June 14, 2017 2:21 pm JST

The Konami exodus

Creators find authoritarian Japanese gaming giant makes life hard for 'ex-Kons'

YUJI NITTA and SHOTARO TANI, Nikkei staff writers

There seems to be no love lost between "Metal Gear" series creator Hideo Kojima and Konami, his former employer.

TOKYO -- "You are unfairly discrediting the company." Those words were contained in a letter that Japanese gaming giant Konami sent last fall to Hideo Kojima, the renowned creator of the company's hit "Metal Gear" series.

Konami was referring to an incident that occurred on Sept. 18, 2016, when Kojima appeared at a talk event hosted by Sony Interactive Entertainment at the Tokyo Game Show expo. Kojima, who had already left Konami in December 2015 to set up his own company, Kojima Productions, was asked by a fan if he was involved in the new "Metal Gear" game that Konami announced was in production. "That has nothing to do with me," he said with a wry smile.

Fans of the series are not enthusiastic, to say the least, about the newest installment in the series. The original series was a realistic espionage game in which players infiltrated enemy strongholds. The new one veers into fantasy with its focus on surviving zombielike creatures.

While Kojima's comments were met with laughter in the room, they did not amuse Konami.

The company is thought to believe that Kojima violated the terms of their contract, apparently because of his comment at the game show, and may be stalling on payments it owes him. Konami's public relations department said Kojima continues to receive the proper compensation, but Kojima Productions refused to comment on the matter.

While it is not certain whether Kojima's comments hurt the company, it is clear the gulf between the two parties cannot be bridged.

But the perils of being eyed as the enemy do not stop there for Kojima.

In April this year, a Kojima Productions executive applied for the company to join ITS Kenpo, a health insurance society for companies in the gaming and internet service industry. Joining such insurance organizations is crucial to employee welfare, but the application was not even accepted. When the executive asked why, he was told by ITS Kenpo that all applications are screened by the board chairman before being reviewed by the board, and it could not show this application to the chairman.

Kimihiko Higashio, a director at Konami, is the chairman at ITS Kenpo.

The actions by ITS Kenpo suggest it was surmising Konami's wishes. But Article 22 of the Health Insurance Act stipulates that the decisions of health insurance societies be made by a majority vote by the board. If there is a tie, then the chairman decides. Showing applications to the chairman first would be deviating from standard procedure. But the issue goes beyond that: Health insurance societies by nature are supposed to act in the public's interest; decisions on applications cannot be left to a single person.

ITS Kenpo would not comment on the matter when approached by The Nikkei. Meanwhile, Kojima Productions is still unable to join the society.

Persona non grata

Kojima is not the only former Konami employee -- or "ex-Kon" if you will -- facing obstacles after leaving the company. 

A staffing agency employee who asked not to be named said he notifies gaming companies if a prospective hire is an ex-Kon. He said that is because Konami files complaints to gaming companies who take on its former employees.

One major gaming company went so far as to warn its staff against hiring ex-Kon. There was even a case in which a former Konami employee moved to a construction company before joining another gaming company, hoping to throw people off the scent.

One ex-Kon described his surprise at learning that Konami had instructed an employee at a television company not to deal with its former employees. In another case, a former Konami executive was forced to close his business due to pressure from the gaming giant.

Ex-Kons are not allowed to put their Konami experience on their public resumes. "If you leave the company, you cannot rely on Konami's name to land a job," explained a former employee. If an ex-Kon is interviewed by the media, the company will send that person a letter through a legal representative, in some cases indicating that Konami is willing to take them to court.

Such tactics, however, have not stopped popular creators from leaving the company. In addition to Kojima, other big names to leave Konami in recent years include Naoki Maeda, the composer for popular rhythm games such as "Dance Dance Revolution" and "Bemani"; Akari Uchida, producer of the dating simulation games "LovePlus"; Minoboshi Taro, the illustrator for "LovePlus"; and Shinichi Hanamoto, a former executive who helped Konami obtain the license for the popular card game Yu-Gi-Oh.

Perhaps that is because they felt stifled by the company's iron grip on its employees and the sense that they were viewed not as valuable workers but potential sources of information leaks. 

Konami's authoritarian approach is notorious in the industry. Employees are not allowed to have their own corporate email address. When they have to communicate with outside parties, they are given an address consisting of five random numbers and letters, and the address is terminated within a few months. Lunch breaks have strict time limits, and timecards are used to record how long they take. The names of those who go over the time limit are made public throughout the company.

Employees' social media activities are also monitored. In 2014, Konami workers who liked a Facebook post by an ex-Kon saying he started working for a different company were shuffled to different positions.

Kozuki empire

Kagemasa Kozuki, the chairman of Konami Holdings, founded Konami Industry in Osaka in 1973. He single-handedly turned the company into one of the country's leading entertainment players. Kozuki, now 76, is credited with playing a big part in establishing Japan's gaming industry.

Konami insiders say he is a very cautious person. His second son, Takuya, is Konami's president, and together they control Konami Holdings' only representation rights. Several organizations with ties to the family, including the Kozuki Foundation and Kozuki Holdings, appear on the list of the company's top 10 shareholders, and together hold more than 25% of the outstanding shares. While Konami often appears antagonistic toward former employees, those who have stuck with the company since its days as a small player often occupy important positions.

Like many other Japanese gaming companies, Konami's forte used to be arcade games and games for household consoles. But a person familiar with matter said a turning point for Konami came in 2010, when it released the social gaming title "Dragon Collection" for smartphones.

Developing the title cost only several tens of millions of yen -- a paltry amount for the gaming industry -- but it ended up raking in hundreds of millions of yen a month. The stunning success is said to have led the chairman to put more effort into making games for smartphones. That is an understandable move given the huge costs involved in creating extravagant titles -- products that have no guarantee of success.

The approach is bringing solid results. Konami is on track to post a record group operating profit of 40 billion yen for the year ending in March 2018. Industry insiders are often in awe of Konami's ability to make games once played on TV screens work on smartphones.

Of course, there is no guarantee that the company's emphasis on smartphone games, which often involves recycling old intellectual property, is sustainable in the long run, especially with the departure of top-notch creators. And Konami must be aware that the spate of acrimonious exits of star talent and its treatment of ex-Kons are only hurting its credibility among the gaming community.

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