SAN FRANCISCO – Depending on your perspective, Keiji Inafune is either a singular voice of sanity in the Japanese game industry, or a traitor.

"Man, Japan is over. We're done. Our game industry is finished," said Inafune, then a game producer at Capcom, at the Tokyo Game Show in 2009. Shortly after those remarks, the creator of the character Mega Man and producer of hit games like Dead Rising and Lost Planet quit Capcom to start his own game development studios. Free of corporate control, he has continued to raise eyebrows with his cataclysmic comments about Japan.

"God. Inafune-san talking about the dire state of the Japanese gaming industry...AGAIN? Please tell us another one. This act is wearing thin," wrote a game producer at Tokyo studio Q Entertainment on Twitter prior to Inafune's recent Game Developers Conference speech. Another industry pundit called Inafune's outspoken opinions his "Charlie Sheen moment."

It is an inarguable truth that Japan once occupied a position of dominance in the videogames space that it has now lost. In 2002, editors of the U.S. gaming enthusiast magazine Electronic Gaming Monthly published a list of the top 100 videogames of all time, 93 of which were from Japan. Such a skewed list today would be unimaginable. Besides Nintendo, it's difficult to name a major Japanese publisher whose games still enjoy the cultural cachet or critical acclaim they did in their heyday.

Wired met with Inafune during Game Developers Conference in March to discuss his feelings on Japan's game business and what he believes the country's creative talent needs to do to turn things around. Inafune's remarks have been edited for space and clarity.

Wired: What specific pieces of advice do you have for the Japanese game industry?

Keiji Inafune: I'd like to talk about your mother. You love your mother, right? Let's say your mother's birthday was coming up and you wanted to get her something that would make her happy. And you came to me and you asked me, what can I get my mother that would make her happy? What's the specific thing that I should buy her?

Someone who doesn't know your mother might tell you that should send your mother on a vacation. But they actually don't know whether or not it'll make your mother happy.

This is an analogy for what I'm saying about the Japanese industry. If you ask me, "What should I get my mother?" I will tell you, "Chris, you need to appreciate your mother." If you don't have that feeling of appreciation in the first place, even if you send her on a vacation or give her a present, your mother won't be happy.

Across the world, American games are the best-selling and considered the most fun. But Japan's gamers and game creators still won't accept this. This is why Japan can't win.If you don't understand the core message, it doesn't make sense to give small pieces of advice. People think what I'm saying is vague. But it's not vague, it's the core message that they're not getting. Japan is over because there aren't any people who are admitting that they've lost the competition. Japan still talks about how American games are not good at all, because they're sitting on the fact that they were winners in the game industry years ago. First, Japan has to admit that they've lost the battle once and they have to build up on the current state.

I want to talk about Korean products too. Why are there no Korean products in Japan? Japanese people believe that Korean products are much worse than Japanese ones, that they're very bad. But throughout the world, they're more successful than Japanese products.

Japan won't admit that Korean products have won the battle. Everybody is buying Korean cars and TVs from Samsung and LG and all the big players. They have good quality products for lower prices. It's not bad quality or anything. That's why people are buying Samsung over Panasonic now. But Japan won't admit it.

Right now, Japan believes that other Asian games, and American games, aren't as good as theirs. But across the world, American games are the best-selling and considered the most fun. But Japan's gamers and game creators still won't accept this. This is why Japan can't win.

Wired: What Japanese companies do you think are doing it right? Who's trying hard?

Inafune: I'm trying hard (laughs). As far as companies that are looking toward a more global stance, there's (mobile game publishers) GREE and DeNA. They have that mentality of wanting to win and wanting to go out into the world and succeed.

GREE and DeNA haven't won in the western world. But once they do, and once they start to succeed in Japan now that they're spending a lot of money here, then the rest of the Japanese gaming publishers will finally realize that they've lost the battle within Japan. Once they see that GREE and DeNA are successful in the rest of the world, they will finally realize, oh no, we have to do something about it.

Concept artwork from Keiji Inafune's upcoming Nintendo 3DS game Kaio: King of Pirates.

Image courtesy MarvelousAQL

Wired: It's heartbreaking to hear things like this, because I like Japanese games and don't want them to go away.

Inafune: Chris, you say that you like Japanese games, but you don't like them now, right? You like the old ones. You like the new ones sometimes, but you always liked the old ones, right? Say there's a movie director you really like. You don't like his new movies but you'll go to see them anyway. It's the same thing. Sometimes it's a hit. But back in the day it was nothing but hits. Since you're a fan you'll watch them, but non-fans won't see them.

You're being too nice to Japanese games. You should be harsh when you feel the standards aren't living up to what we had in the past. You should tell the truth about Japanese games not being what they used to be. Unless they get that criticism, Japanese game creators are just sitting on the glories of the past. They won't get the message that the Western audience is turning its back on us.

Japanese people haven't admitted that American games are more fun right now.There was a Canadian guy who appeared in a documentary film and did a Q&A afterwards. And a Japanese person asked what he thought of Japanese games, and he said he thought they sucked. That's what's necessary.

It's very severe, but very honest. Unless Japanese people feel embarrassed from the experience of getting harsh comments, saying [new games] could have been better is not an opinion they would take seriously. When they're embarrassed and they feel obliged to change, it would make a difference.

Wired: What about Nintendo's continued success?

Inafune: Because I'm a Nintendo fan myself, I could be a little biased. But Nintendo is a great company, it always makes great creative material. And it's always been the big player that's provided great creatives to the world. But lately I feel what they're doing is not very contemporary. They're behind the times a little.

I'm proud of Nintendo as a Japanese person. It's a company to be proud of. But right now, we're looking at Facebook and social games. Because Nintendo has all these charactrs that are appealing to everybody, they know they could win easily if they entered this social-mobile space. If Nintendo was a company with no money, they would have done it already. But they have so much money that they're trying to come up with a new way, a new style of winning.

Wired: You're doing a 3DS game.

Inafune: I'm doing mobile and social games as well, but I'm entering the 3DS business because I believe there is a difference between the two platforms. Both platforms are important because the gameplay is completely different. You want to play a mobile game for a couple minutes on the bus, very easily. But with [3DS], you have to have a certain amount of time to really enjoy the gameplay, meaning that the game design and the experience are completely different. I don't think one is dominant over the other. They're both necessary.

Wired: Should Japanese game creators work with Western developers?

Inafune: It's impossible for Japan to win with just Japanese power. Everybody in Japan should work with foreign developers. Not just paying them money and letting them make whatever they think is good, but really working together, coming up with new ideas together and discussing how to make something brand new. That would result in a chemical reaction in a good way. There's no way that Japan can be on their own anymore.

In America, developers who used to love and who have learned from the Japanese games in the past have re-engineered that to fit the American market. But in Japan, Japanese people only learned from former Japanese games and they haven't admitted that American games are more fun right now. So they're not learning from the foreign market at all. They're only learning from former Japanese titles. That's why they're only selling in Japan.

And they're starting not to sell in Japan either. Japan has to admit the loss and start anew, and they have to have the courage to ask you guys to let us learn from your success and then re-engineer that back to Japan. I'm sure that American people won't walk away. They have respect for Japan so they will let us learn from their success.

There are people playing Western games in Japan. They can play them and criticize them, and that's the easy part. But because they are starting to respect Western games, I have to reeducate these people to be able to work with the Western developers who think in that way. That's the start.

Wired: What does Japan do well?

Inafune: They're very diligent. They work hard hours. They probably will work much more than Americans would. The problem is they're not led in the right direction. When they're not shown a direction, they just waste their energy on unnecessary things. There's definitely a lack of leadership. If they're led in the right direction, they will come up with really good work.