James Kay decided at a young age to turn his hobby into a vocation and design games instead of merely consuming them. It was a dream he realised quickly, working at a clutch of British developers in the late nineties. But despite succeeding where many others have failed, Kay wasn't satisfied with his lot. Mario, Sonic and all of the other icons of his childhood were Japanese, their prominence in gaming's canon matching Japan's seemingly inextinguishable dominance of the global games industry.

What could be better for Kay than working at a Japanese studio, making the best videogames in the world under the leadership of the medium's best-known auteurs? In 2001 he emigrated to Tokyo, landing a job at a prestigious Japanese developer, working alongside his idols. Kay had made it big in Japan.

But the reality fell some way short of the dream. As one of only a few foreign game developers in Tokyo, work was lonely. Moreover, he found the salaryman studio culture that demanded employees work long hours into the night wearying and infuriating, perceiving the practice to be merely for show and not endeavor. Partly to vent his frustrations, and partly to expose the grim realities of life at a Japanese games developer, Kay assumed the penname JC Barnett and started blogging his experiences at Japanmanship.

"I hope my writing didn't come across as disillusioned so much as unapologetic," he says today. "Too many people were still enamoured by Japanese games and would hear no wrong about the system that produced them. People dreamed of working in Japan without really understanding what that entailed. I hoped that I could offer a realistic view of the situation, and I was always sure to encourage people to make the move, so long as they were fully informed."

The site fast became the go-to place for young men who, like Kay, dreamed of working abroad on the sort of games that had enriched their childhoods. But the timing of the site's popularity ensured Japanmanship became far more than just a travel guide-cum-careers advice column. As the industry collapsed around him Kay became a reporter on the frontline, offering a window into a secretive industry in decline. With the keen, raw insight of an insider, Kay offered a glimpse of how and, perhaps more crucially, why the Japanese games industry was coming apart at the seams.

"I do not, as they say, have what it takes [to work at large Japanese games company]," he wrote in December 2008, soon after leaving to set up his own Tokyo-based company, Score Studios. "I blame my low bull**** threshold and my desire to have professional, rational work practices... I still care deeply about my work and the final product, which is why I let things get to me so easily.

"It's not that I always know best, but I can recognise disaster... Japan has been getting away with too much for too long. Because Japanese games enjoy a certain amount of adoration, people have been too ready to forgive the many little issues that have been growing over the recent generations, and now things have come to a head. With even big-name Japanese products being technical disasters, [we have] to come to terms with the idea that, well, Japan isn't the Mecca of video games... not any more."

While the rest of the world watched, Kay's posts charted the last days of an empire.

The End of the World As We Know It

"Japan is over. We're done. Our game industry is finished." The now infamous proclamation, spoken by Capcom's Keiji Inafune at the 2009 Tokyo Game Show, was punctuated by a thumbs-down gesture, mimicking the plunge the Japanese games industry has undergone in recent years.

The figures back him up. Inafune's comment came after a 25 per cent drop in Japanese hardware and software sales in the first half of 2009, at an event which had seen a 5 per cent drop in attendance over the previous year. Even if that spark of world-beating Japanese design inspiration can still be found in contemporary titles such as Super Mario Galaxy, The Last Guardian and Demon's Souls, the grim financial realities of the situation are far more evident.

But how did Japan get here? What does it need to do to fix itself? Is it too late to hope that the world's greatest exporter of games can rise again to compete with the West?

"The golden days of Japanese games in the eighties and nineties were based on strength in technology and creative ideas. But nowadays entertainment is much more about culture, and global appeal." At 29 Dewi Tanner, director of development at NanaOn-Sha, holds one of the most senior positions a foreigner enjoys in Japanese development.

The quietly spoken Welshman sees Japan's problem as one of creative introversion, which has led to a failure to stay abreast of Western advances. "Japan has a very strong domestic creative economy - movies and music made here are seldom expected to sell abroad, and they don't need to because there is such high demand domestically.

"This success has proved to be a double-edged sword. For starters, people aren't motivated to learn English. A direct consequence of this is that Japanese programmers cannot participate so well in software forums, where cutting edge techniques are shared. Waiting for badly translated, reduced-content 'help' files puts them way behind the curve.

"On top of this, Japanese developers aren't really participating in global trends such as Facebook or Twitter, so they aren't a part of the global mindset. If anything, lately the marketplace here has become even more introverted. Nobody here has heard of Twilight, let alone the latest internet meme (although bizarrely Susan Boyle is making an impact). Any games 'targeted' at the West will have a hard time because usually they are being targeted at what Japanese perceive the West to be; more often than not the subtleties of nuance are missed.

"A third problem is scale of quality - what domestically here would be deemed to be a decent product may not cut the mustard abroad. The greater this gap becomes, the harder and more intimidating it is to make the jump."

Crossing borders

Many Japanese game companies have publicly expressed the need to be more globally minded in recent years, with Capcom and Square Enix in particular aggressively pursuing relationships with Western developers. But Kay has noted another trend: that of Japanese developers bringing in staff from abroad to work domestically.

"When I first arrived in Tokyo foreigners were quite a rarity at development studios, and I was often the sole foreigner at any given studio. I knew a handful of other foreign developers here, but that group has grown significantly over the past few years. It's becoming easier and easier to get a job here, if you have the experience.

"I guess the idea is that foreign developers bring with them foreign development methods that will make a Japanese company successful in the West. It doesn't quite work that way, of course, and companies must be truly willing to make efforts to change and think more globally, rather than viewing hiring foreigners as a panacea."

Tanner agrees: "Employing more foreign staff and sending their own staff abroad is a start for developers here. But is this the ideal way for Japanese games to find a global audience? I hope a way can be found for Japanese titles to enjoy universal appeal and still be uniquely Japanese at the same time. But it would be arrogant to assume that ours are naturally superior, or more fun than the game styles of other, newer territories in the arena.

"If we look at things from a purely comparative, statistical perspective of how many global developers are now working today then it's only natural that the Japanese market will dwindle in influence."

For Kay, it's more than just a problem with statistics. Rather, there are fundamental problems with the Japanese studio system that are hampering success. "Japan's primary failings revolve around the inefficiency of development practices," he argues. "Japan still works with an 'auteur' system, where a single person, or a select few at the top, decide on every little aspect of the game, and don't think twice about demanding changes that could easily derail the schedule. This has, of course, lead to some amazing games in the past, but with next-gen development, this approach is dangerous and frustrating."

For Dylan Cuthbert, president of Kyoto-based Q-Games and another Brit, competition from rival industries has drained the talent pool in Japan, while simultaneously cooling off consumer excitement about videogames in general. "A lot of programmers who would have naturally progressed into the videogames industry now go into the mobile phone industry which admittedly tends to pay better for entry-level and even mediocre programmers.

"Making full games is harder and needs a better grade of programmer. Combined with this, we have uninterested consumers and a lack of risk-taking from the big publishers, whose conservatism influences one another in a depressing downward spiral. Many good games just fall flat here these days simply because the consumer just isn't all that interested in them. They'd prefer to be playing a sub-par game so long as everyone else is playing it, so they can talk about it with them."

"I'd describe the Japanese games industry as confused right now," says Kay. "The fact Japanese companies need to consider a global market, as opposed to simply making Japanese games for the Japanese market and then exporting them, is by now clear to most, but how to successfully go about it is still very much up in the air.

"The financial meltdown has had its effect in Japan too. Nobody really has the money or impetus to make an effort any more and in hard times Japanese companies would rather stick with what they know and are good at. It's a natural reaction, of course, but it's not what the industry needs right now. Rather they need to open up, learn from Western practices and learn to communicate better with Western publishers, developers and audiences."

Finding Fortune on the Horizon

When Jason Kapalka, creative director and co-founder of PopCap, was approached by Square Enix to collaborate on the development of a puzzle game, he had no idea what to expect. "It was super weird. We'd been talking to Square about publishing some of our games in Japan and, during these talks I mentioned as a joke, an idea to combine Final Fantasy and Bejeweled. I didn't expect it to go anywhere. But the idea somehow took on a life of its own.

"Gyromancer went through a lot of discussions and changes over the next year or two, and I think came close to being cancelled several times. Up to the day it was released I still found it hard to believe it was actually happening..."

While many Japanese publishers have worked with Western developers to create products in recent years, from Capcom with Bionic Commando: Rearmed to Konami with Rock Revolution, Gyromancer was a true and rare collaborative effort between East and West. "The majority of the development was carried out by Square, including all the art, the story, the RPG metagame, and so on," explains Kapalka.

"Our involvement was strictly in the puzzle battle engine. As for the stylistic differences, we certainly knew Square would go in a different direction than we would have if we'd tried such a project, but that was part of the appeal; there are lots of Square fans at PopCap. There were a couple of early passes at the storyline that made us nervous but Square eventually went with a considerably less dark narrative."

Initial plans to bring Gyromancer under the Final Fantasy or Bejeweled brands faltered, and eventually the decision was made to make the game an independent IP. It's telling that the main barriers to smooth development weren't caused by language but intellectual property.

"We built prototypes of the puzzle engine, using Bejeweled Twist as the base, and sent them to Square. Once we had a fairly solid idea of how it worked, Square took over and started making their own changes to the engine to support the RPG model they had in mind. Initially we sent builds over to Japan on a regular basis, and then, when Square took over development, they would send us builds for review. In both cases, feedback would be written up and translated if necessary, then sent back to the appropriate people."

For Kapalka the collaboration was a success, demonstrating how Japanese and Western companies can work together to create globally-appealing properties. "The project made it clear that Square was ready and willing to try some radically different and unusual collaborations to expand their focus. They clearly don't want to just keep milking Final Fantasy over and over; they've been trying a lot of really experimental titles over the last couple of years, starting with stuff like Kingdom Hearts.

"It's a challenge, but handled intelligently, it can pay dividends. The distance, time zone, and language issues make it hard to collaborate in real time, so I think that something like what was done with Gyromancer actually works pretty well: make sure the teams have clear distinctions in their work projects, and when necessary, make sure the hand-off between the teams is clean and well understood."

Land of the Rising Fun?

For Capcom, one of the Japanese companies most vocal about working alongside Western developers in recent years, the gamble hasn't paid off in quite the same way as it has for Square-Enix. Bionic Commando performed poorly at retail, leading to the closure of the GRIN studio that made it. Indeed, in Capcom's 2010 forecast, director Haruhiro Tsujimoto pledged to shareholders his intention to bring development of new IP back to Japan. (Capcom also declined to be interviewed for this feature.)

"I thought Capcom was aiming in the right direction," says Kay, "but sadly it seems they have got cold feet. I hope they'll reconsider their strategy. It's partly cultural; things are always slow to change in Japan. The way Japanese studios work has been perfectly fine for the last few decades, right up to this new generation of consoles. Only recently have studios and publishers been forced to consider the necessity for change, and that is always a difficult thing.

"There very well might also be an element of hubris involved. Japanese games in the past have made quite a splash worldwide and even today a lot of Westerners will defend and praise Japanese games simply for being Japanese. You have to admit that it must be hard for a designer who has made several million-selling, critically acclaimed titles to consider things need to change. It will take a few major studios closing down and some major financially disastrous titles before we will see some real change."

Q-Games, NanOn-Sha and Score Studios are all smaller Japanese developers eager to grasp change ahead of disaster. "At Q-Games we only do work that we find interesting and fun," says Cuthbert. "It's a very simple moral to abide by. To be brutally honest, I think many of Japan's current issues stem from the fact that many companies do the opposite of that, and are motivated by money. That said, there are a lot of small startups focusing on iPhone or Facebook games in Japan right now working with two or three staff, and some of these could develop into fully-fledged games companies."

Kay's Score Studios, developer of the iPhone's Flock It!, fits Cuthbert's vision of hope. "Currently there are only two of us working here, with the occasional outsourced third or fourth, working on iPhone initially. We have worked hard on our own technology for our multi-platform strategy so we plan to expand to other platforms soon.

"My business partner and I are foreigners with long years of experience both in Japan and abroad. This places us uniquely right in between the two powerbases, with solid understanding of both. Once we start to expand we will certainly pitch ourselves as a bridge between the West and Japan that has so long been missing, as Capcom's recent troubles can attest to.

"You know, I don't want to overplay the death of Japanese game making. The industry is going through some changes right now, for better or worse. Some Japanese companies are still making games that are successful globally. I think it is more a fact that Western game development has grown and matured to a point it can easily compete. While younger generations grew up with Sonic and Mario, current generations are growing up with Halo and World of Warcraft.

"Japan will never again be a pinnacle of game development simply because competition is too stiff. I'm sure once the dust has settled and Japanese companies have become more global-minded, in more than just sound-bite platitudes, it will once again be seen as a powerful player. Just not the only one any more." eurogamer