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(Bloomberg) — “How many people came for video games?” asks a keynote presenter at Sony Corp.’s PlayStation bash in Las Vegas last December. The crowd roars. “And how many came to give Shu Yoshida a hug?” The roar gets even louder. The man in question is an unlikely celebrity. Short and bespectacled, the 50-year-old Shuhei Yoshida is president of Sony’s worldwide game studios. What he’s done to draw such affection is champion some of the biggest hits in the business and prove people will pay $70 for top-notch titles even in a world with thousands of free smartphone games.
In the process, he’s helped Chief Executive Officer Kazuo Hirai steer Sony toward a surprising turnaround. The company’s games business has not only survived, it’s had the best console launch ever with the PlayStation 4. The division is one reason Sony’s headed for the highest profit since 1998, when it made MiniDisc players and “Men in Black.” (Yes, the first one.) “Yoshida and his team are on a roll right now,” said James Mielke, an executive at the cloud-gaming startup Shinra Technologies Inc. “He’s certainly a star. But it’s a humble star-quality.”Success for games has helped fuel a surge in Sony’s share price. The stock closed at 3,201 yen on Feb. 20 and has climbed 80 percent in the past 12 months. It’s little exaggeration to say Yoshida’s life is computer games. He grew up playing arcade games and titles from Nintendo Co., based in his hometown of Kyoto. He joined Sony’s games group more than two decades ago as it developed the first PlayStation. He uses five consoles today, to make sure he can play games from any region, using a Wii U at home with his nine- year-old twins and saving more adult fare for the office.

Too Narrow

As studio head, he’s taken an exceptionally inclusive approach. He works with Sony’s own developers to come up with games like “Uncharted” and also supports independents, opening his checkbook to help produce hits like “Journey.” The studios that Yoshida manages are part of Sony Computer Entertainment Inc., led by Andrew House. Yoshida says spending the time and money to foster upstarts pays off because it leads to great games and a vibrant industry. It’s necessary, he says, because the biggest developers have trimmed output to concentrate on well-known franchises, such as “Grand Theft Auto” and “Call of Duty.” “The industry’s focus has narrowed too much,” Yoshida said in an interview at Sony’s Tokyo offices. “Can we continue producing interesting new products? That’s become a real concern.”

PlayStation Revival

Yoshida takes to Twitter to applaud indie hits, crack jokes about the competition and talk with gamers. His following has swelled to 153,000, in the same range as Facebook Inc.’s Sheryl Sandberg. He’s even been made into a playable character by the independent studio Capybara Games Inc. (His digital double uses a smartphone to take down enemies with “I love PS4!” tweets.) Yoshida has been in charge of Sony’s game development since 2008, but his rise to fame is closely linked to the PlayStation 4. The console has sold 19 million units since its release in November 2013, compared with 11 million for Microsoft Corp.’s Xbox One, according to data from VGChartz. It’s a reversal of fortunes, after Sony’s over-engineered predecessor lost market share to less expensive machines from Microsoft and Nintendo. His support for indies has proven fortuitous. The latest consoles from Sony and Microsoft have similar technical capabilities so buyers often make decisions based on which one has their favorite software. Quirky PlayStation exclusives like “The Tomorrow Children,” a Soviet-themed sandbox title described by creator Q-Games as a Marxism simulator, can sway a potential customer away from Xbox One.

Content Leads

“Because the machines are so similar now, it all comes down to content,” said Alexander de Giorgio, chief operating officer at Inflexion Point Capital, a fund that invests in independent mobile game developers. Sony’s indie strategy came into focus around 2010, Yoshida said. As major publishers focused on their franchise titles, the rising popularity of smartphone games played on Apple Inc. iPhones and devices using Google Inc.’s Android threatened the future of consoles. Hits like Rovio Entertainment Oy’s “Angry Birds,” which has amassed more than 2 billion downloads, almost immediately threatened Sony’s portable players. Yoshida’s answer has been to court indie developers with money and production support in return for some degree of exclusivity. Sony works with creators in the U.S., Europe and Japan.

Tokyo Jungle

Yohei Kataoka came across Sony’s developer program in 2006, when he was a design-school student making real estate and car advertisement websites part time. Even earning as much as $8,500 a month, he was bored and dreamed of creating video games. The program’s main requirement was to pitch ideas unlike any existing game. Kataoka quit school to develop a proposal, and a few months later, Sony’s stipend was paying rent for his startup Crispy’s and covering the salaries of four friends.
“Tokyo Jungle,” which went on sale in 2012, was set in a futuristic version of the Japanese capital abandoned by humans. The photo-realistic city is run by feral animals, which battle for survival and the chance to procreate. The cover showed a forlorn Pomeranian, one of the main characters. It became a critical and commercial success, selling more than 231,000 copies. “If it wasn’t for Sony, there is no way I would be doing this now,” Kataoka said in an interview. “It was like an angel investment, something unheard of in the games industry.”

Gaming’s Future

Sony is a regular presence on the independent developer scene, sponsoring events from New York’s IndieCade to BitSummit in Kyoto and Tokyo Indie Fest. The involvement helps ensure a steady stream of content for PlayStation owners, including breakout hits such as “Journey.” The minimalist desert-voyage game from thatgamecompany won British Academy of Film and Television Arts awards in 2013, including for artistic achievement and game design. If the PlayStation 4’s features and Yoshida’s tactics are any guide, the future will probably be very different from the solitary experience most people associate with gaming now. PS4 users can broadcast their gameplay live on Twitch, which is owned by Amazon.com Inc. They can also share recorded footage on Facebook and Twitter, taking games beyond the confines of the living room. Sony is also working on a virtual reality headset code-named Morpheus, a project Yoshida is part of. “It’s all about ecosystems competing,” Yoshida said. “This goes for Apple, Google, Amazon and Microsoft. The platform encompasses content and services that run on your hardware, but also various partnerships. It’s an interesting time, because your rivals can also be your partners.” Not that Yoshida takes it easy on the competition. In one recent Twitter post, he defended PlayStation Portable against Apple’s smartphone.
“Does your iPhone have Uncharted?”
One gamer asked his opinion of Xbox One.
“Sorry I fell asleep. You asked about HTC One?”
His fans were delighted.
“Why can’t every executive be like you?” one asked.
“They are adults,” he replied.

–With assistance from Jason Clenfield in Tokyo.

To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net; Grace Huang in Tokyo at xhuang66@bloomberg.net To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Peter Elstrom, Robert Fenner
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