Is Game Development Profitable? A roundtable discussion about the future of the Japanese game industry with honest opinions

What is the working environment? Which jobs have the highest incomes? Are Chinese game companies a threat?

We asked an insiders of the game industry about these and other interesting topics.

The Improving Working Environment of the Game Industry

Eto: We are here today to talk about the inner workings of game companies from the perspective of those on the inside.

Morimoto: It is a unique industry, so it is difficult to understand from the outside.

Eto: So let's get started. People often say that the game industry is full of rogue companies, but what do you think?

Morimoto: I think it is true if you look at it from a general perspective. Including a certain major game company where you used to work, the working hours are usually much more than 8 hours, right?

Eto: Yes, that's right. Basically, it was a system like a discretionary labor system, and I have the impression that the working hours were quite long. However, it may be just the company I was at, but I don't think there were many people who suffered from being forced to work long hours.

Actually, I think I enjoyed spending my time at the company, spending my time freely, chatting in the break area, playing new smartphone games with my team members, and exchanging opinions. Of course, there were times when we would work late into the night on the computer right up to the release of the game, but I still have a strong impression that it was a lot of fun.

Morimoto: When I started working at the game company, I worked even longer hours, but I still have a strong impression that it was fun. I think this feeling is probably largely due to the fact that people who work at game companies basically love games.

Eto: I am sure of that. The people around me are also full of game lovers, so it's interesting to talk with them, and I still can't put into words the excitement I feel when a game I'm working on is completed. I guess it sounds like exploitation of my motivation in a bad way, but for my part, I even want them to squeeze as much of my motivation out of me as possible.

Morimoto: Nowadays, that would not normally be allowed (laughs). At the same time, I would like to tell readers that the working environment in the game industry has really improved recently, and there is almost no such thing as being forced to work beyond your limits. However, it is also an environment that you probably cannot endure unless you are quite a game enthusiast, though.

Eto: Yes, it is. In fact, there were people around me who thought they were quite fond of games, but when they entered a game company, they quit because they felt that they were at the level of just ordinary people. So I guess this story is like, “If you think about it on a general scale, it's rogue, but for those who can have a sense of fulfillment, it's a rewarding environment. Come to think of it, speaking of the game industry's unique working environment, there aren't many permanent employees, and most of them are contract workers, aren't there?

Morimoto: Yes, I think it is not unusual to find departments where more than half of the employees are contract workers, even at major game companies. I would say that the only permanent employees are those who joined as new graduates, those who have created hit titles, and those who have made achievements at other companies and moved on to new positions.

The majority of companies have almost no exceptions for people who apply for regular job openings and start out as contract employees.

Eto: The same was true at the company I joined as a new graduate. However, not many people in the company cared whether I was a regular or contract employee. Of course, there were some people who were passionate about “becoming a full-time employee,” but since most of them were contract employees to begin with, it was an environment where it was not a concern.

Morimoto: In the game industry, people come and go as they please. Of course, there are reasons why it is more convenient for management to have contract employees, but I think there are many people who would rather be in a position where they can quit at will in a sense.

However, it is also true that if you quit the game industry after spending a few years as a contract employee, you will be evaluated as having little value as a career, so if you want to enter the game industry, you need to be prepared to some extent. That being said, I personally think that if you feel that it is not for you, you should quit immediately.

Annual Salary in the Game Industry: is the salary for a producer not that different from other members of the industry?

Eto: It is said that the average annual salary in the game industry is 5 to 6 million yen, but this figure is for full-time employees. For contract employees, you should expect a little less.

Morimoto: That's right. The game industry is an industry with a rather young workforce, and the average age is said to be around 35 to 40. A full-time employee of that age earning 6 million yen is neither particularly high nor low. In fact, I think the figures are similar for all regular game companies that develop consumer games.

Eto: At one time, there was a period when startup companies that made social games and smartphone application games had much higher annual salaries. I think there were quite a few new graduates who were paid about the average in the game industry.

Morimoto: That was true for a while from around 2017, when smartphone apps became very popular. I remember that there were many people who switched jobs from traditional game companies to those companies at that time.

However, those companies also withdrew from game development, and I don't hear much good news about the economy these days. The only companies that pay well now are those that have titles that have been at the top of the smartphone app rankings for many years.

(Annual salary image)

Eto: Even within the same game company, the job descriptions and income vary considerably depending on the type of work, don't they? Is the highest salary still for producers?

Morimoto: In the game industry, a producer is in essence the person in charge of the overall project, and is responsible for launching the project, managing the budget, and organizing the team members. Because of the heavy responsibility, the salary is often higher than that of a regular team member.

However, even so, for the same length of service, there is often only a difference of about 1 million yen at most compared to other types of jobs. If you are some very famous producer or something, it's a different story.

Also, I often see cases where the director actually has a stronger position in the team, or is more respected. Incidentally, the director is the person in overall charge of the development site, and is in a position to directly communicate with planners, programmers, designers, etc. to create the game. The role of the director is quite flexible, as a producer may essentially act as a director, or a director may also serve as a planner.

Incidentally, the planner is the person who designs the exact parameters of the game, for example, “If you attack with the fire attribute, the damage to this monster will be doubled,” or “How many attack points does this character have, and how much will it increase when it levels up?

Eto: I have experienced several projects where the producer is the one who manages the budget and schedule, and the director is the one who actually takes the lead in game development. The income of planners, programmers, and designers also increases according to their length of service and the success or failure of the project, unless they are so-called legendary creators, right?

Morimoto: That's right. People who are treated like “That person is a super programmer! but the salary is surprisingly at a normal level.

Eto: So in that sense, even if you do very well at a major game company, you don't get paid an incredible amount of money.

Morimoto: The game industry itself is an unstable industry, so it would be impossible to make a living if you had to increase your salary just because of the success of a single title. In that sense, if you are not attracted to the fact that the company provides an environment where you can create games as much as you want because you love games, you may not realize the benefits of working for a game company.

In fact, many designers and scenario writers who are particularly good at what they do become independent freelancers. It is not stable, but if you are good enough, you can make more money as a freelancer.

(Annual income by occupation)

SQUANI Posts Extraordinary Losses, while Capcom Achieves Record Profits

Eto: Now let's talk about some recent topics in the video game industry. One of the recent topics among major game companies is Square Enix's (hereinafter referred to as “Square Enix”) announcement in May of a special loss of 22.1 billion yen for content disposal in its financial results for the fiscal year ending March 31, 2024.

Morimoto: Square Enix records the costs of games under development as “content production accounts” in its assets and records them as costs at once at the timing of their release, but it seems that the company discontinued development of some titles and recorded them as an extraordinary loss at this time. In short, the company reviewed the titles it had developed.

Incidentally, it seems that the extraordinary loss recorded this time was for HD games, in other words, consumer games.

Eto: Because the amount was so large, there was a lot of noise on social networking sites that the development of sequels to very well-known IPs such as “Dragon Quest” had been cancelled. and there was a lot of noise on social networking sites. It has been reported that until now, SQUANI has focused on producing a number of games in order to increase sales, but from now on, they will carefully select the number of games they produce.

While Capcom and Koei Tecmo HD in the same industry had an operating profit margin of over 30%, Square's was about 9%, so I guess they want to be more precise.

Morimoto: There are two types of production methods: mass-production and mass-sales, and development with a limited number of titles and aiming for constant hit production. While mass production increases the probability of creating hit titles, development costs will only increase if the hits are not as big as expected.

On the other hand, while costs are reduced in the small-lot production model, the probability of creating a hit title is also reduced. Ideally, we would like to develop a limited number of games and make them all hits, but in the entertainment industry, such as games, such a thing is impossible.

Eto: Before 2020, SQUAENI's strategy was to develop and release as many smartphone games as possible. I remember that there were many completely new titles at that time.

Morimoto: Recently, however, smartphone games are mainly IP games such as Dracula. The main reason for this is the change in the market environment. At that time, smartphone games were still in their infancy, so you never knew what would become a hit, and if you could make a hit quickly, it could lead to an explosion of profits. Therefore, I think it is an excellent strategy to proceed with mass production at that time.

However, as the market matures, new inventions and business models are unlikely to emerge, and there will be no room for new titles to break into the market. When the market enters such a period, it is probably a good idea to keep the bat short and take a guess.

The consumer market is also changing due to such factors as the growing strength of overseas companies, which may mean that mass production is no longer profitable.

Eto: This can be seen in the mid-term business plan, which calls for a shift from “quantity to quality” in order to deliver “reliable fun.

Morimoto: The main Dracula series is the core of SQUANI, so I don't think they will stop so easily, but I expect that they have reduced the number of derivative works and new titles in the mid-tier series. However, it is expected that the company will reduce the number of mid-tier derivative works and new titles. Rather, I am looking forward to seeing what kind of games will be created by shifting from quantity to quality.

Eto: On the other hand, Capcom's record-high profits in the same period were also a topic of discussion. It seems that sales of “Street Fighter 6,” which was the biggest hit as a fighting game in a long time, as well as “Resident Evil RE4” and other titles were strong.

Morimoto: In addition to “Resident Evil,” Capcom also has “Monster Hunter” as a leading IP, and each title in the series continues to be a steady hit. We have released several new titles, but the foundation of our sales is based on these series titles. Capcom has a great balance of having popular IPs steadily become hits and having unique titles like Street Fighter become a topic of conversation.

If new IPs can emerge from new titles, this would be the ideal situation. This is the kind of balance that SQUANI is aiming for in the future.

The Rise of Chinese Game Companies

Eto: Incidentally, as I mentioned earlier, I feel that foreign game makers, especially Chinese companies, have been releasing good titles recently. Especially for smartphone games, Chinese makers are making games with a Japanese-style world view and characters that are becoming hits.

Morimoto: In the game industry, Chinese game companies used to have the image of being less capable of development than their Japanese counterparts, but recently that image has been dispelled. In fact, they are extracting the best parts of games created by other game companies and developing games that surpass them in sheer volume.

However, it is normal in the game industry to imitate systems with a certain degree of moderation, so there is no point in just criticizing them. As a Japanese developer, I feel ashamed to say this, but I believe that they will continue to be a threat to Japanese game companies in the future.

Eto: Chinese game makers have already produced a number of hit titles for smartphones and PC games, but they have not had such a remarkable track record in consumer games, have they?

Morimoto: That's right. However, the title “Black Myth: Goku” (developed by Game Science/ Platforms: PlayStation 5, Xbox Series X|S, PC), which will be released in August this year, is getting a lot of attention. Since the announcement of the trailer and other information, it has been referred to as “China's version of SEKIRO” on social networking sites.

SEKIRO is an action game released by Japan's FromSoftware in 2019, and was a big hit as a “death game” with high difficulty. So-called “death game” action games have been slowly gaining popularity in recent years, and now that a Chinese manufacturer is finally entering the market, I too am anxious and hopeful about how big a hit this will be.

Eto: Speaking of game development, are you using AI, which has become a hot topic recently? It's not very widespread around me at the moment.

Morimoto: Several people around me are interested and working on it. What I can say without a doubt is that AI can dramatically reduce the man-hours required for game development. I believe that humans will continue to be responsible for thinking about the fundamentals of game systems, but tasks such as creating 3DCG objects, for example, will be replaced by AI in the future.

Other tasks such as illustrations and flavor text (text that reinforces the world view, such as character introduction text) will also be created by AI. Individual developers are also using AI to create dots and background textures.

Eto: I guess it would be better to get interested and get started as soon as possible.

Morimoto: Just as in the history of games, when a new technology is born, the competition begins to determine how best to use it and what business model to create. Technology never stops developing, so as long as we are in this industry, we will always have to keep up with what is new. That's the hard part, and it's also interesting.

Column.1

Why are “boring games” created?

Many players are puzzled by the release of so-called "crappy games," making them wonder "why were they released with such a low level of completion?"

"The biggest problem is the budget and schedule. For a product like a game, which requires both creativity and technical skill, it is extremely difficult to predict the schedule, so delays are commonplace.

That is why many game projects have a longer schedule than expected, but even so, there are still problems such as unexpected bugs or the fact that it's no fun at all after all the making.

Then, when companies run out of budget and schedule, they decide to release the game at the last minute, and the result is a tragedy. I can only say that I am sorry for the players, but in such projects, the people involved are usually crying internally, so please forgive them."

Column.2

The Yasuke Problem in "Assassin's Creed"

"Assassin's Creed Shadows", the latest in the series of undercover action games starring assassins, has been revealed to be set in Sengoku-era Japan, and with it has come several controversies, including those involving polycorrectness (*explained in Column.3).

One is the treatment of the playable character Yasuke, whose background is virtually unknown except for the fact that he is a black man who served Oda Nobunaga, and he is positioned as a "legendary samurai". The developers also explain that this is a "historical fact".

Since it is generally believed that Yasuke was actually a peasant rather than a samurai, the developers' attitude has been criticized as being dishonest and leading to the revision of history. Of course, it is not wrong to fill in gaps in historical facts in games and other creative works, but it is a different matter to claim that they are historical facts.

Many people also argue that if you are going to create a character with the role of an “assassin” in Japan's Warring States period, why not use a ninja instead of a person with an unknown background? The use of Yasuke in the film has been criticized as a sign of racism or based on a poly-college mentality of “not wanting an Asian to be the main character.

In addition, this game has been criticized from the viewpoint that the historical research on the Sengoku period in the released trailer is very shallow, and there are many mistakes (in the design of tatami mats, family crests, and the way kimonos are worn, among many others), and that it may be disrespecting Japanese culture to begin with. The game has also been criticized from the viewpoint that “the game is fiction.

Some people argue that “games are fiction, so there is no need to worry too much about it,” and the debate continues to this day. This firestorm is a good opportunity to think about the treatment of culture and history in games.

Column.3

The “polycorrections” problem in the game industry

Political correctness is a term that describes language, policies, and measures intended to avoid offending or disadvantaging members of a particular group in society. The use of neutral expressions and terms that do not include prejudice or discrimination based on race, religion, gender, or other differences.

This wave of polycorreation has also reached the world of video games. For example, in response to comments such as “It's not right that the hero and heroine are all beautiful men and women,” it is reported that the characters in “Horizon Forbidden West” are very ordinary looking (or not beautiful at all). It is said that the characters in “Horizon Forbidden West” are made to look very ordinary (or not beautiful).

Other works have been criticized for being overly diverse in terms of character romance, which has generated a lot of controversy. While many gamers are critical of this trend, it seems that more and more AAA titles are getting caught in the middle of this issue.

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Masaru Eto

Masaru Eto is 34 years old, and after graduating from a major game company, he has worked for several companies and now works for a small independent development company. His favorite games are “Apex Legends,” “Eldenring,” and “League of Legends.

Tatsuya Morimoto

Tatsuya Morimoto is 42 years old, works for a major game company, and moved from the IT industry to the game industry in his 20s. His favorite games are “Harakami”, “Powerful Pro Baseball” series, and “Jakumon”.