Does Sega's future lie in social gaming?

If you ask Haruki Satomi, president and CEO of Sega Networks, the only reason his company is losing out to new competition in social and net gaming is speed.

If you ask Haruki Satomi, president and CEO of Sega Networks, the only reason his company is losing out to new competition in social and net gaming is speed.

"The biggest reason is that Sega's competition has changed," the head of the new company told Famitsu magazine this week. "Our competition used to be the so-called large game makers, outfits that had the same speed and methodology we had. With the advent of the iPhone and social gaming, our competition became smaller-scale outfits and companies that were venture capital successes, and we couldn't keep up at all in speed. Sega has the money, the brand name and the talent, and the only reason we couldn't beat these companies was speed."

Originally founded July as part of a company-wide restructuring, Sega Networks is set up to be similar in style to the Zyngas and PopCaps of the world, a company able to respond quickly to trends in portable apps and stay ahead of the competition. As Satomi, it's the way that any sane traditional third-party game developer should go, now that the differences between platforms are disappearing and there's no longer a single hardware "winner" to grab the coattails of. "For a game outfit like ours, we see it as a great chance," he said. "We're able to provide a variety of games, for a variety of platforms, at a variety of price levels and business models. Much like Nintendo developed a new marketplace with the Wii, the iPhone and Android devices are also developing new markets for us. Looking strictly at retail, you hear people talk about how difficult the game industry's become, but if you change your point of view, the market for games is still growing worldwide. We have to change our viewpoint to be aware of that."

So far this is perhaps best reflected by titles like Kingdom Conquest, a free-to-play RPG for iOS and Android that's clocked over three million downloads worldwide. "Like Kingdom Conquest represents," Satomi said, "we try to create games that are high-end and push the hardware's abilities to their limits while still fusing that with the good elements of social games. That's something Sega can compete with using the technology and style they've built in the console and arcade businesses. The first step is to establish a decisive position with that and have people see us as a company that can really make fun games."

Sega Networks is showing off Kingdom Conquest II at the Tokyo Game Show this weekend, along with the PS Vita and Android editions of Phantasy Star Online II (due out late this year in Asia). Where does Satomi see Sega headed in the future? "We deal in entertainment, so it won't be good enough to simply respond to people's expectations," he commented. "Especially when it comes to new IPs and genres, we have to go beyond those expectations. Sega can't do that alone, and so especially in the social market, I think we'll see us teaming up with a number of other outfits. I think people expect Sega to go beyond what they're expecting, and I think that's where future both lies and should lie for us."