There's a CEDEC 2020 talk on the art direction for Animal Crossing New Horizons. In this thread, I'll be translating the important bits from the talk.

I'll be translating in real-time, so please follow to stay up to date.

Thanks to @PanchamBro for the heads up!
First, they introduce the speakers: Koji Takahashi, Asako Shibata, and Hiromi Sugimoto.

Animal Crossing started in 2001, and it has been 19 years since the series debut.

The concept of human to human communication has remained constant throughout the series.
There are a lot of ways to "play" Animal Crossing. There are players who enjoy fishing, some who enjoy the shopping aspect, others who enjoy speaking with the animals, and more. The concept of human to human communication ties everything together.
In this image alone there are several things the player can interact with. There is the fish, the bucket, the NPC, the house, materials for DIY, adjusting the landscape, and more.
The art direction has to tie all of these elements together.
In Animal Crossing, the world bends when the player is moving around outside their house. This is to allow the player to see more of the world and see things that might interest them.
Because the graphics have improved so much, and there are more things to interact with, the art team decided to focus on "symbolization". By using symbolization, it allows more things to be displayed on screen without overwhelming the players.
For example, on the left is a picture of an actual tree. But by reducing it, and creating a symbol of it, it can represent the same amount of information in less space.
Animal Crossing uses a variety of styles.
On the left side of this image, these art more "symbolized". On the right size of this image, the art is more "realistic"

Bugs and fish are donated to the museum, and are based off real things. Because of this, they are more "realistic"
It might be counterintuitive to think that with better graphics, the art team would utilize less information and lean on symbolization more. However, this is because they wanted to create room for the player's imagination to fill in the gaps.
Next, they are talking about how they chose the grass pattern. Here is a shrine that Takahashi sometimes visits.

If you look closely at the vegetation, you can see that there are fallen leaves, and the green is not entirely consistent across a single image.
This style was chosen to create a "symbolization" of how grass grows. In addition, the team were able to utilize colors to represent different seasons.
The first two images show off how the grass looked mid-development (The second picture even has a map). The final picture is how the grass looks in the final game. As you can see, many revisions were done in order to get the right look. The team even experimented with polygons.
Next is talking about animal design. There are ~400 characters in the game.

The team wanted to create characters that would become important to the players. In order to do that they had to consider what players would want to be surrounded by, and what players would like to see.
The silhouette is very important, as it allows the player to see the animals even if they are far. This might entice them to want to interact with them as well. Seeing them off in the distance can make the player imagine what they are going to talk about.
Just by sealing their silhouette the player might imagine what type of animal they are. In this case, it's recognizable that they are a cat, but what cat exactly might entice the player.
Characters with important roles like Isabelle and Tom Nook have their own unique silhouette, while the same species of animal villager will share silhouettes.
Because the silhouettes are similar, the team spent time on differentiating the characters through their designs, and considered how to represent their characteristics.
The basis for the characteristics of the animals are based on characteristics of people to make them relatable
There are 35 different kinds of animals in AC. However, they don't move like their species do, instead they all share similar animations. This is to create empathy among the players for them.
The team tried a variety of styles to see what aspects were the most important of the designs, and what would work together (not standing out).
Here is an example of Aurora vs Rosie. By adding the eye highlights to both of them (second picture), it makes Rosie's appeal lower, and Aurora design feel like it clashes with her personality. But only giving the highlights to Rosie, it shows off her peppy (idol) personality.
With New Horizons they had to add more details. They show off Bob as an example. In the second image, it shows the 3DS version vs. the Nintendo Switch. If they made his lines too straight for his mouth, it would give off an artificial vibe.
They also added little paw prints which can be seen on the beach.
Emotions were given more detail, and through symbolization the information can easily be told to the player.

New Horizons also added more emotions such as gazing and a stoic mouth.
Next they are talking about how they gave incentive for the players to see the animals. They added a lot of actions to the villagers in order to encourage players to watch their animal friends.
By seeing the villagers going about their everyday lives, and through their designs they are hoping that they become important to the players.
Going to take a quick break, the next section is the last part and it deals with furniture design. Be back in ~10.
One thing that makes Animal Crossing so fun is not just the activities that you can do outside, but also decorating your house and seeing how your friends decorate theirs. The reverse is also true, and showing off your place is an enjoyable component.
The goal of the design process is to create the following cycle: The feeling of desire for the furniture, using it in your own personalized way, and then communicating with other players. This will kickstart a new cycle with a new piece of furniture, and turns into a loop.
It was important to design the furniture in a way that it wouldn't deviate from the player's expectations when they decorated with it. So they focused on the essence of the pieces of furniture.
They give the example of a retro style fan. What stands out for people for this appliance? Well, it's the guard frame which makes it difficult for things to get caught in the fan, and big buttons that easy to push down.
In order to capture the essence of the furniture, it's not necessary to stay 1 to 1 with the actual device. In the case of the fan, the guard frame is larger in the front, but in AC it's been adjusted to be equal size.
Additional design work was then done to create a symbolization of it. With a fan, a warning sticker (telling the user not to put their fingers in the guard frame) and colors to the blades were added to make it stand out more.
In order to give options for the player's personalization, it was important to add a lot of options and give players freedom to change their furniture.
They also gave players the freedom to change the furniture's texture to allow them to fully customize their rooms. The following three pictures are all using the same models, but different textures.
Also the team considered a wide variety of situations to think of different variations for the texture.
Next the team had to consider the sizing of the objects as there is a wide range from the small dolls to the 10 meter tall lighthouse. The team had to ensure that everything could fit in the player's house, so a height limit of 4 units (about 40 meters) was decided.
In order to size everything up right, it was decided to use the bed as the basis. 2 units were decided for the bed as anything more felt too big, or anything less felt too small. Other object's sizes were decided around that bed size.
The team adjusted the size of the objects from there. The first image shows no adjustment, while the second image shows everything tweaked.
Interactions with items were added to give them more life.

The second image shows concept art for the bamboo doll in New Horizons.
(I'm paraphrasing) When designing the game, the team sought to communicate a wide range of possibilities in every image. It's up to the player to choose how they play, and utilize their own imaginations. By using their imaginations the game world expands.
That's all that was contained in the CEDEC 2020 talk for Animal Crossing.

Original source: https://www.famitsu.com/news/202009/05205296.html
Thank you for joining me on this hour plus translation!
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