Japan has a sophisticated mobile gaming market with the potential to accelerate and compete with China, the world’s most mature gaming industry. The Statista data shows that Mobile gaming revenue in Japan reached $13.4B in 2021 which was nearly half of the revenue of China in the same year. This is particularly impressive, considering the size of population and given the aging population in Japan in comparison to the scale of China. Read on to learn how your gaming company can enter Japan’s advanced mobile gaming ecosystem—and thrive.
Since the dawn of video games, Japan has been a global leader in pioneering and developing electronic gaming hardware and software. Names like Sony and Nintendo have long been synonymous with gaming—and they are still relevant today. When smartphone applications first appeared alongside traditional console gaming systems, Japan became the first country to offer downloadable mobile games. As far back as 1999, users could download games like Dragon Quest and Final Fantasy from the NTT DoCoMo platform and play them on their phones.
Japan’s mobile gaming market, with its given long history, is among the most mature in the world with the potential to compete with China.
As described in the “Why is Japan’s ARPU so much higher than other countries” section below, Japanese gamers make more ‘in-game’ purchases than users in other markets. They also regularly rank highest globally for average spend per paying user or average spend per user overall.
Now, a confluence of social factors and technological advances is set to further reshape Japan’s mobile gaming sector. Between changing consumer behavior due to the Covid-19 pandemic and the advent of 5G communication networks, Japan’s mobile gaming sector expects to see further market activation and revenue increase.
However, despite the numerous opportunities afforded to overseas developers by a mature Asian mobile app market, gaming in Japan remains an overwhelmingly cultural force. To outsiders, mystery shrouds the market, and many attempts to break in fail.
It is not surprising, then, that domestic publishers create most of Japan’s top-grossing mobile games. Carefully considered localization of content and marketing assets, then, is indispensable for the success of foreign mobile app developers in the Japanese market.
How big is mobile gaming in Japan?
Japan is home to the world’s 3rd largest mobile gaming industry with consumer spending on smartphone games climbing steadily since 2011. According to the Statista data, the number of smartphone users in Japan is expected to reach over 107M users in 2022.
The sector is part of the larger video game industry, which is very stable in Japan, and generated $21B in revenue for 2021. Mobile gaming revenue in 2021 was $13B, more than half of the revenue for the entire Japanese video game industry. In a global comparison, China’s mobile gaming industry, the most profitable in the world, generated around $32B in the same year, while the US was second-most at the $15B mark.
As the Covid-19 pandemic forces consumers to seek new forms of entertainment at home, in 2020, revenue growth in the Japanese mobile games market saw a spike of 16.2%. By 2022, this percentage is expected to return to pre-pandemic levels. However, even with 2022’s slightly negative projected annual growth rate, by 2026, the sector’s projected market volume will be holding fast around $22B.
Why is Japan’s ARPU so much higher than other countries?
Average revenue per user (ARPU) for mobile games in Japan is incredibly high compared to other markets around the world. For 2022, ARPU in Japan’s mobile games segment is projected to be an impressive $418.99. Meanwhile, worldwide ARPU in the mobile games segment for the same period is only expected to amount to $64.66 in 2022. Put simply: Japanese gamers, on average, spend considerably more than gamers in other countries.
Firstly, in Japan, mobile games are generally free-to-play (F2P) and monetized via the ‘gacha’ mechanism (i.e. in-app purchases for raffle). Gacha games make up almost all of Japan’s blockbuster mobile gaming titles. In 2019, 8% of respondents in a video game survey admitted to spending money on in-app purchases in the past 12 months.
While these insights may be welcome news for overseas developers looking to expand into new markets or increase revenue, when non-Japanese developers approach Japan’s mobile gaming market, expert ‘native’ guidance is essential for effective localization of products and marketing efforts.
Who plays mobile games in Japan?
The number of Japanese mobile gamers is expected to amount to 34.1M by 2024. In 2019, Male dominated the userbase, commanding 64% share and that has decreased to 56% in 2021.
In the same year, middle-aged working adults aged 35–44 made up 33% of users and many of these players consumed gaming content during their commutes.
What are the best-selling games in Japan?
Though there are many blockbuster Japanese mobile gaming titles, these are the three you need to know.
- Fate/Grand Order is a F2P role-playing mobile game (utilizing both historical figures from fantasy and real-life) that serves as an entry into the blockbuster Fate franchise. It was jointly developed by Type-Moon and DelightWorks and published by Aniplex. The game was released in Japan for Android and iOS in summer 2015. An English version launched in the US in June 2017, followed by Southeast Asia and Australia. The game has also been released in China, Taiwan, and South Korea.
- Monster Strike is the highest-grossing mobile app of all time. The Japanese mobile juggernaut was developed by Mixi Inc. for iOS and Android and co-created by Yoshiki Okamoto. It is a role-playing physics game with puzzle, strategy, and cooperative multiplayer elements. With over 40 million downloads (in a nation of 127M people), its devoted fanbase has spawned a pop culture franchise, including an anime adaptation and unique live events.
- Puzzles & Dragons is an F2P puzzle game with role-playing and strategy elements that requires players to move and match colored orbs around a grid. It was created and published by GungHo Online Entertainment for iOS, Android, and Amazon Fire. By October 2018, the game had grossed over $7.2B worldwide and is now the second highest-grossing mobile app of all time. Like Monster Strike, the game’s sprawling franchise consists of several video games and an anime series, Puzzles & Dragons X.
What are the localization challenges for overseas developers?
- Content localization
From a content standpoint, foreign developers’ biggest obstacles in approaching Japan’s mobile game market concern the language barrier.
The Japanese have made foreign words their own and created catchy abbreviations that are not recognized by people from English-speaking countries, like “Kajyuge” which means “Casual Game”.
Another thing that confuses developers is the concept of keigo (respectful language). The honorific speech system in Japanese is a complex but vital part of the country’s linguistic fabric. Therefore, when localizing a video game into Japanese, it is important to understand your target audience clearly.
Additionally, Japanese uses several different writing systems (Hiragana, Katakana and Kanji). From the Western perspective, where language is inherently fixed, some of these systems can be considered ‘subjective.’ The nuance of a sentence might be slightly different depending on which writing system you chose.
In terms of genre, due to the depth and breadth of Japan’s long-standing video game culture, Japanese players have more diverse tastes than their Western counterparts. For instance, games about baseball such as Jikkyou Powerful Pro Major League outperform the football and basketball titles familiar to western gamers. Strategy games like Lords Mobile or Clash of Clans are also less popular in Japan than in the West, and there are no strategy or Match 3 games currently on Japan’s top ten bestseller list.
Finally, Japanese pop culture is very particular and culturally significant at home and abroad. Anime, for instance, is intricately connected to the gaming universe, and very widespread. Games and IP in gaming explicitly connected to pop culture, therefore, often see the highest ratings and strongest sales.
Studies have shown that app localization makes a significant impact on install rates in a target market. For instance, an AdColony study carried out in 2016 found that localized creative content in Japanese increased install rates by 44%.
- Market Launch
The second localization hurdle takes the form of cultural barriers, uniquely Japanese media, and their effect on marketing. To compete successfully with domestic blockbuster titles, concentrated promotional efforts at the time of a game’s release in Japan are imperative. Gaming companies must approach their marketing strategy with a comprehensive understanding of unique Japanese media, such as LINE and Smartnews. LINE, which began as a messaging service then expanded to include social media, news, and payment services, is especially important. In 2019, LINE’s annual revenue topped more than 227 billion Yen (2.16 billion USD). Within Japan’s social media market, LINE’s audience reach is more than double that of its leading global competitors, including Twitter, Instagram, and Facebook.
Furthermore, understanding the target audience and user characteristics for each channel is critical for developing effective ad creative. Comprehensive A/B testing from different angles can help demystify user behavior and lead to the creation of compelling media-specific.
How can my business break in?
Irep Inc. can help localize your mobile gaming content for optimum performance in Japan’s nuanced mobile gaming ecosystem. By overcoming complicated cultural and linguistic obstacles to market entry together, we help ensure that your game receives maximum visibility in Japan as well as Asia more broadly.
The specific mobile gaming-focused solutions we offer include:
- Data-driven support for app content creation, sales methods, ASO, and more
- Strategic target selection and site policy formulation using behavioral data
- Strategize and execute integrated marketing campaigns, including online & offline media
- Strategize and implement performance-based marketing
- Social media and influencer marketing
- Localization of creative and marketing materials
- Consultation for localized app design, testing, and quality assurance
- User testing of prototypes and user interviews
- Localized app implementation
Want to know more about the mobile gaming landscape in Japan?
Contact us to discuss how we can work together.
Irep Inc. is an award-winning global digital marketing agency based in the San Francisco Bay Area. Our headquarters are in Tokyo and our network spans more than 20 countries. In Japan, we are ranked No. 1 for performance-based marketing. We also offer highly specialized market entry, as well as integrated marketing and localization services. Since 1997, our data-driven solutions have effectively led our diverse international clientele to continuous success in Japan, Asia, and beyond.