hit or miss. Having many titles in a lineup is not bad itself. And taking the risk of forging ahead with experimental projects is necessary.

However, carrying out apparently hopeless projects or embracing an unlimited number of titles because of personal reasons is problematic.

Q: What do you think is the root cause of Square Enix’s loss for its video game section?

A: RPGs, represented by “Dragon Quest” and “Final Fantasy,” traditionally sell well in Japan but fall into a minor genre in the global market. The cause seemingly lies in the company’s failure to address this issue concerning cultural differences.

Capcom Co., which reported good financial results, has its own clear strengths. “Street Fighter,” characterized by fighters from a range of countries, proved a multinational hit, while “Biohazard” (Resident Evil) presents feelings of horror in a style that people around the world can relate to, and it became a universal hit.

However, RPGs marked by distinctly Japanese emotions and designs that appeal particularly to Japanese consumers are apt to be accepted only locally.

Q: Could you be more specific?

A: The first RPG is said to be a PC game developed in the United States and inspired by the British trilogy “The Lord of the Rings.”

The Japanese version of RPG did not simply rehash the Western-born concept but successfully modified the foreign idea for cultural adaptation so that children in Japan would be able to enjoy RPGs, like “Dragon Quest.” For example, characters in them are honest and compassionate, while troubled townsfolk show gratitude and return favors if players help them.

There are no difficult religious standpoints or a sense of coldness found in contract society.

Square Enix achieved a great feat by making RPGs originating from the West compatible with Japanese culture. But the latest challenge requires the need to promote products in the global market.

To get consumers to buy the sort of RPGs that Japanese love, the company must do more than just create a good gaming design. It needs to overcome barriers concerning intellect and culture.

Q: What would win over consumers outside Japan?

A: The Japanese edition of RPGs can be likened to Spaghetti Napolitan. They were remodeled from Western-deriving predecessors to fit in Japan. Tactics to overcome double or triple cultural barriers must be thoroughly weighed to pitch overseas things that were born in the West but given Japanese twists.

It could be more difficult than simply putting out Japan-originated products into the world.

Companies in the video game industry frequently fail to expand into the global market. Like Square Enix, many overseas businesses’ plans to make a foray into Japan have also gone flat.

It is high time for all parties in the industry to abandon the naive notion that hot-selling products in the domestic market should see strong sales elsewhere as well.

U.S.-based food supplier Heinz, famous for its ketchup bottle, once attempted to adapt to Japanese culture by releasing specialized local recipes for each of the nation’s 47 prefectures.

McDonald’s serves the Japan-exclusive Tsukimi Burger.

While food-related industries have know-how to understand and adapt to other cultures, the video game industry is still immature when it comes to overcoming cultural differences.

Q: Few details have been released about “Dragon Quest 12” since the announcement of its future release. Do you have anything to say about the game?

A: One attraction of “Dragon Quest” lies in its witty and sophisticated style. The series is casual in a positive sense and somewhat comical at the same time. In the meantime, game titles that sell well throughout the world are typically substantial.

The developer must choose which course to take or should seek ways to incorporate the advantages of both types of software. I guess this trial-and-error process will take a considerable amount of time.

An established strategy for games to gain popularity outside Japan is to eliminate Japanese elements to adjust to global standards. But removing these factors would be impossible for “Dragon Quest” because the Japan-born franchise makes full use of the nuances of the Japanese language.

I expect the management and the development team to work closely together toward completing a landmark Japanese-style RPG that people around the world can understand and crave.

(This interview was conducted by Go Takahashi, a staff writer of The Asahi Shimbun.)