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'Silent Hills' Is the Latest Sign that Japan Is Losing Interest in AAA Games

Changes at the legendary game company reflect monumental shifts in Japanese markets. Strange days ahead.

by Zack Kotzer
Apr 28 2015, 10:00am

​Silent Hills PT. Image: Konami

​On Monday, Konami confirmed that Silent Hills, one of the only two console games it's announced for the future, is cancelled. Even PT, its acclaimed playable teaser, is being removed from digital stores. Konami says it's committed to making new, unspecified Silent Hill games, but the announcement came after a weekend of speculations, and a real Monday of revelations, including Konami delisting itself from the New York Stock Exchange.

It's starting to look like Konami has lost interest in its big, expensive, decade-spanning console franchises like Metal Gear, Silent Hill, and Castlevania.

The past month has seen a tizzy of concern and confusion over whether Hideo Kojima, creator of the Metal Gear Solid series and easily Konami's biggest star, will stay at the company after he finishes his work on Metal Gear Solid V: The Phantom Pain. It began when his name was removed from all logos and promotions for the game, and apparently the company's executive board list as well.

Back-and-forth statements from Konami to game sites didn't provide a clear answer. Konami said that Kojima will finish his work on The Phantom Pain and that it's hiring for future Metal Gear games, but didn't confirm he was leaving. Some Metal Gear fanatics considered Kojima's rumoured expulsion as just another part of the series' weird mysterious rabbit hole marketing, but some of these same fans believed that head transplant surgeon is also a fictional construction for the game's promotion, so take that as you will.

From ​Konami's 3Q FY2015 financial statements.

Kojima was also co-creating Silent Hills, along with director Guillermo del Toro and The Walking Dead actor Norman Reedus. In short, it was going to be a huge production, but now it's no more.

Even Konami's annual Pro Evolution Soccer isn't confirmed for this year, making The Phantom Pain its only upcoming console release. These developments illustrate bigger changes in Japan's games business and audience.

Video games are not Konami's only investment. Among fitness centers and manufacturing pachinko (pseudo-gambling pinball machines), video games are Konami's biggest stake, but they're also the most at-risk. The company's most recent financial records show that its games, despite being buoyed by mobile game growth, lost the most footing, while pachinko revenue nearly doubled.

It's telling that Konami led the digital entertainment section of its latest financial reports with its mobile games, not console and PC games.

Many of Japan's issues aren't exclusive to the gaming industry, but they're manifesting in compromising ways. Japan's population is tumbling down, some estimates saying the country could be a quarter smaller within our lifetime. A country with twice as many people 65 or older than children under the age of 15 is bad for many economic sectors, but especially bad for video games.

The domestic base has historically supported vanguard Japanese games, which either take on their mythos abroad or achieve a cult status, like Dark Souls or Persona. Today, video games still sell well in Japan, but only a few: Pokémon, Monster Hunter, the Pokémon-like Yokai Watch, and Puzzle & Dragons. They're all focused on collecting or forcing monsters to fight each other, are all available on portable devices, and are largely the games Japanese children seem to feel most passionately about. Japanese gamers have been known to be picky, but never as they currently are. Sales for home consoles and their games have been sliding.

What we're seeing might be Konami becoming one of the first to game companies to change course, removing investments from AAA game design and pursuing more stable markets like mobile games, gyms, and pachinko. Even Nintendo is starting to make mobile games as consoles games shrink in Japan.

Older fans may think that Silent Hills' cancellation and Kojima's possible departure is a tragedy, but to Konami, dropping legendary designer who dreams up big, ambitious, risky console games is probably just a sensible business decision.