December 28th, 2012Top StoryThe Game Savers: How A Tiny Company Gives Neglected Japanese Games New Life In AmericaBy Jason Schreier Every Friday afternoon, the staff of Xseed Games have a meeting. They sit in a conference room, break out the booze, and talk about video games. They talk about what games might be fun to make, what games might be fun to play, and what sort of strange Japanese titles they should work on next. It's a much-needed moment of respite for the gang of talented multi-taskers, heroes to any American gamer desperate for someone to drag overlooked Japanese games across the Pacific for us to play, who work long hours translating, marketing, and bringing Eastern games to life in the United States. They have to work hard: there are only nine of them. Nine people. At the entire company. But while the bigger guys—giant game publishers like EA and Activision—duke it out over who can sell the most millions, Xseed is happy to stay small. They're happy to focus on quirky Japanese games. And they're happy to stick within their niche, even knowing that it won't make them nearly as much money as they might make chasing after shooters and dubstep. It's not easy. Big retailers want nothing to do with them, passionate fans can be a little bit too passionate, and everyone in the company has to wear multiple hats every day. But Xseed keeps going. And to people who like Japanese games—games like Half-Minute Hero, The Last Story, and Valhalla Knights—Xseed has become one of the most beloved companies on the planet. Niche of a Niche of a Niche"How do you pick the games you localize?" I asked Xseed. I was sitting in their conference room, chatting with Ken Berry, Jess Chavez, translator Tom Lipschultz, and marketing manager Jimmy Soga. "I would say usually games are found either by somebody contacting us, like the Japanese developer team or publisher contacting us and saying, 'Hey, we have this title, are you interested in publishing it in North America?'" Berry said, "or us just hearing about a title, whether it be reading about it in Famitsu, or seeing it a trade show, or seeing it covered on the Internet." "Then we'll take all that feedback, sit down together as a group, and then say 'Okay, here's what I like about the game, and here's what I didn't like about the game,'" When they're interested in a game, they'll approach the Japanese developers or publishers and ask about the North American rights. If a deal is possible, Xseed will ask for a playable build of the game so the whole team can check it out. Everyone at Xseed will spend a week or so playing the game and filling out internal assessment forms to figure out whether it's good or bad. "Then we'll take all that feedback, sit down together as a group, and then say 'Okay, here's what I like about the game, and here's what I didn't like about the game,'" Berry said. "And then based on that feedback, we'd have to come up with some kind of basic sales estimate—how much we think the title can sell. And then based on that we would have to put in a proposal to the original developer team or publisher in Japan." Xseed will make a specific offer, pitching an upfront minimum guarantee ("You will definitely make $XXX") and a royalty rate ("You will make X% of every sale") based on how many copies they think the game will move. At this point, that Japanese team might also be taking bids from some of Xseed's competitors—other niche publishers like Nippon Ichi, Atlus, or Aksys might be interested in the game as well. So the bid is very important. "What if you found a game that you really, really loved, but you just couldn't justify publishing it because you wouldn't sell enough copies?" I asked. "That's every single game that Tom likes," Berry said, laughing. "The one that I really pushed for, actually," Lipschultz said, "was the Hatsune Miku minigame that came in the first expansion pack for Project Diva, called Hello Planet, which I thought would make a great PSP Mini. But yeah. Nobody here really thought that was a great idea." Hatsune Miku, an auto-tuned android that sings Japanese pop songs, is immensely popular in Japan. It's never quite picked up steam here. "Tell him the premise!" Chavez said. "Well it's a game based on an actual Miku song," Lipschultz said, as Chavez giggled uncontrollably next to him. "Basically it's an 8-bit style platformer that is in like a post-apocalyptic world. World War 3 happened. Humanity's been wiped out. But miku's like an android that was like awoken automatically after a long sleepcycle. You play as Miku trying to find your master. Eventually you find his grave and, like, die at the side of his grave." (Chavez still couldn't stop laughing.) "You get to read all these emails about what happened," Lipschultz said. "And hear about, like, the end of the world. And it's billed as like the last love song of the planet. It's a very sentimental, very sappy sort of game, but it's really genuinely touching, and really fun... I thought it'd be a good choice but I couldn't convince anybody." "A niche of a niche of a niche," Chavez said. So yes, sometimes games are even too smalltime for a small publisher like Xseed. And their biggest regret, Berry said, is that they can't bring over the sequels to games that didn't sell well, like Retro Game Challenge or Half-Minute Hero. "I mean, we take so much flack from our fans," he told me, "because they say they bought it and they loved the first one, and why can't we bring over the second one? Well... Half-Minute Hero was probably one of our worst-selling games." I asked how many copies they sold. "Just imagine our hypothetical threshold and then cut that by five," Chavez said. Berry laughed. "Look on VGChartz and then take like 1/5 of that and that's probably it." Fleeing Square EnixXseed started with an exodus. It was 2004. Just a year before, two big Japanese companies called Squaresoft and Enix had merged to form one bigger Japanese company called Square Enix. And although the merger had gone smoothly for Square's U.S. offices, some of their big American executives were starting to disagree with their Japanese counterparts on how to grow business in the United States. Eventually, Square Enix U.S.A. president Jun Iwasaki stepped down. So did a few other executives, including business development manager Ken Berry. "A couple months after, he called us all together and said he wanted to start up a new company," Berry told me during a meeting at Xseed's office earlier this month. There were six of them: Iwasaki, Berry, Square sales manager Sean Montgomery, marketing manager Kenji Mimur, CFO Kenzo Nogimura, and PR head Kyoko Yamashita. Iwasaki gave them all the pitch: first, using his contacts at Square Enix, they'd do some marketing work on a freelance basis. Once they'd gotten off the ground, they'd transition into publishing their own games. From there, Xseed was born. "We actually did all the sales and PR and marketing for Kingdom Hearts II even though we weren't a part of Square anymore." "We actually did all the sales and PR and marketing for Kingdom Hearts II even though we weren't a part of Square anymore," Berry said. "We also pitched in quite a bit for Final Fantasy VII: Dirge of Cerberus, and the movie, Advent Children." Iwasaki was close with Tetsuya Nomura, one of Square Enix's most powerful producers and the man behind Kingdom Hearts. While at Square, Iwasaki had recognized just how appealing a Disney/Final Fantasy crossover could be, and he'd launched a big marketing campaign for the game. It became a massive hit in the U.S. Nomura was always grateful for that, so even when Iwasaki had left Square, Nomura worked to get him onto their projects. The newly-formed Xseed also did some marketing research for Namco-Bandai, helping run focus groups during Comic Con to take a look at the Gundam series. But the folks at Xseed didn't just want to do marketing. They wanted to sell their own video games. They wanted to be a full-fledged publisher. Towards the end of 2005, Iwasaki found out through some Japanese contacts that Sony of America was going to pass on localizing the Wild Arms 4—the fourth game in the popular RPG series that blends giant robots with wild western themes—and the folks behind it were looking for a new publisher. Around the same time, Berry suggested that they go after another RPG: Shadow Hearts: From The New World, a game with a bizarre plot and a fascinatingly intricate combat system. They got both games. They brought on a company called 8-4 to help with translation, while they handled everything else: sales, PR, production, distribution, licensing, and all of the other fiddly little things that need to be done before a game can be brought to life. They also got funding from a Japanese company named AQ Interactive (a company that, later, would go on to become their majority shareholder). Xseed Games had become a publisher. Locali-what?The first thing you notice, when walking into Xseed's office in Torrance, California, is the big white shelf full of video games in the entryway. Some of the games are in English, but most are Japanese imports: weird-looking games with titles you've never seen before. One cursory look at the shelf might lead you to a fishing game, or maybe an anime-style girlfriend simulator. It's fascinating. Over the past six years, Xseed has brought a number of Japanese games to the West. Some you might recognize, like The Last Story, a Wii RPG helmed by the creator of Final Fantasy. Others might be less familiar, like KORG DS-10, a synthesizer application that lets you make music on your DS. Xseed has a large, eclectic library of games, from remakes of old classics to RPGs based on fairy tales. Today, Xseed looks much different than they did in 2004. Of the founding members, only Ken Berry is left. And they no longer do marketing work for Square Enix. Now, they partner with a number of Japanese developers and publishers in order to get Eastern games to the West. For hardcore fans of Japanese games—of which there are quite a few in the U.S.—companies like Xseed are a lifesaver. Xseed works on the ground floor of a black building not far from the freeway and walking distance from a number of Japanese restaurants and convenience stores: perfect for stocking up on the staff's two main vices—ramen and beer. Their office, which I visited earlier this month, leads right out into the parking lot. While walking around the floor space, which is small and well-decorated, full of dolls and action figures of all sorts, I found a closed door towards the back of the main room. I asked localization editor Jessica Chavez what was inside. "That's where we keep the interns' bodies," she said. It's that bizarre sense of humor that characterizes many of the translations in Xseed's games, and it's one of the reasons fans have grown so fond of this ragtag group over the years. If you play video games, you've probably played something that came out of Japan. Many of gaming's biggest and brightest series—Mario, Final Fantasy, Resident Evil—were developed by Eastern companies, then translated and programmed for North American or European machines. But for every Japanese game you've seen on U.S. store shelves, there are 10 more that never made it over here. Two particularly infamous examples are Nintendo's Mother 3 and Square Enix's Final Fantasy Type-0. The list goes on and on. So why do so many games seem to slip through the cracks? While it's tempting to imagine a world where one finger snap can turn a Japanese game English, the process of bringing a Japanese game to the West—a process known as localization—is timely and expensive. Not only do games have to be translated, they often have to be rewritten entirely for English cadence and Western sensibilities. The best translators are creative writers as well, adding a dash of their own humor and charm to replace all the Japanese puns that might get lost in translation. Once translators are done with the script, the game has to be programmed for localization. Then there's voice acting, quality assurance, ESRB approval, printing, shipping, and all of the other random factors that can cause hurdles and delays during the process. In other words, localizing Japanese games is an expensive, time-consuming endeavor. For many big companies, the costs just aren't worth it—especially for RPGs, which tend to be unwieldy, massive games with limited appeal. That's bad news if you're a Western fan of Eastern games. More than a few hardcore gamers have taught themselves Japanese just to play all the games they wouldn't be able to play otherwise. The rest of us have to rely on companies like Xseed. 'Do As I Say, Not As I Do'One big advantage of being a small company is that you can kind of do whatever you want—and indeed, everyone at Xseed wears multiple hats: Chavez does editing and licensing; Lipschultz translates and dabbles in programming; Soga handles marketing as well as IT for the whole company; and Berry not only handles business deals, he runs the online store (by printing out orders and shipping the games by hand alongside their assistant production manager, Brittany—"We are the online store," he told me). But when you're owned by a big corporation—Xseed is now owned by a company called AQ Interactive—even the smallest move can have a giant ripple effect. Last year, Berry was talking to fans on Xseed's Facebook page. One person had asked if they would bring over a certain title—an anime game called Magical Girl Lyrical Nanoha A's Portable: The Battle of Aces—and Berry responded by saying that retailers in the U.S. tend to dislike anime covers that aren't Dragon Ball Z or Naruto, so it'd be a hard sell. The next day, Berry found a story on Siliconera, a blog devoted to Japanese games: Retailers "Refuse" To Carry Anime Games. The story was based on Xseed's Facebook post. "Then the next day we get an e-mail from our parent company AQ interactive," Berry said. The Japanese version of Yahoo Finance had picked up Siliconera's story, but something was lost in translation. Yahoo reported that AQ Interactive's subsidiary, Xseed, was struggling in the United States. Because "games from Japan don't sell in America." AQ Interactive's stock went down. Because of that Yahoo article, which was based on a Siliconera article, which was based on an Xseed Facebook post. "We got an angry letter from Japan saying, 'What's going on over there?'" Soga said. Berry's innocuous Facebook comment had been blown way out of proportion, and now they had to deal with the fallout. It's the sort of incident that might lead a bigger publisher to demand that employees never use Facebook again. It's also the sort of incident that leaves companies like Xseed rather paranoid about exactly what they say to whom. "[Ken] sent an e-mail to us," Lipschultz said, laughing. "The subject was, 'Do as I say, not as I do.'" The Big DealIn 2010, Xseed struck a deal with a respected Japanese developer named Falcom. The folks at Falcom were well-known in Japan but significantly less popular in the United States, where they had released a number of games with several different publishers. By working together, both companies could build up their individual brands. "They really liked that idea of us handling multiple titles," Berry said, "and really just pushing the Falcom name and brand awareness here in the U.S." Xseed published a number of Ys action-role-playing games: first Ys Seven, Ys I & II: Chronicles, and Ys: The Oath in Felghana on PSP, then Felghana and Ys Origins on Steam. Xseed also localized and published Legend of Heroes: Trails in the Sky, a game so huge and time-consuming that it still gives localization editor Jessica Chavez fits to think about. (By Chavez's count, Trails had 1.5 million Japanese characters to be translated. It took them close to a year.) The unfortunate thing about Trails in the Sky—a well-written fantasy RPG that ranks among my personal favorite games—is that it ends on a jaw-dropping cliffhanger. This is part one of a trilogy—a trilogy whose second and third parts may never even make it to the United States. "Falcom realized after the first Trails in the Sky what a huge effort that was, to do the localization programming. I think they're a bit more hesitant to take on such a huge project again." "Yeah, we haven't really officially confirmed that it's coming at all in a while," Berry said when I asked about the second game in the Trails in the Sky trilogy. "We sort of missed our window a while back I guess. We're still in talks with Falcom..." Missed their window? "In terms of Falcom doing the localization programming, and also UMDs [PSP discs] still being a viable format," he said. "For one, Falcom realized after the first Trails in the Sky what a huge effort that was, to do the localization programming. I think they're a bit more hesitant to take on such a huge project again. And also, it's been quite some time since the first one came out, when the PSP market was still somewhat alive... we have a combination of much bigger effort to get the game done and potentially much smaller sales, so that makes it pretty tough to justify." Not great news for Trails fans eager to see what will happen next. Still, Berry says there's always a chance that they could release the game digitally on some other platform or combination of platforms. "Both us and Falcom don't want to leave [fans] hanging," Berry said. "So we'll both continue to try to come up with a way to make it work without either one of us losing a ton of money while trying to please the fans." Not Quite The Last StoryLast month, Xseed announced that The Last Story was the company's most successful game to date. But The Last Story almost never made it here in the first place. Before Xseed approached Nintendo about possible localization rights, Berry had to convince their own marketing team that selling a $50 Wii game in 2012 was somehow viable.
"It was a constant fight even within our own organization," Berry said. "To our external sales reps, we'd be saying, 'No, like you guys don't understand. There's tons of fans out there that are asking for this. There's a huge fan movement.' I mean, so yeah. In the end, I think we were right." Xseed's sales reps were surprised at how well The Last Story sold on a "dead platform," but Berry knew that it'd be a hit. Preorders were great, hardcore fans were desperate for a new console RPG in a rather dry year, and the game received a load of free publicity in 2011, when a fan-driven campaign called Operation Rainfall made headlines by asking Nintendo to bring The Last Story—and two other big Japanese Wii games—to the United States. Can't hurt that it's a really good game. "We're eternally grateful to the fan community out there," Berry said. "They really stepped up their game and put their actions and their wallets where their mouths were earlier. They backed up their talk." The Chicken Or The EggNot every story has ended well for the small publisher. While it's easy for them to sell games online or get them into GameStop, Xseed has found it impossible to convince the big-box retailers—like Walmart and Target—to carry their games. That makes it very difficult for many of their games to reach wide audiences, Berry said. "It's sort of the chicken or the egg," he said. "We can't tell Walmart that we have a $3 million TV budget behind this title unless they tell us that they're gonna bring in hundreds of thousands of units of it. So do we wait for them to commit and then commit to a huge marketing spend, or do we commit to the huge marketing spend first and just believe that they're gonna bring it in? That's the tough part." Even their games that could have widespread appeal—like Victorious Boxer, a boxing game released for the Wii back in 2007, when the system was flying off store shelves—couldn't make it to Walmart and Target. Without the budget—or the track record—of bigger publishers like EA and Activision, Xseed can't compete. Sometimes, outside factors can prevent Xseed from getting the rights to a game in the first place, even if that game never makes it to the U.S. anyway. "Most of the big names that people keep requesting from us over the years, we've been in talks on," Berry said. "There's a couple that we were right there... like one that would've pretty much shocked the industry if we could've announced it. But for whatever reason, at the very end, maybe some executives at the company just realized that this brand is too important to their company to license out to another company. Even if their U.S. branch isn't going to publish it, they can't let anyone else publish it." I asked what game, but Berry said he couldn't tell me. Part of dealing with Japanese companies means dealing with secrecy. "Anything you can hint at?" I asked. Berry laughed. "I think I already hinted too much." They've all got their dream projects—Berry says he'd love to publish Valkyria Chronicles 3, for example—and they're all fans of the games that they release: it's not uncommon to find Lipschultz and Chavez chatting about games on message boards like NeoGAF and GameFAQs, or even on Kotaku. And Berry's optimistic about Xseed's future. "I would say we're in the best position we've been in in years," he said. They've got big plans for next year, too: Berry said they're planning to announce most of their 2013 lineup in mid-January, and it includes "a pretty big announcement" for a game that isn't even out in Japan yet. "In an industry where the big guys are almost exclusively going after blockbusters and the smaller games don't seem to make much money, how does a company like Xseed survive?" I asked. "No office snacks," Chavez joked. "I think it's because we're small," Soga said. "We can live off the crumbs—what falls off the table. To them, it's nothing. To us, it's enough to stay fed." Berry chimed in. "Plus, I mean, we know not to take those guys head on. We're not gonna put out any first-person shooters. A big part of our competitive advantage is, we're willing to work on RPGs, mainly from Japan, that those big guys won't... We're talking huge cost, time commitment for relatively small sales. But we thrive in that environment."  |
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