Square Enix had so much to talk about at the Electronic Entertainment Expo (E3) that it took advantage of the void left by Sony’s absence and held a press event. And it showed off a lot of games, including the highly anticipated game based on its partnership with Marvel on The Avengers.

I spoke with Yosuke Matsuda, CEO of Square Enix, about the company’s big announcements at E3. The film Avengers: Endgame has made about $2.7 billion at the box office so far this year, and there are huge expectations from fans around the video game.

I also spoke with Matsuda about the making of Final Fantasy VII Remake, and he was candid about how it is sometimes more difficult to create a faithful remake than to make a brand new game. We also talked about diversity, the new consoles, the market for console games in Asia, and cloud gaming, including Square Enix’s own failed experiment with cloud supercomputing technology, Shinra Technologies, which shut down in 2016.

We spoke through a translator, but he took the time to look me in the eye and smile as we spoke.

Here’s an edited transcript of our interview.

Image Credit: Dean Takahashi

GamesBeat: How is E3 going for you so far?

Yosuke Matsuda: I wasn’t able to see much of it yesterday or today because of meetings, but I did see a bit today. I saw Borderlands 3.

GamesBeat: How did The Avengers come together? What helped make that deal happen?

Matsuda: There’s not a lot I can say about that. [laughs] Since there’s another party to that arrangement in Marvel. But I can say that it wasn’t just us that brought that idea together. Marvel and Crystal Dynamics and Eidos Montreal were the ones who got excited and said, “Hey, shouldn’t we do this together?” They made the proposal. That’s how it got started.

GamesBeat: Why did you think it was a good idea to approve that, to make such an ambitious game around The Avengers?

Matsuda: First of all, because it’s such a big piece of IP, I thought it lent itself to giving us lots of potential as far as what we could do regarding game design. We’re still working on the Avengers right now, but I believe that what we achieve out of that is something we’ll be able to leverage on the development side at our studios going forward as well. For that reason, I decided that it would be good to take on this big piece of IP with Marvel.

Image Credit: Square Enix

GamesBeat: What made Crystal Dynamics a good fit for this kind of game?

Matsuda: Crystal has always been a company that’s made games in the action-adventure space. In that sense, I thought that it would be good fit in terms of making a game with Marvel using the Avengers, which would naturally be an action-based game.

GamesBeat: Marvel’s Spider-Man was another successful Marvel-based game, and very different from a lot of superhero-based games that came before. It had far better production values than a lot of previous Marvel games. It looks like yours is very similar — like the thinking around the movies, which have gotten much better as well. It seems like an interesting resurgence, with deeper investment in everything related to Marvel. What’s your reaction to that been like?

Matsuda: I think a lot of good things have come out of that universe, which is so popular around the world now, especially in the United States. I also thought the production values on the Spider-Man game were amazingly good. When you look at things like that, you see more and more excitement building up around the IP. I think it really has had a significant benefit. One good thing leads to another. That’s been the case with the films as well, and I think the same will apply for the games. It’s great that all this excitement is building up.

GamesBeat: Are you happy with what you’ve seen from the new console announcements, and Google’s introduction of cloud gaming?

Matsuda: Just timing-wise, we’re in a period where we’re suddenly seeing a lot of news crop up about new consoles. This time just a little information was released in advance, but when I listen to those announcements it gives me high expectations for what’s going to be coming out going forward. Also, with the discussions about backward compatibility, I think this is going to make for a very smooth migration for the fans. For that reason, I also think it’s going to be great.

As regards Stadia, it’s also inspiring to see — where we’ve traditionally seen the three major platforms, plus the PC, on top of that we’ll now see streaming become a very serious channel. I’m also excited about that, so I’d say I’m very much looking forward to what’s coming out.

Image Credit: Square Enix

GamesBeat: Ubisoft’s Yves Guillemot was saying that he’d like to see the game industry reach 5 billion players in the next 10 years. I wonder whether you’d agree that that’s possible, and what’s the right way to get there. Will things like cloud gaming help us get there, or making triple-A games more accessible, or other things?

Matsuda: It’s impossible for me to comment on whether 5 billion is the right number, but I would say that in the current generation it’s not just the people who like to play games. A huge number of people enjoy games without actually playing them. They like to watch them. In that sense I think we’re going to see the population of people who enjoy games in some form grow going forward. If cloud gaming seriously takes off, that would be a major tailwind for that.

Especially since we’re going to be having cloud gaming, that means we’ll have the potential to have more opportunities for people who don’t own a console, but like watching games, to additionally play them. They might go on YouTube and see a game being played, and they might not think they want to go so far as to buy a console, but because of cloud gaming they’ll be to play it. That will give us more opportunities to have people like that buy and play our games. I’m very excited about that.

GamesBeat: Square Enix had its own experience with cloud gaming through Shinra Technologies. What lessons do you think you learned from that about how cloud gaming could do better in the future?

Matsuda: What we tried to do with Shinra was based on what at the time was very innovative thinking. But in terms of the platform and the play environment, it was too early, and too much for us to do on our own in terms of the scale of the business and the investment involved. The environment just wasn’t there yet. But now that you have big players like Google and Microsoft coming on to the scene, who have the servers and the data center investment to do this in a big way. We’re finally at a place where the conditions are coming together so that this business environment can support it taking off.

If that happens, then what we tried to do with Shinra, and what other publishers have been interested in — we can see people start to get seriously involved in the cloud, because now the circumstances lend themselves to that. We have, as I say, these big players coming on the scene, and probably others will as well. Netflix has announced that it will be developing games, which I’m very interested in, that such a big player in the streaming market is going to be developing game content. The game industry is going to become a major new customer for players in the data center or server businesses. For that reason, I think it will bring a lot of new vitality to the industry.

Image Credit: Dean Takahashi

I think we’re finally seeing an environment where the conditions are conducive to developing the kinds of things that we tried to do with Shinra. For example, to develop a cloud-centric or a cloud-native game. But I’d also note that this is just the year this is going to be launching. We’ll still have to wait and see if Stadia is an environment that game players can be satisfied with. That said, I sincerely hope that it takes off to great success.

GamesBeat: Final Fantasy VII has been in the works for a long time, and there are very high expectations for that project. What have you learned from that process so far?

Matsuda: [laughs] I’d say that what we’ve learned is that making remakes can be very challenging. It’s as difficult or even more so than making an original title, a new title, in a different sense. What I mean is that when you’re making a remake, you can’t just chase nostalgia. That’s not going to work out. You have to make it the latest game, a game that’s current.

In making the Final Fantasy VII remake, we have to think about the fans of the original, who know Final Fantasy VII, but at the same time we want to expand beyond that to people who may not have had any experience with Final Fantasy VII, or even Final Fantasy altogether. I don’t believe we can just be thinking about the fans of the past game when’re making this. Of course we value how much support they’ve given us, but at the same time we’d like to see new customers play this as well. We need to make a game that will satisfy both of those customer bases. That’s why I say it’s so challenging.

GamesBeat: Epic Games has been very successful with Fortnite, and they’re using that success to become more of a platform company, with their engine and their store and other things. They’re clearly more than just a game developer now. Does Square Enix also want to be more than a game company in similar ways?

Matsuda: We’re a game company, and from now on we want to continue to grow as a game company. But with that said, there are a variety of different ways you can deliver games to customers and have them enjoy them. For example, I want to consider the possibility of us developing our own channel going forward. Also, there are lots of ways you can enjoy games other than just playing them. We can offer people peripheral forms of entertainment like merchandising and animation. A lot of people out there strongly want those kinds of experiences as well, and for that reason, I do want to further flesh out our content lineup so we can offer those opportunities as well.

Image Credit: Dean Takahashi

GamesBeat: How can you improve diversity in the game industry, do you think, and reduce toxicity in game communities?

Matsuda: In terms of diversity, I’d say that we as a company, if you think of our group as a whole, are in a very unique position. By that I mean that while we are a publisher that was born in Japan, we don’t just have teams in Japan anymore. We have development teams in western markets as well, and we all collaborate in a variety of ways. For that reason, I think that whether we’re talking about our game portfolio or the makeup of our times, you’ll hardly fine another company with as much diversity.

There are lots of different ways to interpret the word “diversity,” but what I believe is important is that we can leverage our diversity in order to make richer content and provide new game experiences. That’s what I want to see our organization do, because I think that’s what will make our game fans the happiest. That’s also the way to go about it that best matches our corporate philosophy.

GamesBeat: Back on Marvel a little bit, how could that be a globally successful game? We’ve seen globally successful entertainment properties like Avatar, but not all Marvel titles have been worldwide hits. How do you help make that into a global hit?

Matsuda: It’s a very difficult question. [laughs] Nothing would be better for us than if we were capable of making every one of our games into a global hit. But it just doesn’t work out that way in the entertainment industry. Of course, we do want to do that with the forthcoming Avengers game, but I think the key to success is whether you can provide an experience to game players that goes beyond what they had imagined and makes them say, “Wow, that was fun, that was surprising.” Focusing on providing that kind of experience is what we have to be thinking about.

Image Credit: Dean Takahashi

I believe that when you get good feedback is when you achieve that, when you develop something that appeals to fans in that way. Of course we want to do that with this title, but that’s something I want to target with all the titles we make going forward. It’s something I’ve talked about with our development teams. We have to make something with an edge, something that goes beyond what the customer imagines. If we don’t do that, we won’t be making things that are global hits.

GamesBeat: Do you think the consoles can be more successful in Japan, Korea, and China, or do you think it’s more important to succeed with mobile or PC games in those regions?

Matsuda: At present, I’d say it’s a fact that the consoles are struggling. If we think about in the short term, from a business perspective, the weighting will have to be more on the PC and mobile side. Especially in the case of China, censorship is a major issue. You’re forced to engage in considerable localization and culturalization. What you’re able to express in consumer games is another challenging issue.

If we think about this in the short term, or more in the middle term, the focus should be more on the mobile and PC side, especially mobile. It’s not to say that censorship isn’t likewise applied to mobile games. That’s also challenging. But it’s not going to be easy for consumer games to take off there.

Also, it’s now been decided that Tencent will be handling the Nintendo Switch in China. This is the first time that Nintendo will be officially selling in China in a major way. They might have gone in through parallel imports in the past, but I’m very much interested to see whether Nintendo is going to have to make any changes around the Switch.

Image Credit: Square Enix

GamesBeat: What do you think about the rise of subscription services in games? How many subscriptions do you think gamers are ready to pay for, and have you thought about doing a Square Enix subscription.

Matsuda: My own sense is that I wouldn’t want to pay for more than 2,000 or 3,000 yen, maximum, considering what we already pay for video services. In my case, I’m spending more because I’m also buying games outright. It’s difficult to say what the appropriate number will be, but I will say that we’re thinking in a very forward, positive manner about the potential for running a subscription service.