The 2010 Tokyo Game Show has drawn to a close – all the latest and greatest the Japanese game development industry has to offer was on display, and plenty of new titles were announced. Whilst there are undoubtedly many millions of gamers around the world excited by the prospect of these new games, some of the developers themselves don’t have a rosy outlook.

Speaking in an interview with The New York Times, prominent Japanese developer Keiji Inafune, head of global research and development at Capcom, said: “I look around Tokyo Games Show, and everyone’s making awful games; Japan is at least five years behind.”

Capcom themselves announced three new titles at TGS – Asura’s Wrath, Steel Battalion: Heavy Armor and Dead Rising: Case West. “Capcom is barely keeping up. I want to study how Westerners live, and make games that appeal to them,” said Inafune.

The Japanese game market has been shrinking, globally and worldwide – many reputable research groups corroborate the fact that in 2009, Japanese hardware and software world market share had plummeted to just 10%, from a high of 50% in 2002.

The domestic market has dwindled by 20% on 2007 figures, to just US$6.4 billion at the end of 2009. In contrast, the American market grew by 10% over the same period, sitting at US$19.7 billion at the end of 2009 – all this despite a global recession.

“Japan used to define gaming, but now many developers just do the same thing over and over again,” said veteran developer Jake Kazdal, who boasts time with Sega Tokyo and Electronic Arts. Kazdal’s views are evidenced by the sheer number of sequels on display at TGS – Ninja Gaiden, Dynasty Warriors, Devil May Cry, and Castlevania were just a few of the well known series receiving yet another addition.

Kazdal believes that part of the problem is the rift in gameplay tastes between Japanese and Western gamers. He points out that popular Japanese games are linear, whilst Western titles tend to offer open-world gameplay.

“Smarter developers in Japan are trying to reach out to the West. They’re collaborating and trying to make games that have more global appeal,” said Kazdal. Developers such as Team Ico have developed a cult following among Western gamers, and Capcom experienced success with Dead Rising, a game specifically aimed at a Western market. Despite this, Capcom is currently in financial doldrums, and they are banking on their new titles, including Dead Rising 2, to revitalize the company.

There also appears to be a development culture difference between Japanese and Western companies. Resident Evil creator Shinji Mikami explained a recent example in the development process of Shadows of the Damned, which was announced at TGS: “Japanese developers tend to work on inspiration, not so much on a set time schedule like the Americans. So when EA asked about the game month after month, we felt like loan sharks were coming after us.”

Japanese developers are gearing up to re-establish themselves however. Close attention is being paid to foreign market versions of Japanese games, to ensure that script translations are done correctly and sensibly. China and South Korea are also booming gaming markets, and there is plenty of potential to cash in on the social networking and mobile gaming trends.

Yoichi Wada, president of the Japanese game developer Square Enix, spoke of the challenge at the game show. “How do you truly globalize?” asked Yoichi Wada, president of Japan based developer Square Enix.  “I think you have to work with people who grew up overseas, who grew up breathing the culture. It’s impossible otherwise.”

As for Japanese developers’ future in the estimated US$60 billion global game market, Wada said: “The game industry is constantly changing. Everybody’s joining the market. You just don’t know what’s coming next.”

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Source: The New York Times