The gaming market in Japan, particularly with regard to social gaming is an especially lucrative and promising market that has attracted the attention of international investors in the last few years. However, the peculiarities that make this market attractive also make it harder to predict. In this article, we will take a look at some trends in Japan’s gaming market and what the next years may have in store for Japan’s social gaming industry.
An overview of the actual state of gaming in Japan:
Japan has a social networking culture that stands out from other countries in that it is unique to Japanese culture. In Japan, both real identity social networks and virtual identity social networks have gained prominence as a way to share news, gaming, and social interactions. Japan’s social networking structure is particularly interesting in that it is dominated by three very large social networks that are entirely Japanese, each with its own particular market and goal that is very clearly delineated. The three main homegrown social networks in Japan today are:
- Mobage - This social network is mostly about mobile social gaming and its users use virtual identities to access content.
- Mixi - This is the largest real identity social network in Japan and about eighty percent of Mixi users use this social network for social gaming. Its closest Western equivalent is Facebook, which has recently overtaken Mixi in the Japanese market.
- GREE - Like Mobage, GREE is also focused on mobile social games and allows users to use virtual identities
There are some aspects of the actual state of the Japanese social gaming industry today that may sound completely alien to outsiders. For example, the industry structure is quite fragmented by Western standards and there are hundreds of providers of social apps. There are two companies that provide both social games and platforms, DeNA and GREE. A good comparison to what these two companies are doing in Japan would be to imagine a company in the West that combined Facebook and Zynga into a single entity – it should be noted though, that Zynga has closed their operations in Japan.
It is also important to note that all of these companies’ stocks have a bright future and are all projected to increase in the coming year. The dominant companies in the market hold something of a monopoly on the Japanese social gaming market, with the only successful foreign gaming company in Japan being Reekoo. GREE and DeNA have a very tight hold on the Japanese social gaming market that is nearly insurmountable for foreign companies looking to gain a foothold in Japan.
Possible threats on the horizon for established gaming companies in Japan
There are several aspects that may threaten the future of the established players in the Japanese social gaming market. One of the most widely publicized of these is the increasing government regulation of social gaming practices. In recent years, attention has been cast on gambling-like aspects of Japanese social gaming. Other problematic practices include games that take advantage of the addictive quality of these kinds of games while offering unfair or even impossible odds to their customers. Known as kompu gacha, these kinds of practices involved using micro transactions to milk consumers out of considerable amounts of money.
Apart from regulation, the rise of Western social media companies in Japan is also a threat. While Twitter gained almost immediate acceptance in Japan, Facebook was an underdog for several years. However, it is only recently that Facebook has managed to overtake social gaming giants such as Mixi for a larger share of the Japanese market. Experts predict that Facebook’s market share will continue to rise. Successful incursions by other international social media network companies may also finally open up the Japanese social gaming market to interested companies and investors outside of Japan. It is important to note that these threats to GREE and DeNA’s dominance of the social gaming market are not particularly strong and that these companies have done a good job of adapting to the fluctuations of the demands of the Japanese public.
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About the Guest Author:
Nida Rasheed is a freelance writer and owner of an outsourcing company, Nida often finds herself wanting to write about the subjects that are closest to her heart. She lives in Islamabad, Pakistan and can be found on Twitter @nidarasheed.