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June 10, 2007 11:32 pm

Handhelds drive games market, says Enix chief

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Powerful next-generation consoles such as Microsoft’s Xbox and Sony’s PlayStation 3 are mismatched to the gaming environment and handheld game devices are set to dominate sales this year, according to the chief executive of one of Japan’s leading game developers.

Yoichi Wada, chief executive of Square Enix, said the demographics of gamers have undergone a sea change in the past few years, forcing software developers to shift their strategies accordingly.

“There is a new breed of gamers in the market – we have to make games for all kinds of people,” said Mr Wada, in an interview with the FT. “In the old days, we could just focus on the PlayStation or the GameBoy, but the environment has changed completely.”

In an abrupt turnround for the company, Square Enix announced this year that Dragon Quest IX, the latest instalment in its successful franchise, would only be produced for Nintendo’s handheld DS machine. The move was groundbreaking, as previous Dragon Quest instalments were made primarily for the PlayStation and PS2.

“We chose the Nintendo DS because the widest array of people use it, including people who previously did not play games before,” said Mr Wada.

Nintendo has sold more than 35m DS portable game-players globally, and is set to sell 22m units this year. In contrast, Sony aims to ship 11m PS3 consoles this year.

Software makers are hedging their bets as a clear winner among next-generation consoles has not yet emerged, and in light of this trend, companies such as Sony are focusing much more on in-house software development.

“Management [at game developers] are making decisions on a pure economic basis these days,” said Jay Defibaugh, analyst at Credit Suisse. “You are putting a lot of risk on the table if you develop an exclusive [title] for the PS3.”

Mr Wada said certain next-generation consoles were over-engineered for today’s gaming environment.

“There are too many specs – and you also need a high-definition TV, a broadband connection and a deep knowledge of gaming – these consoles are mismatched to today’s environment. In a year or two years they will fare better,” Mr Wada said.

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