The localization team for XSEED's games such as JRPGs Ys, Legend of Heroes and Zwei believe that games are art and should not be censored, but acknowledge that it's becoming harder to justify a "zero tolerance" policy.
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In an interview with GOG, XSEED localization producer Thomas Lipschultz was asked about different sensibilities in Japan vs. the West, in particular themes such as sexualization and consent. And while he admits that from a business standpoint companies don't want to upset their fans, he has a "zero tolerance" approach to any censorship.
"I truly do consider video games – ALL video games – to be art, and just as it wouldn’t feel right to me if someone painted over offensive material in a painting, edited out offensive material in a book, or cut offensive material from a film, I don’t want to see anyone (least of all us) editing out offensive material in games... if we want video games to be classified as an art form on par with books, films, and paintings, we need to maintain zero tolerance for censorship in localization, no matter how offensive the content we’re localizing may be."
Thomas believes that by keeping the "offensive" material as intended it will spark discussions about the material and lead to change for the better. He does admit however that with all the news about sexual harassment and the issues faced by the LGBTQ community it's becoming harder for this type of policy with localization.
"It’s become much harder to justify maintaining a zero-tolerance approach – and with a lot of Japanese games starting to really push the boundaries of “good taste” more and more, the looming threat of censorship has become much larger and more imposing than ever, and certainly more of a beast to fight on multiple levels."
Less controversially, the other main question from the interview deals with why Japanese game titles are so long and occasionally so odd. While less offensive, this is another matter of how Japanese culture differs from Western cultures. We're all about "succinct naming" whereas Japanese games have to have long titles so as to give them more advertisement space on posters and in magazines.
You can read the full interview here, and check out XSEED's games on GOG here.