The fall of Game Republic

Former Capcom icon Yoshiki Okamoto opens up about the collapse of developer Game Republic.
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In 2003, Yoshiki Okamoto hit a wall.

A veteran of game developer Capcom, he'd designed classic arcade titles like 1942 and Forgotten Worlds. He'd managed hits like Final Fight and Street Fighter 2. He'd worked his way up and overseen most everything Capcom produced. He'd spun off a small company and had a hand in Nintendo's much beloved Zelda franchise. And he needed a change.

So Okamoto founded what would become one of the largest independent development studios in the world, Game Republic, at its peak topping 300 people on staff. He had a nine-year plan, he later told website Gamasutra: the company would focus its first three years on hiring, the middle three on improving the quality of its work and the final three on becoming profitable.

"It's generally understood in the [Japanese] market today that a company can start producing interesting games in its fourth, fifth and sixth years, but still not turn much of a profit," he said. "The company is supposed to start making money in years seven through nine."

But when year seven came around in 2011, almost 30 years to the day after Okamoto started his first job in games, Game Republic shut its doors.

Japanese website G-Dash reported rumors that he had accumulated massive debt, borrowed funds from shady organizations and fled the country. Okamoto posted on his personal blog about moving to a small apartment, translated by website Kotaku at the time as "far from the station and the type of place you'd expect roaches to scurry out from." Then his blog went offline and Okamoto disappeared, without a public statement or explanation.

Looking back two years later, Okamoto says the story's not quite as scandalous as it sounds.

The game show contestant

Meeting with Okamoto in 2013, he appears relaxed. With the same dollop of hair in the back that became his trademark in the '90s, he's wearing an Abercrombie and Fitch T-shirt, cargo pants and a letterman jacket — looking like a teenager in an adult's body, having recently turned 50.

Perpetually two seconds from telling a joke or bursting into laughter, Okamoto's tone can make it hard to determine whether he's telling the truth or trying to impress the foreigner in the office (or the female translator). Those who have worked with him say this isn't a show he puts on in interviews; he's generally more concerned with getting a laugh than being misquoted or misunderstood.

ThirdOkamoto is perpetually two seconds from telling a joke or busting into laughter.

"There are so many funny Okamoto stories to share," says Platinum Games' president Tatsuya Minami before going into an anecdote about a time Okamoto got sick on a fishing trip and Minami asked for a raise.

"He's probably one of the maddest people I've ever met, and that includes people whose language I understand," says former agent Michael Wiesmuller, who describes Okamoto as "enigmatic" and "gossiped-about." "His staff [looked] up to him as if he was a guru or Svengali."

Okamoto's personality has long made him a magnet for gossip and urban legends. Like the time his boss fired him early in his career for disobeying an order and making a shooter instead of a driving game, then asking for a raise. Or the time his co-workers and family members crashed five of his cars in six months.

Asked about the validity of these stories, Okamoto becomes a game show contestant, putting his arms above his head in a circle to signify "true" and crossing them for "false."

Those two mentioned above? O.

Working on a Tom and Jerry game in the final days of Game Republic? X.

Having a long distance relationship with his now ex-wife? O.

Getting caught on Capcom premises receiving oral sex from a woman dressed as Street Fighter's Chun-Li? X.

Dressing in near-blackface to interview famous-for-being-tan game designer Toshihiro Nagoshi? And taking Western business partners to a topless bar, tricking the dancers to yell "vagina" at them in English while tricking the foreigners to yell "I want to fuck you from behind" in Japanese? According to Okamoto both are true.

"I'm not well in the head," he says.

The biggest urban legend

"I was never chased by the yakuza, but there is a lot of debt."

When the interview turns to Game Republic, Okamoto forfeits the O/X game show structure in favor of a serious tone. He gives shorter answers, tells fewer jokes.

Clearing the air on his biggest urban legend to date, he says the rumors surrounding Game Republic's demise are partially true, but exaggerated: There were no shady investors, and he never had to leave town.

"I was never chased by the yakuza," he laughs. "But there is a lot of debt."

He gives the total: $14 million, accumulated over the course of several projects.

One game in particular brought in the biggest debt, he says. Asked about it, Okamoto covers his face with his hands and becomes slow to reply.

Launching Game Republic

When Okamoto launched Game Republic in 2003, he had options. His reputation enabled him to find funding and make deals that fit two specific demands: he didn't want to repeat what he'd done at Capcom, and he didn't want to work for Capcom's direct competitors.

Initially, he says many companies offered him work similar to what he'd done previously.

ThirdGame Republic was a rare studio working with two console competitors.

"When a company approaches us to do work, they'll always say something like, 'Let's make a game where you shoot zombies' [like horror franchise Resident Evil] or 'Let's make a fighting game' [like Street Fighter] — in essence, something related to what I've done in the past," he told website 1UP in 2007. "[I've] actively avoided those games, and that's the reason I had a tough time in the beginning."

The other hurdle was that Okamoto, out of respect for Capcom, initially wanted to work with first-party console providers rather than third-party competitors like Namco Bandai or Konami.

Game Republic was able to sign a series of deals for original titles with both Sony and Microsoft — making it a rare studio working with two console competitors.

The team signed action game Genji: Dawn of the Samurai and others with Sony, and board game Every Party with Microsoft. Okamoto oversaw the company, rather than directing or producing any games specifically.

While the studio found work in its first few years, not everything went smoothly. None of the group's games were overly successful, and a setback proved costly when Microsoft canceled a second Xbox 360 game the studio had been designing. Okamoto told 1UP that following the cancellation, the team spent nine months continuing work on that project with its own money in the hopes that Microsoft would see the progress and come around, but it didn't work.

"For a company just starting out, it was a huge loss," he said. "I know now that this was a major mistake for us and a bad move for our company early on."

Okamoto and team began to look for new publishing partners. And the one they found would mark the beginning of the end for the studio.

Brash Entertainment

Around the time Okamoto widened his publisher search, a small group in Los Angeles was forming an idea for a new kind of game publisher. Brash Entertainment was to be the first publisher focused exclusively on licensed games, most based on movies and television shows. One of its founders was Thomas Tull, also CEO of production house Legendary Pictures, responsible for films such as Batman Begins and The Hangover.

"Brash is founded on the simple premise that top Hollywood creativity plus top game talent should equal great games," said CEO Mitch Davis in a press release.

In June 2007, Brash announced a $400 million funding deal, putting 12 games into production and acquiring the rights to 40 entertainment industry licenses, making it an aggressive competitor to publishers like Activision and Electronic Arts in the licensed game category, despite housing a much smaller staff. Most of the deals involved hiring developers who could produce work relatively cheaply, and to Brash, signing Game Republic meant signing a high-end client.

Fifth
"It cost us around $2 million to run the company each month."

It wasn't what Okamoto envisioned when he started Game Republic, but it was new territory. Something different than what he'd done at Capcom. And it wouldn't turn out well, ending up as what Okamoto calls the single biggest factor in bringing Game Republic to an end.

But in the early days, those involved say the deal looked promising.

"Brash was talking about they wanted to work exclusively with Game Republic, and I said, 'They've got 200 people sitting there, plus another hundred in students [helping], so it'll take a few projects to keep them busy,'" says Michael Wiesmuller, who introduced the two companies and represented Game Republic as an agent. "So they went, 'Well all right, find some.'

"They loved Game Republic so much. They wanted Game Republic to do every single project they had on their books. Literally, we were talking about 10 projects for some time that would be a possibility."

Clash of the Titans quickly surfaced. Conceived as a game based on the classic film and later converted into a game tied in with the 2010 remake, Okamoto and team signed on to make it an action game similar to Genji. It went on the books initially for $10 million, one of Brash's biggest bets.

Progress went well enough that midway through development Brash signed Game Republic to a second game — 301, based on the 300 film, which would follow the surviving warrior mentioned in the movie's credits — and discussed plans for titles based on the Elric fantasy novels and the 300 sequel Rise of an Empire.

"[That's] how Hollywood is — they're typecast very quickly," says Wiesmuller. "'They did something with spears and Greek people, so hey, let's find some more stuff with spears and Greek people.'"

When it came time to reveal Clash of the Titans publicly, Brash put on a show. At a press event in January 2008, the company teased it as a surprise encore at the end of a presentation, making a splash out of a trailer without revealing the title, and only giving a "2010" release date. Many guessed it was Clash of the Titans, yet in March, when Brash revealed Game Republic as the mystery game's developer, it still didn't mention the franchise by name.

Then in November, before Brash had a chance to make Clash of the Titans official, the publisher shut its doors.

Asked about it, Okamoto's hands cover his face. This was the moment, he says in retrospect, that hurt Game Republic the most.

Clash of the Titans

Sources familiar with Brash blame the publisher's collapse on funding not coming through as expected. As a result, many teams under contract with Brash ran into trouble, with missed milestone payments and cancellation fees.

"We were working on milestones, and after the milestones got approved we were supposed to get paid," Okamoto says. "But Brash didn't have the money, so that turned into debt. It cost us around $2 million to run the company each month, and that added up over time."

Okamoto's voice quiets when he describes the situation, saying it would have been better had Brash canceled the contract, but the publisher going out of business added debt. Brash filed for an alternative to bankruptcy known as an "assignment for the benefit of creditors," which meant that the legal administrator asked every developer that had worked for Brash to repay money received in the previous 90 days.

Developer ZootFly, which developed a game based on the Prison Break television series, found itself in a similar situation to Game Republic and sued Brash, only to later consider itself lucky to owe $50,000 instead of the $1 million it would have owed for 90 days of payments. "In the context, that was a good outcome, but in the big scheme of things, it was horrible for us and not expected at all," says former ZootFly CEO Bostjan Troha.

In the wake of Brash's troubles, various studios — such as 7 Studios, Bottlerocket and Factor 5 — closed. "That's somewhat Brash's fault, but it's also the developers' fault for [not having other options]," says a former Brash executive who declined to be named. "If you're too dependent on a brand-new publisher with speculative funding, well, you're taking some risk. But you know, a developer's only as good as the deals they can get. So if they had a better deal with EA, then they wouldn't have been talking to us in the first place."

"It's a sad story and a lot of people got burnt," says ZootFly's Troha. "A lot of good studios closed, and it's a shame. And it's not the first one and it's not the last one, definitely."

Okamoto, however, isn't bitter about what happened, going so far as to praise people he worked with at Brash. "Brash actually tried really hard not to go under, and they went to a lot of effort to not put us in a bad situation," he says, "so I don't have hard feelings towards them."

A life boat

Unlike some studios, Game Republic was able to keep itself afloat in the years following Brash's demise. Okamoto and his team self-published downloadable games and returned to their Japanese third-party publishing roots, signing multiple deals with Capcom-competitor Namco Bandai, known for fighting franchises like Tekken and anime-licensed Naruto and Dragon Ball games.

First up: selling the remains of what the team had developed for Brash.

Namco Bandai picked up Clash of the Titans and saw it through the end of production.

"I've been involved with the Clash of the Titans project since the movie itself was in talks," Okamoto told Famitsu magazine in 2010. "So it's been under development for a pretty long time ... I never even imagined I'd get to see the game through to where it is today." [Note: While the full quote at that link credits Okamoto saying much of Clash of the Titans' funding came from investment firm Lehman Brothers, which went out of business around the same time as Brash, Okamoto tells Polygon Lehman Brothers had no involvement.]

Clash of the Titans

Former Namco Bandai brand manager Brad Stradling says the publisher's U.S. division viewed the game optimistically at first, rather than as another company's leftovers. But as development delays hit the project, it became a struggle to regain player interest.

"That was one of the big problems with the game — it wasn't ready," says Stradling. "It actually got pushed out, so the theatrical release came and went and we ended up syncing the release of the game with the DVD, which is always bad news."

Namco Bandai later announced that Clash of the Titans sold less than 40 percent of its projections in its first three months on the market.

For 301, Game Republic wasn't able to find a new partner — in part because Brash never officially owned the license. Brash executives assumed it would come through because of an established relationship with Legendary Pictures, but the papers had never been signed, making it difficult to sell.

Game Republic signed more deals with Namco Bandai for a mix of licensed Dragon Ball Z games and original titles such as Majin and the Forsaken Kingdom and Knights Contract. Okamoto's strategy was to pitch new games to Namco as franchises that could each grow into multiple titles, but none sold well enough for that to pan out.

The debt grew to the point that Okamoto had to throw in the towel.

Taking blame

In 2011, Okamoto laid off most of Game Republic's staff, shut down his blog and watched the rumors appear online.

Officially, he says, the company still exists, though basically just on paper — he's keeping it afloat because he hopes to repay the debt at some point. He's the only employee and he's no longer working under the company name, describing it as "frozen" and in "sleep mode."

In retrospect, Okamoto takes the blame for Game Republic failing. Largely, he says, it was an issue of him not being able to find the right deals, and not being able to work well enough with his staff. He had ideas for sequels to Game Republic titles Folklore and Majin; he had ideas for licensed titles based on franchises like Naruto; his studio was developing an unannounced original game in its final days. His team's products just weren't selling the kinds of numbers necessary to get the company more work and back on track.

Seventh
"We just weren't able to create big enough hits."

While many in the game industry have pointed to a trend in recent years of mid-tier developers struggling in the current market, Okamoto doesn't think that's the reason Game Republic ran into trouble.

"It came down to my lack of communication — how I built relationships and communicated with people both inside and outside the company," he says, hinting at how many of his urban legends have begun over the years.

Asked what he'd do differently if he could start over again, Okamoto says, "I don't really have an answer. I'd say to not work with Brash, but I think sooner or later this probably would have happened."

Asked why, Okamoto laughs. "If I knew why, I wouldn't have failed to begin with," he says. "We just weren't able to create big enough hits."

In 2013, Okamoto says he's retired from making console games — which he revealed to Polygon late last year — and is cutting costs where possible.

The day of this interview, he says, his lunch was a banana. The day before, a fast-food beef and rice bowl. "It's not like I'm living a rich life," he says.

Like many veteran developers, he's found new work in the mobile game market. Though he can't name the company or give details on the title, Okamoto says he's currently working for a developer on a mobile game that he expects to release in June 2013. He speaks of it with optimism that it will help him get closer to repaying his debt, noting it will "probably" be released in America.

Last year, he said, "For a game creator like me, one who's been creating games such a long time, I feel like it's more fitting to create a game where I know what's going on [during development]. With bigger titles, there are so many aspects of development, so many people working on the game. It's more fitting for me that I work on a game where I can see what's happening, like it was during the beginning of the video game era."

Encore

Before Okamoto can finish his mobile comments, he signals the interview translator, thinking back to something he mentioned earlier.

"Actually, I want to make a correction," he says. "Game Republic's debt isn't $14 million. It's probably closer to $10 million."

Another communication hiccup. Which, he realizes, is how many urban legends start — a whisper becomes a game of telephone becomes a Chuck Norris meme. For a rare moment, he seems to care more about being misquoted or misunderstood than getting the laugh.

Whether he's learned to be careful or just enjoys the irony of the situation, Okamoto sticks with his revised answer. Arms at his side, he apologizes and smiles. Babykayak

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