The Downfall of Hudson – A Behind the Scenes Look

It’s official.  Konami has completely taken over Hudson. Unfortunately, as a result of Hudson’s operations being folded into Konami, the US branch of Hudson has closed its office doors for good while forcing a number of Hudson’s outstanding titles into limbo.

While this may surprise a number of people, the reality is that this chain of events was set off over 10 years ago.  So why the long drawn out process towards its demise?  What exactly happened?  I thought I’d shed light on this subject matter as someone who once worked at Hudson.  I used to oversee the games publishing group at the company in North America.

Hudson Entertainment’s US office during its peak. Redwood Shores, CA. I loved Hudson so much
that I moved right across the street from the office!

Some of you may have read Morgan Haro’s recent online post about his final days at Hudson (Update:  it appears that he has since removed the post).  For the most part, his perspective rings true regarding some of the challenges Hudson faced in this marketplace that led to its ultimate demise.  But I think the one thing that should be better clarified is that Hudson’s closure was inevitable.

Konami Pwned Hudson Long Ago
When I joined the US division of Hudson in 2006, one of the things I discovered on day one was that Konami had alread owned the controlling interest in Hudson since 2005.  The events that led to Konami’s control were fascinating.  Hudson, for many years, was a successful family-owned business run by the colorful founders, the Kudo Brothers.

In fact, for over 30 years in Japan, Hudson was thriving in the gaming market that not only rivaled against Konami, but other big name public corporations like Capcom.  However, by 2001 when Japan went through a financial crisis and a number of banks were collapsing, similar to what happened recently in the US, Hudson was suddenly caught in a precarious position.  Their sole bank was going belly up and Hudson’s only hope now was to turn the company to the public market.  And although the original founders resisted such a devastating move, the company was on the brink of potentially running out of cash liquidity inherently needed for capital intensive costs of game development.  Hudson went public on the stock market and by August 2001, Konami had bought a good chunk of the company becoming Hudson’s largest shareholder.  By 2005, Konami bought up more than 50% of Hudson which effectively meant that Konami owned Hudson and could affect how decisions were made at the company.

Hudson Entertainment’s original office, circa 2006. The last time Hudson had US operations
was over 10 years ago when the TurboGrafx system was launched.

How Konami Changed Hudson
Ultimately, the move resulted in Konami having enough control of Hudson to institute some sweeping changes. Some would argue that the changes were much needed; that Hudson needed to operate more like a public company and less like a family-owned business and Konami was quite skilled in streamlining the business to be more efficient.  However, the big corporate changes affected the distinctive culture of Hudson.  First off, the the highly influential original founders left.  Soon thereafter, Nakamoto-san, arguably the most creative force behind Hudson and the creator of Bomberman, parted ways as well.

The departures of the major creative champions dramatically changed the key strength Hudson had.  No longer did the Hudson culture cater to its quirky creativity, but instead, it catered to an overpowering need to satisfy its shareholders.

How Bomberman: Act Zero Came To Be
Consequently, because Hudson felt this overwhelming need to please its shareholders, games like Bomberman:  Act Zero came to be.  Before the US division of Hudson was fully established, the remaining creative minds at Hudson wanted to update Bomberman to cater to Westerners.  The company believed that the US was an opportunity to grow again.  Unfortunately, the game was developed in a vacuum and was based on what the Japanese thought Western tastes in gaming were.  Without the original Bomberman creator on board to protect the brand, and without input from US operations (which at the time didn’t have any real developers on board), Bomberman was thrust into a post-apocalyptic world that was dark and sinister and launched without one of the key features that defined the game.

As a result, Bomberman: Act Zero was critically panned, ranking as one of the 10 worst games of ALL TIME.  While the game wasn’t fundamentally broken, the media tore Hudson a new hole to essentially sound a wake-up call.

Bomberman:  Act Zero was a low point for the company.  Sales for the series dropped to a low of 20 thousand units from a high of more than 1million during its peak in the 90’s.  Hudson needed a new champion for game development real bad.  Ironically, it came from the newly formed US division.

How the US Division Turned Hudson Around
When I initially came on board with Hudson, it was to oversee marketing efforts which was already a big challenge since the company didn’t have any presence in the US for over 10 years.  But I soon realized the team, headed by President John Greiner, who had been with Hudson for over 15 years, had bigger aspirations.  He wanted to reestablish Hudson as a respected developer and publisher again in the US.  Soon, a head of game development was brought on board and she built a whole team around her.

Through a great deal of negotiation and many trips to Japan, Hudson Japan ultimately agreed to give thumbs up to build the first Bomberman game with a US based team.  Joel Bretton, our lead producer, did a bang up job in bringing it all together.  Hudson Entertainment (US) built Bomberman Live saving the brand!  What our development team did wasn’t anything magical or innovative.  The game was fundamentally filled with just what gamers wanted and that’s where the magic lives.  We understood what gamers wanted and made the game that fit that mold.  Bomberman Live became the best selling Bomberman game Hudson had seen in over 10 years!  The game was such a success that the Bomberman series took home a Game of the Year Award (on XBLA) where awards had been absent for a decade.

Despite constant boardroom battles, often times due to cultural difference,
I always enjoyed hanging with our Japanese counterparts.
They sure know how to drink.

For the first time since Hudson’s reorganization after going public, there was a group of people championing for better game design rather than hitting quarterly financial goals.  Because the US staff did not own any stock, our motivations were different (we had a bonus structure in place instead).  I soon was promoted to oversee the games publishing group, and having broke into the industry as a game designer initially, I was one of the few “suits” that would constantly push for better games.  John Greiner, Sabine Duvall (our head of development) and I formed a pretty powerful trio that ultimately strived for a game development model that made sure we didn’t flood the market with quick cash ins (Hudson of Japan was pretty convinced the US market could bear having three Bomberman games launched each year).  It is a fascinating story on how this process works, but I’ll save that for another time.

Hudson Rose To Become a Top Developer Again
By the time I left Hudson, it went from the complete obscurity of 3 years earlier to being picked as one of the top 20 game developers in 2007.  The collaboration between Hudson Japan and Hudson Entertainment (US) was starting to bear fruit.  It resulted in 3 games that sold over a million units each and Hudson successfully positioning itself as a dominant player in the digital download world (on console and mobile), and the casual gaming market.  This success was an extension of the original culture that defined Hudson for so many years – to build a fun place to work that churned out quirky original games.

Adrian, Creative Director at Hudson Entertainment, showcases Bomberman Live
to our Japanese counterparts in Sapporo, Japan for the 1st time.

But this rise to prominence had to eventually end.

Why It All Came Crashing Down
If Konami already owned such a big chunk of Hudson back in 2005, then why did it take them so long to finally fold the former-family owned company completely in?

By the time Konami initially bought into Hudson, Hudson was starting to really take off.  Profits were starting to soar, the US division was making waves coming back as a game publisher, it’s Japanese mobile business grew to become the second largest player, and the company’s stock was shooting through the roof.  Quite frankly, with business doing so well, there really was no reason to mess with things.

Konami did, nonetheless, ease everyone into the inevitable integration; however, it wasn’t planned to be a drastic change.  Unlike US based mergers and acquisitions where an acquired company could be shut down overnight and all operations consolidated in a blink of an eye, Japanese businesses rarely go through dramatic gutting of operations.  Until recently, most Japanese employees would work for one company their whole life (this has changed quite a bit recently in Japan, thanks to Western influences).  Konami was very deliberate in the integration process.

For instance, while Hudson operated quite independently while I was there from 2006-2009, we were “encouraged” to have the Konami logo on our business cards.  We were “encouraged” to establish our offices close to Konami’s own.  We were “encouraged” to use Konami’s distribution channels for publishing.  Konami’s Sapporo office merged with Hudson’s HQ.  Hudson’s Tokyo operations was also moved to the Konami building, though they operated on their own floor and just “rented” their office.  The integration was happening without a doubt and while I’m quite proud to wear a Hudson T-shirt claiming my allegiance, the reality was, I spent much of my time working with Konami on the publishing business.  We were, in essence, on the same team.

But Hudson’s high flying days came to an end when both the President and I left the company in 2009.  By sheer coincidence, we both left nearly the same week, though John leaving did influence my decision to leave as well.  When that happened, the development process reverted back to an unhealthy state.  Quick efforts to cash in various successes like Bomberman, Deca Sports and even Fishing Master resulted in half baked sequels churned out in less than a year of development time.  Each sequel sold poorly as they added nothing new to the games.

Sabine was pretty much the only US based champion left.  While she’s a strong German woman who knows how to hold her own, she ultimately was fighting against a dominant business machine and that fight is too much for anyone to bear.  Not only that, the rest of the Hudson Entertainment team simply wasn’t established enough to affect change at a corporate level.

With enough failed titles that were cranked out in the last year, it was enough to bring Hudson’s lofty stock price down allowing Konami to finally, and completely, take over and buy all remaining shares of Hudson.  Konami did what it felt was best and brought Hudson’s best IPs over to their fold.  As a result, the US operation was shut down.

So Who Is To Blame?
Ultimately, when I look back, I don’t think using the term “blame” is inappropriate.  The reality is that the chain of events that happened could only really result to one outcome.

Yes, Konami did attempt to turn Hudson into a more corporate company, but it could be argued that given how Hudson got into a financial crunch, the public move was very much needed. Konami really did save Hudson when it needed it after the financial markets crashed and Hudson welcomed that with open arms.

Yes, Hudson did lose its most talented creative forces and adopted a more corporate approach to making games.  But I find it misguided to blame Hudson Japan for this because they now had to adapt to being a public company.  That transition for them did not go smoothly because the company was home grown for 30 years.  The company’s overcommitment to churning out games quickly to drive the stock price up may have been misguided, but once the top creators left the company, the balance was already lost.

Yes, Hudson US did fall apart once the core executive team left.  At times, I do feel like I let the company down when I left, especially given the foundation I left was starting to bear fruit.  Looking back, I spent a good chunk of my livelihood building relationships and pushing an agenda.  After a 9 to 6 work day, I would stay in the office late into the night to coordinate with our Japanese office due to time zone differences.  There were also frequent trips to Japan and vice versa.  Once I left, my team never picked that up.

A BBQ lunch on the last days at Hudson Entertainment for both John Greiner and I in 2009.
John went on to found Monkey Paw Games. I went onto the start up world
(while continuing to consult with Hudson til 2010.)

But one thing that both John and I came to grips with early on was that Hudson’s best opportunities for growth meant that we needed to better coordinate with our parent company.  What we held onto was the belief that there was a way to bring about change while retaining the more intimate feel of the Hudson culture.  Being a long time Hudson fanboy (I was a proud owner of both the PC Engine & TurboGrafx gaming systems, both created by Hudson) I was hopeful that it was possible to merge culture with corporate.  Perhaps I was wrong.

This wasn’t about a fight for independence.  That wasn’t in the cards anymore.  Most of the key Hudson Entertainment staff, if you were ask them candidly today, would acknowledge the same thing.  Hudson was a part of Konami, and while everyone was very gung ho about trying to keep the Hudson tradition alive, perhaps it makes more sense for Hudson take advantage of Konami’s know-how instead.  After all, Konami is a powerful company and it’s because they know how to make good games even if it’s culturally a diametrically opposite of what Hudson was like.

The Tragedy of It All
The real tragedy is that 30 years of grand Hudson tradition is now in the history books.  No more stories of the crazy Kudo brother who would only wear “cowboy” attire to work because of his fetish for all things American.  No more fully functional mini train that would run through the Hudson warehouse (Hudson was named after that exact locomotive).  No more crazy business practices like selling Hokkaido potatoes as part of their business (Hudson was founded in Hokkaido, which is famous for its potatoes).  No more crazy videos of Master Higgins training gamers how to exercise their thumbs.  All these things that made Hudson so unique were established because of the personalities of the company.  Once the coveted personalities left, so went that life, that culture that made Hudson entertainment personified.

While all further titles from Hudson were “canned” for the US market, you can be sure they will be brought to market still.  Bomberman will live on.  Momotaro Dentetsu (one of the best selling games in Japan) will live on.  Even Bonk and Master Higgins from Adventure Island (I do believe the “real” Master Higgins will continue to work at Konami) will live on.  The colorful stories, however, will only be passed on through blogs like this, grasping onto cherished fading memories.

I gotta admit, when I wanted to break into the gaming industry, it was because I was hoping to experience the type of corporate culture that Hudson embodied.  Yet somehow, over the years, it just feels like the gaming industry as a whole has gotten more corporate.

The last time I’ll get the chance to hang out with Takahashi Meiji, AKA “Master Higgins”.

On a nostalgic note, check out Mr. Dtoid’s posts from 2007 on his trip to Japan to visit Hudson’s offices.  This was the first time in 10 years since any western media outlets had visited the remote offices of Hudson. Part 1 here. Part 2 here.