Q&A: Yuke's Koyama On U.S. Expansion, Casual Trends

Yuke's is best known in the U.S. as the developer of the massively popular WWE Smackdown vs. Raw series for THQ. With a massive development staff in Japan and resources for expansion, the company has arrived in the U.S. as a publisher. PR and product development manager Ken Koyama, pictured holding a copy of Lucky Puzzle -- the basis for the company's new casual DS game Neves -- sat down with Gamasutra to discuss the company's strategy for its expansion into the US market. Yuke's has been in the market for a little while now. How did Yuke's get the idea to open up a U.S. branch? Ken Koyama: Our boss, Yukinori Taniguchi -- which "Yuke's" is short for -- recognized that the American market is a huge market, a growing market. In Japan, we have two offices: our head office in Osaka, and we also have an office in Yokohama. As we started growing more in Japan, it's difficult to maintain that business side without having a bigger income. We obviously needed to grow, so they knew that they had to go worldwide. They had to expand more. Obviously, the U.S. was the first market that we were looking for, because of [how] huge [a] market it is in the U.S. The idea was to start off in the U.S. and then grow from there. What's your strategy? KK: Clearly, right now, what we'd like to do -- there's a lot of games in Japan that aren't released in the U.S. We also have a lot of things that Yuke's has developed in Japan that haven't come out in the U.S. at all. The main reason was that we didn't have a U.S. connection, and there wasn't anything we could really do in the U.S. But now, opening up an office brings up opportunities for that to expand into the U.S. market, and bring more of those Japanese original titles into the U.S. market. And also vice versa as well. Our publisher staff in Japan also wants to bring more American-developed games in Japan. We view that connection as a window of opportunity, and that was the reason why we opened up Yuke's Company of America. Is one of the reasons that you were interested in entering the U.S. market because the Japanese market is sort of having a downturn when it comes to hardcore gamer-targeted titles? KK: I wouldn't say it was just because the Japanese market was going in a downturn, but I would say it was more of an opportunity for us to grow more, as far as being in the U.S. market. The money is shared pretty much, so obviously that's what we're trying to focus on. At this point, the only game you have released is D1 Grand Prix, correct? KK: At current, yes. Did you learn anything from how that worked so far? KK: You know, it was a rough situation going into D1 GP. It was our first title, obviously. As we started learning, though, we realized how the industry is moving in the U.S. The main thing was, we didn't recognize how much difference there was in the Japanese market compared to the U.S. market. Obviously, the American market is heavily based [on] Xbox. 360 is very huge, online gaming is very big. In Japan, it's completely the opposite. Online gaming is nonexistent, and the 360 is pretty much dead out in Japan. From there, we learned a lot in the differences in things and what we have to do to approach the American market compared to the Japanese market. Have you run up against any pitfalls so far, and have you learned anything from what's happened? KK: In the U.S. market, the pitfalls are... nothing serious in pitfalls. Everything is like a learning curve. A year has passed by already for our U.S. market. We're just kind of feeling our way through, making connections, and trying to do things. The hardest thing we're having a time with is that nobody in the U.S. really knows what Yuke's is all about. In Japan, we're pretty big and pretty popular, but in the U.S., nobody really knows us. That's probably our biggest pitfall that we're going up against. Related to that, Yuke's is probably known best in the U.S. for developing WWE Smackdown, but obviously that's THQ's. Does this move west affect that relationship, and also does Yuke's U.S. relate to that relationship, or is that all handled through Japan? KK: It's one of those things where, you know, when we first were going to open up the office in the U.S., we were obviously talking with THQ and figuring out what we could do. THQ wants Yuke's to [succeed] as well. We've got a really good relationship with THQ, and they do a lot of things for us. But with THQ, we were strictly developing games that they wanted us to develop. We had a relationship and a contract with them. The other things that we want to bring out, THQ really doesn't want to have anything to do with. For that, they're like, "Go for it, Yuke's. See what you can do. Best of luck," type of deal. Your company's very small in the U.S. -- presumably the U.S. division is a lot smaller than the Japanese? KK: Much, much smaller, yes. With only intermittent game releases, are you capable of maintaining your profit and maintaining your office? KK: One of the reasons we're in Chicago is based in the fact that the cost of living -- the amount of rent and stuff like that -- is a lot cheaper in Chicago than it is in like the west coast, or in New York. Obviously, that played a role for us to be in Illinois. It is kind of difficult, since we're a smaller company and nobody knows us... and it's hard to have distributors come to our side, or have a sales team recognize us. There are some difficulties, but we're learning, and we're trying to grow from that and move forward with it. Your latest game, Neves, is very different than D1. That was an incredibly hardcore game. Casual gaming has also got a lot of press right now. Where did this game come from? KK: Originally what happened was that we were really big fans of the toy version of this game, and always wanted to make it for the DS. We didn't know if it would be good to bring it to the U.S. market, but with the casual gaming deal coming up, it seemed like the perfect opportunity to bring it out. We contacted Hanayama -- the original people who [created the toy Neves is based on] -- and got exclusive licensing with them, and for future titles as well. We have exclusive licensing with Hanayama, and they have a whole line of puzzle games that we could probably bring over to the DS. That's what we're looking at right now for the DS market. It's an interesting point -- this puzzle game that you've now created, you've taken a physical puzzle game that's sold in stores in Japan and turned it into a DS game. That's very similar conceptually to Sudoku, and now Picross has also come to the DS. Can you talk about that trend, or how Yuke's got involved with the trend? KK: In Japan, especially with the DS, the DS market is just so big right now in Japan. It's kind of gone crazy. But it definitely is a trend that's going on right now. I don't know how much longer it's going to last, but it's a growing trend, and it's a very profitable trend, and that's something that we didn't want to pass up on. We definitely wanted to get our foot in the door for that. In Japan, Nintendo markets Touch! Generations very heavily. It seems like even what little I've seen of Europe is more effectively marketed. Do you think that Nintendo's doing enough to bring in that casual market in the U.S.? KK: I think the difference is that the market hasn't grown to its peak yet in the U.S. for the DS. Especially for handheld games -- the demographics are completely different. In Japan and Europe, people of ages from 10 to 65 will have a DS. As for the U.S. market, it's still kind of like the younger kids have the DS, and the hardcore gamers from 25 to 35 will have them, but you rarely see 60-year-old people playing the DS in the U.S. Do you think that they just haven't because of marketing issues, or because of games being thought of a certain way? KK: I think it is games being thought of a certain way. It's also marketing. I don't think many people in their 60s or 50s really know what the DS is about. They don't understand what it can do for you, whereas if you go to Japan and you watch some of the commercials, they show all of the people playing it. All the generations relate, and they say, "Oh, I understand what it is now." They don't have that here in the U.S. yet. There was some marketing, possibly in Time. They did an ad when Brain Age came out, but perhaps they haven't kept up the momentum. KK: Right, right, and that's the biggest thing. In Japan, once that momentum started, it kept on going and going and going. I think Europe is starting to head that way as well, but in the U.S., it hasn't been that strong yet. What about the Wii? That's got a lot of momentum right now, and they've attracted a general audience, but everyone's trying to figure out, is that going to last? KK: Right. We're also looking into that, and standing back and seeing what's going to happen within the U.S. market. Obviously in Japan, there's a huge trend going on with it, and everybody's playing with it. For the U.S. market as well, once Wii Fit comes out, I think that's going to change the demographics as well in the U.S. market. We're taking a step back and seeing where it's going to head and move on forward from that. So far, you've put out a PS2 game and now you're putting out a DS game. Can you talk about any other formats you might be interested in? KK: Pretty much everything. We're definitely looking at every console. We really like the online business of it, and WiiWare is also something we're very interested in. The great thing about the DS market is that both territories -- Japan and the U.S. -- it's a huge market. That's something we'd like to concentrate on. With other consoles, we have to face the fact that if we make a game for 360, it's not going to sell in Japan, so we have to make sure that we can recoup just from the U.S. That makes our decision-making revolve around that fact, because the markets are very different, so we have to figure out what we can do and how we can spend our money wisely. What about a service like Xbox Live Arcade or PlayStation Network? KK: We're also definitely looking at online. That's something that we recognize in the U.S. as a very big market. It's kind of hard to convince Japan, because Japan has no idea what the online market is because it's pretty much non-existent. The main thing is that we recognize it, and we definitely want to focus on getting into that market as well. Do you run into struggles having some management in Japan and some management in the U.S.? As you just mentioned, you have to convince Japan to get them interested in certain projects. KK: It's more of a teaching. We have to teach them what the American market is doing, what the price differences are, and so on. They're willing to learn, and willing to listen, because they want to grow. It's more or less not really convincing but more like teaching, so they can understand it. Until they fully understand it, they don't want to move on anything, so it's us trying to make sure that they know everything so that they can understand it and then go on from there. So if you could take away the 500-pound gorilla in the room -- that's WWE -- what would you say that Yuke's is all about? KK: Besides all of the wrestling? I would say that we have a really good development team in Japan. They're a really dedicated crew. It's a very large crew. I think Yuke's is mainly really known for our well-developed games that look pretty and handle well. I think from that aspect, we have a really good development house, and hopefully from there, we can grow as a publishing team as well. In Japan, you guys have done some anime-licensed games like Berserk and Armored Trooper Votoms. Are those the kinds of things that you're thinking about bringing out here? KK: Exactly. We're trying to see what we can do and what we can bring over. There's a lot of IPs that are out there that we haven't brought over yet, and that's one main reason why we have Yuke's Company of America. As a property, Berserk has a really hardcore fanbase. Maybe not very big in the U.S., but they're very into it. KK: Right. And it was at E3 at the Sammy booth a couple of years ago... KK: Yeah, a long time ago, Sammy licensed it. This was before we had an office in the U.S., and there were talks about trying to bring it out. That was for the PlayStation 2, but with the PlayStation 2 kind of dissolving and going into PlayStation 3, that kind of died out. It was just bad timing for the release of that game, so it kind of didn't pan out. Again, we're trying to resurrect those kinds of things and see what we can do with it. Your development team is based in Japan, and its most high-profile project is WWE. That's created on behalf of the U.S. audience rather than the Japanese audience. Do you think that creates an advantage? Does it help your developers have a handle on the U.S. market, to an extent? KK: Yeah, it definitely does help, having that juggernaut title. It makes the development team realize more what the U.S. market is all about, and it helps them figure out what the U.S. culture is. I still think there's a lot more that they haven't seen and we need to show them. It's not just WWE, I guess. Are you guys planning on working on any games that are specifically catered to the U.S. market, or are they all going to be ports of your Japanese profile? KK: No, we're definitely looking into making games specifically for the U.S. audience. It's the point of how much you can budget toward a U.S. game. We definitely don't want to just put all our units into one U.S. game and then gamble on that. If it doesn't work, we'll have to close our company. We don't want to take that kind of road. We're playing it little by little, and being very smart in trying to make our company grow little by little. Once we get that... for instance, if Neves does well, maybe we'll get enough income where we can just generate something and be like, "All right, it's time to do something for the U.S. market." We're definitely looking into it, and we definitely want to do it. It's something that's going to happen. I don't know when it's going to happen, but it will happen sometime. What about the Rumble Roses series? Is development continuing on that? KK: I'm really not sure what's going on with Rumble Roses, to be honest. There's always room for possibilities, like, "I'm going to do this and this and this," but again, yeah, that's a Konami-published game, so I can't go too much into that one. I really don't know, to be honest. In Japan, Yuke's has brought out a lot of games that are based on American licenses, for example the Disney-based Haunted Mansion. Those are Western-developed games that are published in Japan, those kinds that you can't bring out here. Are you guys going to concentrate on Yuke's-developed titles, are you looking at branching out? KK: We're definitely branching out. We're not just going to concentrate on Yuke's games. We're always looking at things we can bring out to Japan or bring out to the U.S. So we're definitely looking to outsource. And are you just focusing right now on being a publisher in the U.S., or is there anything more? KK: Yeah, right now we want to -- since our development team in Japan is very big -- we want to concentrate on the publishing aspect in the U.S. Once that grows, then from there, the possibilities of getting a development team in the U.S. is definitely there.