DigiCube

» see digicube.co.jp as it lived, on the wayback machine

~ the eulogy ~

In Japan around 1998, the place to buy a Final Fantasy game was not a game shop. It was the convenience store, on a shelf near the magazines, from a company set up to put it there. Square established DigiCube on 6 February 1996, in Ebisu, with one purpose: get entertainment software into the konbini, where the entire country already went several times a week. Namco and Capcom put money in later, as did Enix before the two publishers merged.

The name is a pun about its parent. Digital plus Square, and a square diversified into a cube. The business widened quickly past discs into soundtrack albums and the Ultimania strategy guides, and later into gravure DVDs and PC software, anything that would sell from a rack under fluorescent light at list price.

The numbers for a while were enormous. The vending service launched in November 1996 and had moved over ten million units of software by the close of 1997. The peak year was 1998: 8.6 million units and ¥46.8 billion. DigiCube registered over the counter in July 1998 and listed on Nasdaq Japan in June 2000, which is a long way for a distribution arm to travel in four years.

The whole arrangement rested on a retail density that existed in Japan and almost nowhere else. In Turkey in 1999 the route a console game took into your hands did not pass through any distributor's shelf space, and nobody I knew had the slightest reason to wonder who wholesaled it. DigiCube reached me backwards and much later, as a publisher credit on the back of soundtrack albums.

~ the dossier ~

~ the konbini channel ~

The mechanism was a bet about data. Convenience stores ran point of sale systems that reported what sold, hour by hour, so DigiCube could accept returns from retailers and hold the line on list price, confident the data would stop it from shipping copies nobody wanted. It also ran its own in-store channel: promotional video for games, pushed out over satellite broadcast to terminals in the stores, under a broadcasting authorization it obtained in April 1996. 7-Eleven carried the products and so did FamilyMart, with the smaller chains behind them and Lawson only in some regions.

The bet was wrong in a specific way. Point of sale data is excellent at telling you how many rice balls a store will sell on a Tuesday and useless at telling you whether a role-playing game will be wanted next month, because a game is bought once by each person who wants it and never again. The returns came back in volume. A kiosk venture selling music downloads from in-store terminals ran from 1999 to 2001 and lost about ¥1.9 billion before being abandoned. An ATM joint venture with Sanwa Bank had to be liquidated when the bank switched to a rival network. By the year to March 2002 the company was losing about ¥6 billion.

~ the hour between four and five ~

DigiCube's own notice, dated 26 November 2003 and signed by president Masamichi Someno, is the best document about its end. The company, capital ¥4,087,770,000, listed on the Osaka exchange's Hercules market under code 7589, reports an interim net loss of just under ¥1.1 billion for September 2003 and a forecast loss of about ¥2.7 billion for the year to March 2004, with insolvency foreseeable. Then the sequence, in its own words: at four o'clock that afternoon the company petitioned the Tokyo District Court for bankruptcy, and at five o'clock the court issued its ruling and appointed a trustee.

Total debts were ¥9.5 billion. It was the first bankruptcy of a company listed on Hercules, and it went straight to liquidation rather than attempting reorganization, which for a firm that size was unusual enough that the Japanese business press went looking for a reason. What they found was a flurry of share transfers among the major holders in the weeks before the filing. Nikkei Business ran it on 8 December 2003 under a headline calling it a sudden death, and left a question mark on the end.

~ what got reprinted ~

By late December 2003 digicube.co.jp had been reduced to three PDF links on a white page. The first was the bankruptcy notice. The other two dealt with the mail-order site and a change of publisher for a Sakura Wars DVD box, which was the entire remaining business of a company that had moved 8.6 million units in a year.

DigiCube had published about eighty game soundtrack albums. The last was a piano arrangement of Final Fantasy VII; the next, for Front Mission 4, was canceled when the company stopped. Square Enix picked up most of the catalog afterward and reissued it, and because the reissues went out under the old Enix publishing codes, the ISBNs changed. The music survived the distributor, with different numbers on the spine.

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