[While you'll also find Gamasutra stories on DICE talks like Dave Perry's and John Riccitiello's, we're just printing the longer-form, less business-y stuff here - and this Capcom talk, written up by Brandon Sheffield, hits a lot of the right buttons re: intriguing cultural questions.]

Jun Takeuchi, creative director at Capcom and producer of Resident Evil 5 and Lost Planet, opened DICE's first full day of programming with a keynote intended to tackle the issue of global game development and Capcom’s recent success in the Western market.

But in effect, he wound up making a better case for why Japanese game companies are not succeeding in the West.

"Maybe it’s strange for a Japanese person like me to be speaking to you," he began at the Gamasutra-attended talk during the Las Vegas business summit, "but I want to tell you a bit about how it’s like for us in Japan just now."

Takeuchi frequently punctuated his talk with similar kinds of casual and perhaps somewhat unconscious remarks, which ensured the audience got the idea that Japan is different from America.

"Japanese people, when they come to a place like [America], have a very unique feeling," said Takeuchi, presenting a slide representing Japan's perception of the West. "The first thing I feel when I come here is ‘wow, you’re all not Japanese.’ This is of course down to Japan being an isolated island country for many years."

While he delivered his comment as a half-joke, the comment about Japan’s isolation is valid, and is a point of "differentness" to which he kept referring during his talk.

But the harsh realities of the game market do not escape the company. "When I look at the games world market right now," he said, "I have no choice but to admit that Japan is a small part of that market."

Mistakes On The Way To A Bold Goal

"For software sales, Japan is just 6 percent of the global market. For the past several years, Capcom has had the goal of making the majority of its products for the Western market. We plan to increase our sales in the West to 70 percent of our total."

This is indeed a bold goal, and likely that focus is helping Capcom sell its games here, especially given that keeping other markets in mind from the beginning makes localization far easier. In terms of Capcom’s initial approach to this goal, Takeuchi highlighted the company’s initial missteps.

"I think the first mistake we made is thinking ‘we have to understand how foreigners think.’ And the first way we thought to do this was to dye our hair blonde, and then think wow, I’m a foreigner!" He joked.

"The game that came from this strategy was Onimusha 3. Of course, this was still a game about samurai, and it didn’t sell as well as we wanted."

For that title, Capcom tried adding Moroccan-born French actor Jean Reno, to whom Takeuchi referred as a "popular Hollywood actor" -- an indication that the company misunderstood what it takes to make a game popular in the West.

"We dyed the game blonde," he admitted.

Developing A New Approach

At this point, Capcom hired current Bionic Commando producer Ben Judd, who at the time was simply consulting. Judd asked: "How will this help?"

Takeuchi joked that the next approach was to put baseball caps on their developers, because Americans like baseball. The Western-focused game that came out around this time period was Shadow of Rome.

"Just as Ichiro [Suzuki, of the Seattle Mariners baseball team] has his teammates who are American who help him," he said, "we decided to get lots of feedback from Westerners. It didn’t really work out, either.”

At this point, Judd expressed to Capcom that he felt they weren't taking Westernization seriously. "We were taking it seriously as Japanese people," said Takeuchi, "if there’s one thing we hate at Capcom, it’s quitters, so we went back to the drawing board."

The company’s new approach was based on the Japanese proverb: In order to defeat your enemy, it’s not enough to know your enemy - you must truly know yourself. "We used this as our touchstone in our new strategy," he said.

With this in mind, Capcom looked at the problems of Japan itself. Japan is a society that is nearly homogenous, Takeuchi reminded the audience. And Japanese as a language is only used within Japan itself. It’s a very small and built-up country, which leads to small communities as well, he says.

"But we realized that we in Japan enjoy lots of different cultures. We listen to music on iPods, watch movies from Hollywood, eat at McDonalds, want to own Mercedes, and love rock and roll."

Obstacles In The Way

The crunchiest bit of his talk was in the recognition of three problems within Capcom, which also reflects on the Japanese industry as a whole. "First, we realized that risk reduction can actually increase risk," he said.

Concentrating investment on the Japanese market first that will succeed just in Japan, is not a good idea. "The Japanese market is quite small, so the amount of money you can spend on a title like this is quite small."

"The second issue was that our understanding of the Western market was nowhere near clear enough," he admits -- thinking too simply about making games just for the West would also lead to smaller budgets. "A typical result of this might be to take a really stylish character and turn him into a big macho man," perhaps echoing the transition of Capcom’s title Sengoku Basara from Japan into the muscle-bound Devil Kings.

The third problem was that "management was only thinking about the West as an extra sales bonus, not a target market for development." New technology was developed blindly without a proper goal in mind.

Capcom's 10 Commandments

As a result of their rethinking, they came up with some new practices for themselves. Here then, are the 10 commandments of Capcom development.

1 – Keep staff turnover below 10 percent per annum.
2 – Maintain the ability (and cash reserves) to increase personnel by 10% each year.
3 – Keeping the first two points in mind, keep development cost fluctuations within 10%.
4 – Investment in new IP needs to be kept within 20% of total development budget.
5 – The structure and organization of the company needs the flexibility to change in response to growth; the goals and objectives must constantly be reviewed.
6 – Goals and objectives must be adaptable to external forces.
7 – Objectives and aims must always be set from the top down.
8 - Reform must always be taken from the bottom up.
9 – There should be no taboo areas where it comes to reform; reform must be undertaken at all costs.
10 – Don’t set unachievable goals.

"The first three points reflect the fact that Japanese people look first and foremost for stability in their companies," he admitted. "Japanese people view switching developers as a big risk, so people rarely do that."

New IP is important – "but we don’t think it’s a good idea to spend over 20 percent [of budgets] on new IP. If one of those new IP doesn’t take off, it can damage the company quite seriously," he said, adding that "Japanese companies don’t like organizational change – but if you can’t adapt to the time, you can’t succeed in the market."

Troubling Signs In Implementation?

Perhaps most distressing was his discussion of how these sorts of company adjustments need to be undertaken. "When there are problems in the company, they’re almost always within developers themselves," said Takeuchi, explaining that managers must always enact reform from the top down, and communicate this to their employees, as seen in the seventh Capcom commandment. "Management must always work with developers to enact these reforms."

The trouble here is that the idea of adapting the company to changing market conditions is a new one to Japan, and it is extremely telling that this needed to be a commandment in order to come to fruition. This also reflects how quickly Western developers were able to overshoot their Japanese counterparts in the last 10 years or so.

"There’s one more rule that’s as important as the rest," said Takeuchi. "Make games that users will enjoy! This has been the philosophy at Capcom for many years, and is the thing developers learn when they first come to Capcom."

"All things we do in Capcom have to be tied to how the end user will feel. If you can’t do that, you lose the reason for your company to exist."

"Make fun games" seems like an amazingly vague thing to say to other game developers. Perhaps it occasionally needs restating, but unfortunately the reason a game like Lost Planet or Resident Evil succeeds in the West is not because of adapting business practices, or management telling the developers the right way to do things, but because Capcom came up with a good mechanic, executed on it well, and made the locations non-specific to Japan.

He closed by reminding us of our differences: "You’re all Americans, and I’m Japanese," he said. "The things we eat, the language we speak, it’s all different. But I don’t think there’s any difference in our understanding of what a fun game is."

"While I was developing Resident Evil 5, I really fell in love with BioShock," he continued. "I’m really struggling with the fact that I can’t work my way up the rankings in Call of Duty 4. There are no borders to fun."

Question And Answer Session

First, Chris Kohler of Wired asked, to paraphrase: "Localization was difficult on Game Center CX (Retro Game Master) because the developers didn’t think the game would ever leave Japan. Should games be created with localization in mind even if they’re created primarily for Japan?"

Takeuchi responded: "As you say, this is a big problem that’s happening in the Japanese market. There are some developers out there who, because their games don’t take off in the West, can start to ignore the West when developing games."

"I think that’s a very sad and dangerous game for the Japanese market. I think we should remember that in the development of games, the idea of fun, goes beyond national boundaries. I think the fact that we’ve developed games with the thought to release them in the Western market has really helped us."

Seth Schiesel from the New York Times asked: "Why do you think games have become Japan’s most successful cultural export, when other media like film and music are not as successful?"

Takeuchi responded: "Certainly I can see how you’d think that way, but the Japanese film market used to be more popular worldwide than it is now." He cited filmmakers like Akira Kurosawa (Ran, Rashomon), and movies like Godzilla.

"So I think the real question is why, with experience from the past, Japanese films aren’t popular anymore," he said. "And I think that reason is because filmmakers decided to reduce risk by not focusing on the West."

"I think that if an American studio were to make a movie like Godzilla, they would view it as a product to sell around the world, and might spend $100 million. But in Japan, they would never spend more than $5 million, and hope to make their money back only in Japan."

His specific comments regarding games were especially interesting, and summed up rather well the difficulty of making games in Japan in the first place, as well as the trouble with bringing them to the West.

"I think the reason games are different is ultimately down to Nintendo," he said. "Nintendo -- in contrast to other Japanese companies -- really made a big effort to succeed not only in Japan, but also in the West, and all over the world."

"And after them of course came Sony. So we in Japan were inspired looking at these companies. I think that if Nintendo and Sony hadn’t blazed these paths first, I don’t think we at Capcom would be developing games for the West."

"I think with better management, Japanese films and comics would be able to do much better in the global marketplace," he concluded.