Despite heavy influence from and being "pushed around" by Western developers, the Japanese video game industry is slowly adapting to the competition and has begun to push back, Square Enix technical director Yoshihisa Hashimoto said in a recent interview with 4Gamer, translated by Edge.
"I believe Japan is capable of producing interesting games, but looking at the influence, we are being pushed around by western games without a doubt," he said. "Recently, it feels like the Japanese game industry hasn't lost, and is gradually pushing back.
"For us not to lose, we really have to exert ourselves. But, I feel encouraged," he added, noting that he was particularly impressed by Kojima Productions' work on Metal Gear Solid: Ground Zeroes using the company's in-house next-generation Fox Engine.
Square Enix is currently working with its own next-gen engine, the Luminous Studio, and debuted the short film Agni's Philosophy at E3 this year as a demonstration of the engine's abilities.
Despite the rise of popularity of casual games, Hashimoto says that although AAA development "can feel like something of a fool's errand," Square Enix will stick to what it has become known for: big-budget productions with lavish, high-end graphics.
"I think 20 or so years from now, we'll still have 2D card games, and casual puzzle games," he said. "The demand won't go away, so neither will the games. In the same way, the demand for AAA games won't disappear either, though I feel we'll have to work hard to ensure their survival."