GREE: Games as a Cultural Export

As an avid gamer, the news of GREE shuttering its international offices last week came as a shock. In a bit of snark schadenfreude, the news of their international titles not doing well wasn’t anything unexpected– I’ve played some of them before and seen their respective rankings in the App store. Yet what really caught my attention was the plan that their executives had mentioned going forward: “[to shift] to a “Japan-first content strategy” – the plan being to launch games in its home territory, then localise and distribute the most successful ones in other markets around the world.”

Coming from Japan where a shrinking domestic market means businesses need to expand internationally more than ever— this news was disappointing beyond words. PR doublespeak aside, it just seems like GREE is withdrawing inwards, choosing to stick with the safe and known.

But is this really the right move?

To explore that, let’s examine both parts of its plan:

1- Closing down its international branches
2- Releasing only successful home-grown games as localized versions internationally

1. Closing Down its International Branches

This seems to have been motivated largely by cost. A portion of the company isn’t returning profit– so close it down to reduce expenses. Simple enough. Manufacturing companies do this all the time in an effort to bring down costs.

Unfortunately for GREE, mobile games are a consumer software product. And that means that unlike the more standardized world of hardware, moving your production center changes what you’re selling. Unlike hardware, software development is comparatively fragmented, more free-form, and possesses a design process that focuses more on behavioral rather than physical constraints. As a consequence, the product often inherits the local expectations and worldview of its developing team– and why a game produced in Japan for Canada will result in a much different game than if it were produced in Canada for Canada– even if by the same company.

This is one of the reasons why the tech industry is so focused on trying to attain gender, race, and socioeconomic diversity: so that they can ensure that they capture every potential perspective of their consumer market. Drawing an allegory to software, it’s a way to ensure that there’s always some amount of additional local information pushed into your product.

Yet it’s very difficult to justify an entire subsidiary just for the sake of maintaining diversity that may or may not present meaningful change. At the end, closing the branches is the right play if the financial drag was significant enough– as long as the main entity itself can absorb bits of the international talent to ensure that it retains some of that country’s perspective. If not, they will have to recreate the entirety of the local knowledge base when they return. Whether it be a localized game or native.

2. Releasing Only Successful Home-Grown Games as Localized Versions Internationally

It was this segment of the announcement that I found both especially interesting yet overwhelmingly disappointing. If maintaining a diverse workforce reflective of your consumer demographic was the push for new ideas and cultural nuances– then maintaining a presence in diverse (or international) markets is the pull.

We see this in the practice of localization, where the most simple of localization is the market acting as a pull on the product for language translation. But true localization goes so much further. For creative content especially, it’s transposing cultural references like idioms, pop-culture references, and much more. It’s being able to discern that gamers across cultures are different and have contrasting tastes and expectations.

And that’s why this is such an uncomfortable move. To rely on domestic sales and reviews as an indicator of what to port to other countries seems fraught with failure. Just looking at genre alone at the top iPhone games in America vs Japan and we see there’s a large differences in market preference:

Top iOS Grossing Apps courtesy of App Annie as of 7/15/17

For Japan, the overwhelming majority of grossing games are rhythm games or RPGs centered on a collectibles mechanic. For Americans, they are puzzles and/or strategy. To add additional nuance, the top grossing in Japan also tend to be based on branded domestic content– ones with a small audience across seas. Especially for GREE who doesn’t possess the same beloved international content like its mobile competitors Bandai NAMCO and Nintendo, successful expansion of domestic titles seem slim.

Stepping Back

It’s interesting to think about how this piece of news relates to Japan’s desire to increase its international business competitiveness.

Like many countries, Japan is tremendously incentivized for and engaged in the success of its domestic companies in the global arena. As covered in one of our earliest articles “The World is Iterating on Silicon Valley,” this is especially true for the innovation space. But Japan also has the “Cool Japan” initiative— a peer to Korea’s massively successful “Hallyu” that pushed K-Pop and K-Drama to the forefront of the world. Both are governmental initiatives who at their core are campaigns to increase national image and create international demand for their cultural products.

It is here that makes GREE’s choice so interesting. As one of Japan’s mobile gaming companies– GREE stands at the intersection of a Cool Japan product (gaming as a cultural good) and software. But their decision to withdraw and double-down on domestic titles seems to put their philosophy squarely with the former, and pushing out only the most successful titles internationally seems like the exact plan a company under the guidance of Cool Japan would embark on.

Yet as mentioned before, GREE is also a software company– and the components of its product are much more than an amalgamation of national literary arts and historical culture. Gamers can fall in love with and adapt to the artistic direction and story design of a Japanese game, but unlike a TV drama or song, those are not the primary drivers behind an enjoyable gaming experience. For a game, it is the mechanics themselves that drive consumption— and even granular nuances like cursor controls and averaged expected length of consumption matter a great deal. Critical design decisions such as level depth and game intensity alone need to adjust accordingly to metrics like a country’s average commute time.

The question is then: Can a company that chooses to recede into its domestic base really create a game with mechanics that are universally enjoyed?

Because pop-culture and interests may be malleable, but needs and motivations are much more entrenched. To create something that rises beyond niche international markets and catches the next innovative revolution, it is imperative to identify and empathize with markets outside of your own. Just looking at fast food chains– one of the most global of American exports–it is the reason why McDonalds doesn’t serve beef in India, why Pizza Hut serves escargot in Hong Kong, and why KFCs have a special Christmas chicken meal in Japan that requires a minimal of a one month reservation.

GREE’s decision to retreat from a direct-to-international model by no means equivocate to denying any and all international influences– but it definitely drastically reduces their exposure to them. And it will be interesting to see whether its identity as a cultural export or software product will emerge as the ultimate influencer for its eventual success or failure.

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