Why is it that while the western video game industry remains a neverending tire fire, Japanese devs and those in other Asian countries are getting raises? YouTuber Alanah Pearce set out to answer that question in her latest video, and the answer likely won’t shock you at all.
Japanese companies are no less subject to the market conditions affecting the games industry than western studios are; they’re just have different ways of handling those conditions, as determined by both legal and cultural factors. In the video, Pearce explains that Japanese law makes it extremely difficult to fire employees unless a number of conditions have been met.
To implement the reduction in force that companies may desire without running afoul of the law, Japanese companies either rely on more easily dismissible contract workers or try to bore employees into quitting by taking away their work but not their actual job. The video includes quotes from an interview Pearce conducted with former Sony Interactive Entertainment Boss Shuhei Yoshida, who explained that employees being given this treatment “are given no tasks and are encouraged to find jobs outside the company.” But they still get to collect a salary. Can you imagine?
And it’s not that Japanese companies never do layoffs; they just often conduct them overseas. In 2024, Nintendo restructured its product testing department, ending the contract assignments of some of its temporary employees, and last year, Square Enix laid off over 100 employees in its U.K. and U.S. offices. Sony has also implemented several rounds of layoffs over the last two years. But the biggest reason why it feels like the Japanese games industry is doing so much better is that we can easily see the effects of Japanese business culture in the career stability and longevity of many Japanese developers.
At a glance, we can see that Japanese gaming executives are just built different. There’s the famous example of Nintendo president Satoru Iwata taking a pay cut after the Nintendo 3DS failed to meet expectations and again (??!) for the manifold failures of the Wii U. RIP to a real one. And while western devs are losing their jobs, Japanese devs are getting pay raises. Nintendo gave their employees a 10-percent bump back in 2023. In 2024, Capcom increased average salaries by 5 percent across the company while bumping starting pay rates 28 percent.
But Pearce says this isn’t all happening because Japan is some kind of game development wonderland, but rather because companies have to. A shrinking population has made the labor market tighter there than it is here, so companies have to compete for employees, and higher wages are an attractive draw. There’s also a corporate culture that still persists in Japan that emphasizes staying with one company over a lifetime, whereas here that ideal ended here with the collapse of American manufacturing 40 to 50 years ago.
The tight labor market means Japanese developers need their employees to stick around for as long as possible, and have structured their business model to ensure that happens, and, surprise! It has the knock-on effect of making these companies more profitable in the long run. One of the reasons why the big-ass AAA release Final Fantasy Revelation is coming out just three years after Rebirth is because Square Enix hung onto its people. Retention makes development faster and games better. Better games mean more money. More money means happy shareholders.
The west, specifically the U.S., is too capitalism-brained, too captured by the class of corporate ghoul that wants to see the worker replaced with ain’t-shit-ass AI, to ever institute the same kinds of protections Japan has. Luckily, we do have unions fighting for the incremental change that can make the western game industry less of a graveyard.
