Japan’s Toys to Life is the Future of Gaming – PowerCore

Gaming is very different in Japan than it is in America, but PowerCore is introducing technology that could lead to major changes in both of them.

Toys to Life technology blurs the distinction between the analog and digital worlds by having digital gameplay react to the presence of physical toys. For example, after buying a figuring, that character would appear in the game.

The first generation of this technology is already being used by powerhouses such as Disney and Nintendo, but the real change is yet to come.

Today Jia Shen explains what the future holds for Toys to Life, and why he decided to start his company in Japan.

It seems that the boundary between analog and digital is about to become a lot less clear.

It’s a great conversation, and I think you’ll enjoy it.

Show Notes for Startups

Why large companies have trouble crossing the toy-game barrier Why it made sense to build a distributed team from Tokyo The special appeal of physical goods in our digital life How Disney just made a big mistake Why children don't play with some toys Why Japan gaming might be the future model for the rest of the world

Links from the Founder

Learn more about Powercore Check out their Online Store Some cool toy pics on Instagram Follow Jia on twitter @mekatek Friend him on Facebook Jia on Instragram You really need to see the toys in action to appreciate them check out

This video or this one this is cool too or this video

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Transcript from Japan Disrupting Japan, episode 73.

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for joining me.

You know, gaming has always pushed the limits of both computer hardware and the interfaces we use to interact with computers. Jia Shen, of PowerCore, is blurring the distinction between the online and offline interaction. Powercore enables video games to react to the presence of physical object. For example, if you owned a figurine of a superhero, that hero could appear in the game.

It’s a simple interaction that radically changes the way we view the digital-analog divide. Of course, as with all technologies, adoption is never smooth, and Jia explains some of the mistakes that burned Disney, and some of the major market players. It seems that, as is so often the case, the secret to introducing innovative technology, is to do only as much as you absolutely have to, and then watch how your users react. It’s a simple idea in principle but there are surprising reasons why some of the most influential companies in the industry have trouble following it.

But Jia tells that story much better than I can, so let’s hear from our sponsors and get right to the interview. [pro_ad_display_adzone id="1404" info_text="Sponsored by" font_color="grey" ]

[Interview] Tim: I’m sitting here with Jia Shen of PowerCore. Now, PowerCore does toys to life or sometimes it’s called offline-online business, but why don’t you explain basically what it is and who uses it.

Jia: Sure. The toys to life is a model, that from our perspective, Japan has done a lot of pioneering, but the United States, in maybe the last 5 or 6 years, have made a very large business out of it. So we point to, in the US, Skylanders from Activision, Disney had a big one called Infinity, featuring a lot of the great Disney characters. Nintendo, LEGO, they all have some forays into this. And specifically it’s toys that are collectible, that have a strong interaction with video games. So the guys that do it on a large scale, they usually have console games, and you have different characters, which you can stick into the game, they have different power-ups, they have different game mechanics.

Tim: For example, there would be a figurine, or a trophy, or a sticker of some kind that would activate a character in the game or would activate new levels in the game?

Jia: Skylanders, I think, is the best game design. They really accentuate the collection of individual characters. So imagine a Super Mario game but different levels have different mechanics. For instance, certain ones require you to be able to have wheels as feet, to be able to run faster. Other ones require you to have big hands to be able to crawl up walls.

Tim: So what is the physical tie-in there?

Jia: As a player, you literally have your character in front of it when you’re walking through, and say there’s a specific enemy that you want to defeat that requires a specific characters, you immediately swap the character right on the pedestal, and that person immediately appears out of the game.

Tim: Okay, so you’re swapping physical characters in the real world and that’s impacting the game in real-time, as you play it? Cool. Are most customers taking existing IP and making toys, like Star Wars or Frozen or Angry Birds? Or are they companies that have like a popular game and want to add a layer of physical activity to it?

Jia: We have 3 categories of customers. The big customers are large toy companies that are trying to unify kind of a merchandising strategy. In Japan, let’s use Naruto as an example. Naruto is kind of licensed out from Shoeisha and they take that and a bunch of other companies do the merchandise, and a bunch of other companies do the games. None of them are the same. So typically, with an IP company, there’s a lot of business units, a lot of companies associated to it, and none of them are really interacting with one another. And that’s really kind of a sweet spot for us, IPs that are doing large launches, that are existing in a lot of different places, but they really should be creating experiences that really unify everything. Marvel’s a good example of doing a good job of that. Marvel and Disney, what they do is they’re creating universes that everything interacts with the TV shows, work with their movies, the movies work with their games, everything kind of feeds into individual aspects to it. But if you look at everybody else outside of Disney, they’re definitely not doing that. A movie launches, it has nothing to do with a TV show. The toys themselves have their own campaigns and whatnot. Our job is to actually create universes among all these different mediums and the users are free to participate.

Tim: Okay. Listen, before we dig down deeper into the market as a whole, let’s talk about you for a minute. So this isn’t your first startup. You actually started up a pretty successful company called RockYou in San Francisco 8 years ago now?

Jia: I officially started 10 years ago.

Tim: 10 years ago. It was a company that was a platform for developing apps on Facebook and social media. What made you decide it was time to move on from that industry and move into toys to life?

Jia: I think one of the other big things was I moved to Japan. Around 2010, I came here because we did a joint venture with SoftBank, so that was a catalyst for me to move here. But I personally always wanted to be in Japan. The reason for me to move on was kind of more of a personal reflection point. RockYou as a company became very, very large. It’s definitely not the sweet spot in which I enjoy operating at. When I left, we were like 350 people or something in the United States office alone. I wanted to come here to basically try and do new stuff. I wanted to focus on becoming somebody that actually created strong content.

Tim: What was your attraction to Japan? Was the industry itself attractive or was just the country attractive?

Jia: The country attracted me. I’ve been coming to Japan since 2003, every year. For me it was like a very strong personal decision. I definitely wanted to live here.

Tim: Okay. Well, gaming in Japan, it’s certainly different than it is in the US. So is Powercore doing most of its current business in Japan, or the US, or do you have customers in both places?

Jia: We’re pretty much evenly split, as far as customers and the team. As far as core game businesses, Japan and Korea is actually the leader for that kind of business. The US, it more interestingly is coming more from the toy side, as well as the IP rights holders. United States’ IPs are more movie driven, so we’re doing a lot more business from kind of the movie IP and marketing launch sides. It’s the same goal that we’re trying to achieve, but because of how businesses and companies are setup, the US and Japan are actually very different.

Tim: With everything being digital these days, more and more of our life is digital. Do you think there’s some special appeal to having a physical object? Do people identify with that somehow more strongly than they do just the digital game or the digital character themselves?

Jia: Absolutely. And there is a difference based on individual IPs and that’s something that we’ve learned a lot about in the last year.

Tim: Like how?

Jia: The original thesis was you take any game that has a large audience with it, and we should be able to merchandise it. That’s absolutely not true because the two ways to look at our business: one is a very practical one, from business—I’ll get to that in a second—and first is actually universe-building. It works for adults and it works for kids, but it’s a lot more easy to see when a child takes a toy, scans it in. When they get it, it completes a fantasy, “Oh my goodness. My Pokémon is a stuffed animal and now it’s in the game.” Once you make that connection, it’s very nice. So the universe-building part is actually a nice part.

Tim: I could actually see how children would pick that up more quickly than adults would.

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Jia: Yeah, they super love it. Every time you show a kid our scanning stuff,