Japan's
economy may be in the dumps, but one industry here has taken the world
by storm: trading-card games.
Three
years after Nintendo Co.'s Pokemon washed over American living rooms,
children and their harried parents are now immersed in Yu-Gi-Oh. Its
maker, Konami Corp., has taken a page from Nintendo and turned its franchise
into a multimedia blitz, creating the Yu-Gi-Oh card game, software,
cartoons and toys.
With
a more elaborate story line than Pokemon and plentiful characters, Yu-Gi-Oh
has surpassed Pokemon in popularity in the United States, according
to Comics and Games Retailer, a trade magazine that polls retailers
monthly about cards that are in greatest demand.
Yu-Gi-Oh,
which translates as Game King, is based on a comic book series that
first ran in 1996 in Weekly Boys Jump, a Japanese youth magazine. The
story revolves around a shy boy named Yu-Gi who fights monsters that
have powers gained from an ancient "millennium puzzle" that his grandfather
helps him solve.
The
success of Yu-Gi-Oh shows that animated characters and game software
remain among Japan's hottest exports. Fans overseas like Japanese animation
not only because of its shoot-'em-up action heroes but also because
of its multilayered tales and elaborate plots.
As
always, timing is important, and Konami's has been good. With sales
of Pokemon on the wane in the past few years, children were looking
for something new. Yu-Gi-Oh cards, which show monsters and the exotic
weapons used to battle them, were introduced this spring in the United
States and have far outpaced analysts' expectations, a good sign going
into the Christmas season. Their American popularity has also given
Konami a boost just as sales in Japan, where the cards were introduced
in 1999, have slowed.
"Everything
is clicking for Konami," said Zachary Liggett, an analyst for WestLB
Panmure Securities in Tokyo. "Retailers in the U.S. are really pumped
on Japanese content, and Konami's road has largely been paved by Pokemon."
Because
of Yu-Gi-Oh's strong American showing, analysts have raised their overall
projections for Konami. News that American sales of Yu-Gi-Oh cards hit
¥2 billion ($16.2 million) from April through June has helped lift Konami's
shares 35 percent in last two months.
Liggett
estimated that Konami would earn ¥8.3 billion in the year ending in
March 2003, 18 percent above his earlier estimates, on revenue of ¥237
billion. The earnings figure, he concedes, is conservative and may rise
as Konami's U.S. distributor, Upper Deck Co., releases more cards.
Keeping
the tension between supply and demand is crucial in the American card
market, worth about $300 million in annual sales. When companies release
too many cards, children are overwhelmed and run out of money before
finding them all. Releasing too few can cause boredom.
Worse,
shortages can lead to price gouging, fights at school and headaches
for parents.
Unlike
Pokemon, which encouraged fans to collect the entire series, Yu-Gi-Oh
is intended more as a game of strategy - a difference that should temper
some of the frenzy.
In
the Yu-Gi-Oh comic book series, which has sold 25 million copies in
Japan so far, Yu-Gi plays a card game similar to the one released as
a separate product in Japan in 1999. The game was an instant hit and
there was even a riot when Konami ran out of special-edition cards at
a promotional event in Tokyo.
Konami
also helped develop two television shows based on the comic book and
designed game software for Sony Corp.'s PlayStation 2 and Nintendo's
GameBoy Advance. Yu-Gi has also been plastered on T-shirts, shoes, bags
and stationery.
The
game's appeal and Konami's cross-marketing helped turn Yu-Gi-Oh into
a half-billion-dollar business two years ago, when it peaked in Japan
with profit margins of more than 50 percent.
Konami's
margins are only two-thirds as large overseas because of translation
and distribution costs. Though Upper Deck is privately held and does
not make sales figures public, the company says Yu-Gi-Oh is outselling
its traditional No. 1 product, baseball cards.
"Most
of it has been driven purely by word of mouth, which speaks to the strength
of the game," said Mary Mancera, a spokeswoman for Upper Deck.
Unlike
Pokemon, which is geared toward elementary-school boys and girls, Yu-Gi-Oh
is aimed at boys 8 to 14 who crave more sophisticated competition.
"I
beat video games so easily that they're not really a challenge anymore,"
said Elijah Crumpton, 12, of Denver, who spent the $600 he made washing
cars this summer on Yu-Gi-Oh cards. "I like reading about the special
powers, the cool pictures and the cool names."
Although
Yu-Gi-Oh's story and characters are the same in Japan and the United
States, the pictures have been altered to match American sensibilities.
Nudity, extreme violence and religion have been excised from the American
versions. A card that refers to witch-hunting, for example, was not
released in the United States.
