Cloud News & Insights

Risks and Expected Returns in Japanese Mobile Gaming


The kernel of Alvin Toffler’s 1970s book “The Third Wave” was the notion of human progress being mapped in three stages: the agricultural revolution, the industrial revolution and the “third wave” of the electronic or computer revolution. Is cloud the champion surfer of the third wave?

Cloud Tufts

Cloud computing adoption has been in bursts. Anyone who has pitched the technology knows the concerns and resistance thrown up by the potential users. However, there is one niche where acceptance has been high: social gaming.

Compared to Japan, the United States has a long way to go in pushing games through other channels. The 2012 Japanese social game market sales were $3.4 billion. At the same time, the United States social game market reached $1.65 billion, with the worldwide sales cited as $6.2 billion.

Social Gaming Cultural Differences

The social gaming market is growing. But the rate of growth is dependent on several factors such as market size and monetization ability. Japanese games are not usually played outside of Japan due to the nature of distribution channels. Japanese companies like GREE and DeNA have only recently expanded outside of Japan.

The revenue per download of iOS games in the United States is $0.67, while Japan revenue is $1.90. This is in line with other studies which show that the higher revenues are due to the Japanese being more comfortable with purchasing premium content on their free-to-play games. The “comfort spending level” of Japanese social game players is estimated at $18 per month.

Penetrating the Japanese Market

In recent years there has been a rapid increase in acceptance of iOS and Android devices in Japan. On top of that, the top Japanese mobile game distributors, GREE and DeNA have been aggressively pursuing partnerships with American firms for the distribution of their titles outside of Japan. This points to a more aggressive monetization based upon in-game purchases.

For developers, this means that current titles can be distributed better within the Japanese market, subject to culturalization and localization. This further assumes partnerships with Japanese mobile game channels.

The cost of operating within the above constraints is offset by the different and higher revenue expectations from the much better monetization model used by Japanese distribution channels.

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About the Guest Author:

Rodolfo Lentejas, JrRodolfo Lentejas, Jr. is a fulltime freelance writer based in Toronto. He is the founder of the PostSckrippt, a growing online writing business dedicated to producing top quality, original and fresh content. To know more about him, please visit Like him on Facebook or follow him on Twitter, Google+ and Pinterest.

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