Japan, Digitally-Speaking

A Blossoming Market

One of the main characteristics of the current generation of consoles is digital distribution. As well as the casual games such as those found on Xbox Live Arcade, regular titles have also been released experimentally that way for the PlayStation 3 and PlayStation Portable.

According to a 2008 CESA Games white paper, the amount of software and digital items delivered via download to consoles was a market worth JPY 2.5 billion (USD 27.4 million) in 2007 in Japan. It's a small sum when compared with the JPY 382.3 billion (USD 4.2 billion) packaged game market, but it's a field in which significant future expansion is expected to come.

Outside of consoles, the download delivery and sale of game software and digital items also take place on the PC online and mobile gaming markets. According to 2008 Digital Contents white paper, that totalled JPY 84.8 billion (USD 930 million) and JPY 83.1 billion (USD 911 million) respectively, giving a total market size of JPY 167.9 billion (USD 1.84 billion) in Japan - almost half that of the console videogame package market. And in the past year the iPhone App Store has launched, with explosive growth globally.

Dark Matter

Such results are having an impact in Japan, with a number of developers finding challenges in this relatively new field. One of them is Kazutoshi Iida, who is developing a new IP adventure game called Discipline - Tyouritu Teikoku no Yabou.

Iida-san has been releasing new types of games in new genres ever since Aquanaut's Holiday was released for the original PlayStation in 1995, and the platform for his new title is Wiiware, working with the publisher Marvelous Entertainment. It's a game that will be released in May in Japan, and will follow later in North America and Europe, but for Iida-san the reasons for looking at digital distribution don't just come down to numbers alone.

The game is set in a mixed residence cell in a maximum security prison, run by a private security firm at the request of certain country's government. The player takes the role of one of the prisoners, and the aim of the game is to communicate with other prisoners and get them to confess to you - although you don't know whether the other prisoners are really criminals or not, while the identity of the player's character is also something of a mystery.

Iida-san said the game is influenced by writer Philip K Dick, the movie A Clockwork Orange and the work of director David Cronenberg, with seven development staff scheduled to have spent 10 months in total creating the title. I had the chance to take a look at a preview version of Discipline recently, and I felt that some of the characters on-screen were familiar. One seemed to be the former executive officer of Oum Shinrikyo, a cult religious community which spread Sarin in an underground train in 1995, while another looked like the suspect in last year's indiscriminate knife attacks in Akihabara, both residents of the cell that your character is in.

Iida-san declined to comment on those similarities, but it seems certain that his ideas are taken from real cases: "Crimes are actions of one side of a human being expressed in extreme form. If we want to represent real humans even in games, we should not avoid these themes," he told me.

"Even in the Grand Theft Auto series, the event in the prison is omitted. I'm in conflict as to whether I can deal with it in a game, but you are dealing with it naturally in literature or film. Somebody must develop it so that a game is accepted as culture."

Iida-san told me that he had a plan to develop games in which we can experience events normally hidden from society, for adult gamers who grow weary of Brain Age and its ilk. The target platform was to have been the Nintendo DS, but it's too hard for original titles with difficult content to succeed in the regular package retail market, because there are too many big titles already out there.

Instead, he's decided to look to digital distribution and WiiWare. "I want to deliver the game to the user as soon after completion as possible," he said. "The judgment of difficult content titles should be made by the user directly, not by the retailer. In order to get a judgement, the price had better be low, and in the packaged retail environment these challenges are difficult."

Music Therapy

Another developer looking to the digital distribution market is Reo Nagumo, president of Yudo, who's been working on titles for the App Store. Nagumo-san, who was a member of the development team on the original Beatmania from Konami in 1997, became independent in 2000, and has since developed a variety of content outside of the games industry.

In 2007 the company released a health quiz game called Kenkou-kentei for the DS, and then last year they put out Aero Guitar on WiiWare in the summer. Then, late last year Yudo released the Aero music videogame series to the App Store, creating a brand called 1 Dollar Games specifically for the development and delivery of casual games.

On the iPhone the company released three game editions simultaneously - Aero Guitar, Aero Synth and Aero Drum, the first of which ranked eighth place in the Japanese pay version chart.

In the summer of this year Aero Guitar will be released on WiiWare in North America and Europe, too, meaning that the company's step-by-step digital distribution path - DS, Wiiware, and App store - is complete.

"At first, Aero Guitar was planned for the iPod, because of the small development man-hours, a global market and fewer rivals there," Nagumo-san told me. "But it had some twists and turns, so we began development on an Xbox Live Arcade version first.

"However, in the last step of development, we couldn't open an account with Microsoft, and couldn't release it as a publisher. At the same time, we heard the news about Wiiware and the App Store so decided to redevelop it."

Nagumo-san told that they had finished developing the WiiWare version in five months and the iPhone version in two months. Because of the hard work from the staff the company was able to release 3 versions on the iPhone at the same time, with Aero Synth and Aero Drum developed in just two weeks.

There was no story mode in first version, but that aspect was able to be developed in just one day and updated by the programmer. "You should not release title that is deeply developed from the start," said Nagumo-san of Yuda's App Store strategy. "The point is to release simple version at first and to continue updates to the reactions of the user. With that in mind, you should bundle up titles and become a brand."

"Because we can update games quickly and get feedback from all over the world, developing games is very pleasant. Especially, programmers are finding it very enjoyable," he added.

A Change of the Guard

But what do retailers think of such a situation?

"Because digital distribution became very popular after just a few years in the music industry, I was worried about seeing it get into full swing in the game industry," one retailer told me. "I thought that an enthusiast market would spur it on to some extent even if only things like titles for Xbox Live Arcade, archive games for the PlayStation 3 and on the Wii Virtual Console.

But we might feel the impact of WiiWare and DSiWare at last - although most think that Nintendo keeps the relationship with retailers, unlike Sony and Microsoft. There are many retailers who keep watching the actions of Nintendo."

And he told me what he thought would happen in the future: "When Sony began the download sale of Siren: New Translation for the PS3, they explained that the share would become a total of around 4 per cent," he said.

"But that's an approximate announcement - the real number of downloads remains unidentified. However, I think this ratio will increase surely in future. While it erodes the packaged market little by little, it could eventually reach around 20-30 per cent of the market.

"But because there are some negative aspects, such as the need to extensive hard disk drive space for the games, and a solid broadband infrastructure, the full-scale setup for digital distribution won't hit until the next generation console is released."

It's predicted that the game market will be divided between a few key hit titles and the rest of the pack even more so than before if digital distribution increases. Right now the consumer has to pay more to cover the costs of promotion, and so on, in the packaged goods market now, and it's not easy for original IP and titles with difficult content to succeed.

But in Yudo's case it's clear that the industry needs new development styles in the digital distribution era. While triple A titles continue to dominate the core games audience in the packaged goods world, new types of games will steadily grow the power of the digital distribution market.

And at some point in the future, it's likely to explode.