While Western studios spent the last few years gutting teams left and right, Japanese developers have mostly stayed standing, and one expert has a refreshingly blunt explanation: smaller teams and executives who don't pull down $30 million a year. The full breakdown is in MSN's writeup, and it's worth your time if you've watched studios you love get hollowed out.

The core argument is structural, not mystical. Japanese development culture historically ran lean. You look at the credits on a modern AAA blockbuster and it's twenty minutes of scrolling, six studios, and an outsourcing army spread across four continents. Classic Japanese productions simply weren't built that way, and the credit rolls show it. Lean teams mean lean costs. Lean costs mean a slow quarter doesn't immediately become an existential crisis that gets solved with a chainsaw.

Then there's the executive pay piece, which is where it gets uncomfortable for the Western side of the industry. Japanese corporate culture keeps compensation gaps dramatically narrower than their American counterparts. When your CEO isn't taking home a package that could fund an entire mid-size studio for a decade, the math on mass cuts to hit quarterly margins starts looking very different. The people making the cuts feel them too.

There's also the labor law reality. Japan's laws make mass layoffs legally painful in ways that protect workers, and reporting on the subject points to that legal protection as part of the answer. My own read, sitting over here in the American gaming press, is that at-will employment in the States makes cutting headcount the easiest lever in the building; you pull it whenever the shareholder call is coming up. That's my analysis, not the expert's, but I think the comparison holds.

I've been chewing on this since watching studios close this generation that had no business closing. Meanwhile FromSoftware, Capcom, and Nintendo keep shipping with a consistency that's become genuinely rare in Western AAA, and the source piece argues team size is a big part of why. Compare that to the headcount bloat on your average open-world behemoth and you see the two philosophies in a single frame.

The counterargument is worth airing. Lean isn't automatically better, and I'd argue the salary structures that protect workers can also suppress them; the people grinding on those Famicom-era schedules I grew up admiring weren't doing it for the pay. Nina and I have gone back and forth about Square Enix along these lines, and I'll admit my sense that the Japanese side of that company shields its legacy teams better than its international operations is personal observation from watching releases, not sourced reporting.

But the broad point holds. The Western industry built itself on maximum headcount, maximum spending, and maximum executive compensation, and when interest rates turned and the pandemic money dried up, that whole structure had no shock absorbers. Japan's slower, stingier, more conservative model turned out to be the durable one. Four decades in and I still think the Super Famicom-era way of doing more with less was a feature, not a limitation.

Whether Western publishers actually learn anything from it is another question. My guess is they'll read the executive pay part and quietly skip it.