Abstract
This chapter does not focus on a specific market, but rather on changes in the environment surrounding the game industry since the mid-1990s. The Japanese video game industry underwent major changes from around 1994. It was not merely the launch of a new generation of home video game consoles. It was a major transformation that included changes in the technological paradigm and the economic environment surrounding the game industry.
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Notes
- 1.
A translation of instructions (machine language) that directly control a computer into a form that is easily understood by humans. It is fast in operation, but difficult to understand because the program is written at the level of direct control of the CPU.
- 2.
One of the reasons why the game industry started using libraries in their programs was because Sony forced them to be used in PlayStation (Asakura 1998). Another reason is that the assemblers for the various RISC processors that began to be used around this time were too complex, making it difficult to write optimal programs. In the case of compiling programs using high-level languages (mainly C), the method of combining with existing libraries is highly efficient.
- 3.
In many cases, other control signals also flow through the terminals for ROM cartridges of game consoles, and peripherals can be connected through the cartridge terminals, as in the Family Computer Disk System. In addition, Konami incorporated a sound source chip (SCC) in the late stages of the Family Computer, and Nintendo incorporated a numerical calculation processor (Super FX chip) in the ROM cartridge for the Super Famicom title “Star Fox” (1993). In this way, there were many examples of functional expansion by inserting a dedicated chip into a game ROM cartridge. Therefore, it cannot be said that a strict separation of software and hardware was made for home video game consoles in this period. The strict separation of software/hardware was not achieved until 1994, when PlayStation and Saturn were released, when games were provided on disk media.
- 4.
Many games have a staff roll at the ending, but in the 1980s many games used aliases or nicknames in the staff roll for fear that companies would rip off the developers.
- 5.
To introduce development equipment, game development companies are required to sign a non-disclosure agreement (NDA). As a result, the technical specifications of game consoles are not openly disclosed.
- 6.
The strategy of reducing the price of hardware was also used for the PC Engine and Mega Drive, but the content was almost the same and the frequency was low. It was also a way of boosting the sales of machines that were not the top models of their generation.
- 7.
In a game where the screen moves, a virtual screen for the destination screen may be prepared. In addition, there may be multiple sprite layers for easy management.
- 8.
In practice, using only precise objects (with many polygons) is computationally and memory intensive, so in games, relatively coarse objects (with a small number of polygons) are often created for distant views and used together.
- 9.
In 3D graphics, the surface of an object is represented as a collection of polygons.
- 10.
As many game titles account for the majority of sales in the first few days after release, stocking up on repeat production does not necessarily mean that the game will sell if sufficient stock is not available on the day of release. This means that the risk of ordering more and having it remain unsold is never eliminated.
- 11.
Here are two titles of books released in 1994. The Impact of Multimedia: A 123 Trillion Yen Business Opportunity! and Multimedia in a nutshell: Creating a huge market of 100 trillion yen.
- 12.
The first generation of PlayStation consoles released in Asia had video CD playback capability, although this was not available on the models released in Japan. This also contributed to the spread of Video CDs in Asia.
- 13.
A wholesaler who deals directly with a manufacturer to purchase goods. A wholesaler who purchases from a primary wholesaler is called a secondary wholesaler.
- 14.
According to Wada (2003), 97% of the total sales, excluding the sales of our own titles via Nintendo’s sales division, were distributed via primary wholesalers affiliated with Shoshinkai.
- 15.
Saturn is equipped with two Hitachi SH-2 RISC CPUs. Because of this, the Saturn was also sold through Hitachi’s consumer electronics distribution.
- 16.
DigiCube grew rapidly, thanks to measures such as selling the first copies of Final Fantasy 7 almost exclusively through DigiCube distribution. However, due to various reasons such as fixed price sales, lack of supply of Nintendo’s game titles because of the bad relationship between Square and Nintendo, and the cost of kiosk terminals in convenience stores, DigiCube was petitioned for bankruptcy and dissolved in 2003. However, even after the bankruptcy of DigiCube, the distribution of games in convenience stores has been continuing and popular titles are still available in convenience stores. In recent years, web money for online games, prepaid cards for smartphone games, and cards for Nintendo’s download sales are also available at convenience stores.
- 17.
There are several types of price discrimination strategies, for details, see the textbook on industrial organization in economics. In this book, we will focus on the game industry.
- 18.
In the case of bishōjo games, the strategy is to have the game developer provide materials such as images of the game characters, and to produce “goods limited to each shop” such as telephone cards and posters at the shop’s expense, and to present them to purchasers. When the sales of the shops are large and they can use their bargaining power against the game companies, they sometimes use newly drawn images or create original soundtracks or drama CDs. Some avid gamers will buy games from multiple shops to obtain each retailer’s exclusive goods, and then sell the remaining games to secondhand shops. The phenomenon of “buying multiple games for limited-edition goods” is a demand for games for reasons other than their original purpose and is excluded.
- 19.
To put it simply, the characteristics of games that I have described so far show that a rightward falling demand curve can be drawn for each individual title. If you are not interested in the details, you can ignore them.
- 20.
Sales = price * quantity sold. As the vertical axis is the price per package sold and the horizontal axis is the number of packages sold at that price (number of people), the sales are equal to the area of the rectangle.
- 21.
If one additional episode is produced on the production line that is already in operation for the anime broadcast, the cost of producing one anime episode as a bonus for the game will be about 10 million yen. Therefore, if we assume that 20,000–30,000 copies of the limited edition, which is about 3000 yen more than the standard edition, will be sold, the cost of producing the animation will be fully recovered.
References
(1) Japanese-language Document
Asakura, R. (1998). [Sony's Revolutionaries] (Sony no Kakumeiji Tachi). IGD communications.
Fujimoto, T. (2003). Capacity building competition - why is japan’s automotive industry so strong? [Nouryoku Kouchiku Kyousou-Nihon no Jidousha Sangyou ha Naze Tsuyoinoka]. Chuo-Kouron Shinsha.
Wada, T. (2003). [Distribution of home video game software—Risk-return structure and market impact] (Kateiyou Game Soft no Ryutsu—Risk to return no Kouzou to Shijou heno Eikyou). Akamon Manegement Review, 2(11), 563–580.
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Koyama, Y. (2023). Drastic Changes in 1994: Technological and Business Revolutions. In: History of the Japanese Video Game Industry. Translational Systems Sciences, vol 35. Springer, Singapore. https://doi.org/10.1007/978-981-99-1342-8_8
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