SEGA CORPORATION

MAKING

The Game Making Process

Venturing into New Territory with
Web3 and the Metaverse

MEMBER PROFILE

President and COO, Representative Director Shuji Utsumi

Worked in various parts of the entertainment industry and joined SEGA SAMMY Holdings in 2019.
Has held his current position since April 2021

Investment Management Department, Manager Etsuko Horie

Joined in 2015. Initially responsible for strategic investments related to mobile games, and currently serves in the CVC Department of SEGA SAMMY Holdings and Tech Development Department of SEGA's Business Development Division.
Conducts investment activities based on SEGA's business strategy.

Marketing Department, Vice Manager Daichi Mukai

Joined in 2018. Former product manager for smartphone and console games. Established a community-oriented team specialized in robust video content creation, by producing/managing content on YouTube and TikTok as well as collaborating with influencers.
Currently, works on new marketing fields beyond video content.

Including the "Sonic" series and the "Like a Dragon" series, SEGA has created countless titles that aren't just widely-beloved in Japan, but around the world. Their work doesn't just stop at games; they have a wide breadth of work across parts of the entertainment industry, and have created many products that are generational icons.

This company has recently been focusing its efforts on new fields: Metaverse and Web3. With their IPs (Intellectual Properties), assembly of technical skills, and knowledge related to games, SEGA aims to make moving experiences that have never been made before and is launching a new, fully-fledged business project.

A future where you can make a living from games might be waiting

First, could you please tell us about your background, Mr. Mukai?

Mukai

When I was a fresh graduate from college, I worked as a project manager in a company that handled cellphone ringtones and ringtone songs. After two years, things shifted to the smartphone era, and apps became the main focus. I was then involved with developing casual games for smartphones. It was a small team, so I built all kinds of experience with things like ad implementation.

What motivated me to join SEGA was when I received a PlayStation 4 after serving as the MC at my friend's wedding. I had always loved games, but it had been around ten years since I had enjoyed the "Like a Dragon" series. When I played "Yakuza 6", I was moved by how much games had evolved. I realized that I wanted to engage with games as a product. Then, after speaking to many employees at SEGA, its corporate culture and my interest in its products led me to join SEGA.

Now, I'm in the middle of my sixth year at SEGA. Three to four years after I had joined, I was assigned as a product manager for smartphone game applications and was in charge of marketing. After that, I was tasked with establishing an internal team specialized in video content creation. I created a video studio, produced and managed content on YouTube and TikTok, and partnered with influencers. I eventually succeeded in making a team that could make effective video content for our community. Currently, I work on new marketing fields beyond video content. It is my role to investigate what we would really like to do and where our internal knowledge is lacking, and to then propose and implement solutions that'll help us catch up. I am involved with our venture into new territory with Metaverse and Web3.

Do you see the domain of Metaverse and Web3 as a new extension of marketing?

Mukai

You can think of it as a two-pronged approach: as a new extension of marketing and as a ground for new business projects separate from marketing.

When it comes to Metaverse, we're already implementing some things as an extension of our marketing. For example, we are collaborating with companies that operate a Metaverse platform to conduct livestreams, and we're even trying to erect a statue of Sonic in the Metaverse as a form of promotion. We are challenging ourselves to approach Metaverse with many different strategies.

With respect to Web3, we see it as a marketing ecosystem that will be accomplished through various digital transportations, rather than as an extension of marketing. Just as using QR codes for payment has become a given in our daily lives, Web3 will similarly take root into our daily lives as technology evolves and services adapt. Speaking hypothetically, if a company were made in a Metaverse and all forms of payment were switched to virtual currency, games would have their own unique virtual currency. For example, since we're talking about SEGA, imagine "Like a Dragon" tokens or something like that. If we implemented a system like "Use our unique tokens to get a great deal," we would make our core fans happy and drive SEGA's profits up. We don't entirely know what kind of outputs to expect. However, if there are new business opportunities, there's no way a game would pass them up.

Yeah, the "Like a Dragon" games are very close to a real world, and it's easy to imagine how it can tie to the Metaverse, huh?

Mukai

Yeah, while we're on the subject of the "Like a Dragon" series, it'd be interesting if you could visit a ramen store in Kamurocho (the fictional area where the "Like a Dragon" series takes place) and use "Like a Dragon" tokens to purchase ramen that would be delivered to your real home via Uber Eats. Maybe even convenience stores, bookstores, or banks might be able to operate that way too. There's also SEGA's "UFO Catchers": I imagine you could have the prizes you win in-game delivered to your houses. If SEGA had its own network to make this possible, players would be able to immerse themselves into game worlds more than ever before. It would be fascinating to imagine a future where in-game mechanics were connected to the real world and real-world space could be brought into the game world.

Marketing in the Metaverse takes trial and error

There are many people who can't concretely imagine what the Metaverse or Web3 are like, because there are few precedents to go off of. What would you like to have new employees work on first?

Mukai

As a starting point, there are some areas of the Metaverse where it's simple to produce output. Namely, this includes planning and implementing collaboration strategies for SEGA's IPs and titles in Metaverse space. As examples, they could make advertisements for SEGA's latest titles in the Metaverse, or design T-shirts for Metaverse avatars as part of the anniversary events for SEGA's titles.

SEGA of America used an interesting approach for their promotion of the animated series, "Sonic Prime"—which is now streaming on Netflix. They dropped the first episode on the online gaming platform "Roblox" prior to its official launch. In other words, they brought a new animated work to a Metaverse space, so that people there could see it first. "Roblox" has over 200 million users worldwide, and players were able to gather and watch it together. As such, "Sonic Prime" really generated quite the reaction. This may be a precedent for animation, but it may change the methods used to advertise games. For example, it could mean things like early demos or bonuses for people who've played games in early access. First, we'll need to use trial and error and observe how fans react. Once we build up more precedents, we'll coordinate with our development team to deliver interactive content.

Gaming and advertising are advancing at a rapid pace. Now, many people enjoy video game streams, when only until a few years ago, gaming companies viewed secondary use of their content as a negative thing. Gameplay videos have become a major avenue of content. In 2020, we made contracts with YouTubers and VTuber management companies. We've truly changed direction from seeing streaming as a negative to positively encouraging content creators to stream game content for us. Up till now, we've used performers and celebrity endorsements to make game announcements, but we've switched to influencers instead.

In a similar sense, we've placed real-world advertisements throughout city streets and stations, but I believe we'll one day reach a point where we'll be putting them in virtual city streets and stations instead.

You mean that as the tides turn for games and advertising, you must prepare to ride that wave when it comes.

Mukai

Actually, that would be too late. We need to be ready the very moment a new trend sets in. Ideally, we'll find ourselves at the head of the pack and secure enough popularity to be at the very top.

When we started our TikTok two years ago, the only game companies on the platform were SEGA and one other company. These days, companies pop up one after the other on TikTok, but we've established 1 million followers. Riding the wave has certainly made the difference from the get-go.

I want people who feel stagnant in their current workplace to come here

What kind of people would you like to see at SEGA?

Mukai

People with a burning passion, who have thoughts like "I want to take on a new business" or "It looks interesting, so I wanna try it," would be great. To an extent, I think that people who love games are great, and there's nothing better than someone who is knowledgeable and experienced with marketing. However, besides that, I'd like to prioritize someone who finds our latest projects fascinating and wants to apply their skills to them. As we take on our projects with the Metaverse and Web3, they'll be able to pick up the necessary knowledge; it's fine if they don't have any prior knowledge.

Then, I should point out that our Vice President often encourages us to have a half-and-half balance of science and art. Marketers tend to prioritize numbers, but pursuing numbers alone will produce content based around numbers. It's not just about logic. You need to balance it with the need to boldly experiment with things if it might lead to something fun.

A fifty-fifty balance of science and art would be best. However, at the beginning, it wouldn't hurt to have a 9 to 1 ratio of science and art. After someone joins the company, they'll be able to raise the quality of their art, and it'll be great once they achieve a fifty-fifty balance.

As for the kind of people you imagine, what industry are they from?

Mukai

I don't have a preference for any particular industry, but people who feel they are stagnant in their current workplace may be a good fit. There are undoubtedly people out there who are discontent with the way their current workplace's regulations, culture, and internal rules restrict them. They might feel things like "I can't do what I want" or "I've got this great idea, but it's a shame I can't do anything with it." I'd like to bring these people to SEGA and let them do what their heart wishes.

Working with many IPs and learning the philosophies behind them

What is the appeal of working at SEGA?

Mukai

The number one thing is being able to work at a global level. Back in the day, once games were sold in Japan, it would take a few years for them to be localized and sold overseas. However, about two years ago, we changed the flow of our operations to do simultaneous worldwide releases. When a game launches, its popularity boom takes off at the same time around the world, which allows fans from different countries to share their excitement over the same game. Now, sales overseas account for a large portion of SEGA's current sales.

If there are some strategies that are hard to adopt in Japan, it is now possible to try them in other countries. However, because we must consider each country's circumstances, culture, rules, and laws, there are some difficulties. Having said that, we have local subsidiaries and the groundwork to take on challenges in many countries.

One of the merits of working for a large corporation is that we have capital strength that we can leverage. We've got the money, and we have plenty of manpower and technological resources. As such, being able to work dynamically is another point that people may find appealing.

What are SEGA's strong points compared to other global companies or competitors in the gaming industry?

Mukai

SEGA possesses many IPs, which were all made in-house, and at work, we get to be close to the development team. We have the chance to discuss the future of "Sonic" with legendary creators who've worked on different iterations of the series, and can learn what philosophies went into making each game. We are the first to get information about SEGA's IPs, which is a thrill you can't find at any other company. It's because we are the IP owners and get to make an impactful choice like that.

If I had to talk about our organizational structure or our culture, there are no barriers like stuffy bureaucracy in our business departments or our studio. If there were any barriers, I'd say it's about as thin as a single tissue, haha. However, as such, if we have a new idea, we can directly interact with the development teams who hold our IPs and delve deeper into that thought.

We have a mindset of "I thought it'd be interesting, so let's do it first," and this too is one of our strengths. Our Metaverse/Web3 team is a new business project and there'll be a lot of uncertainties, but through each of our actions, we're going to reach the future that we envision.

Mr. Mukai, what do you personally find appealing about your work?

Mukai

It's got to be the small gap between the board members and I. I have the chance to speak directly to board members about my ideas, and they're committed to listening to opinions and suggestions from employees like me. Big companies tend to only get things done through top-down management, but that's obviously not the case here. They do not illogically turn a deaf ear to the opinions given by employees at the workplace either. The board members also value being at the workplace, which makes our workplace feel more comfortable.


* This article contains content from an interview conducted in February 2023.