Until the mid 1990s, Japanese game developers were leading the way. With console makers Nintendo and Sega and later Sony acting as gatekeepers, they were often more successful than their western counterparts, with franchises like Mario, Sonic and Zelda standing out.
But the late 90s saw a leap in Western game development with first-person shooters like Doom and Quake and sports games and ultimately the rise of successful Western IPs like Grand Theft Auto, and Call of Duty. But some are now suggesting that the tide is turning back.
As noticed by 80 level, industry analyst Dr. Serkan Toto from the consultancy Kantan Games touched on the subject in a blog post. He mentions that at GDC 2025 "many conversations revolved around the gloom and doom in AAA gaming in particular", but says the mood is different in Japan, where the share prices of publicly traded AAA game companies like Sony, Nintendo, Konami, Capcom and Bandai Namco have been hitting record highs.
"The mass layoffs and studio closures in North America and Europe really have not spilled over to Japan, apart from isolated exceptions that are a drop in the ocean compared to the storm the industry is seeing in the West currently," he writes.
Indeed he says Japanese developers are actually getting stronger. “The magnificent 8 Japanese AAA studios are (generally) still hiring and are even raising salaries", he says, although he notes that salaries in gaming in Japan are "still terrible".
He adds that the hardware developers Sony and Nintendo are also "winning big time" thanks to their huge chunk of the console market with the PlayStation 5 and Nintendo Switch (and now PS5 Pro and Switch 2).
So what are Japenese developers doing right? Are we back to the 1990s when Japanese devs were seen as more creative? Is it nostalgia as 90s games get remade? Some suggest that Japanese developers shifting to make games available on Steam was a pivotal moment. But some people have a different theory.
Western and Japanese devs traditionally had differences in approach. Japanese developers taking a more stylized approach and focused on unique characters and worlds while Western games aimed for realism, action and immersive gameplay. But developers on both sides of the Pacific have since taken inspiration from each other.
Some believe that where things went wrong for Japanese developers is when they started trying to emulate Western-style games, and that things got better when they started 'being Japanese again'.
As noted by Genki on X, Shuhei Yoshida, president of SIE Worldwide Studios for Sony Interactive Entertainment from 2008 to 2019, has suggested that 2017's NieR: Automata was the game that revived the Japanese games industry after it "struggled chasing overseas trends in the PS3 era."
"I think Yoko Taro made it without thinking whether or not it would sell overseas," Shuhei said. "However, it was a huge hit overseas". He says that led Japanese creators to decide "let's stop imitating overseas countries anymore, if we create things with our own culture and that we understand, they will understand it overseas".
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