The Japanese gaming market accounts for 16% of the worldwide gaming market. As the third-largest market in the world, the estimated market size, according to Statista, is around $40 billion. This includes all the gaming-related industries, from hardware to in-game advertising —mobile games revenue accounts for over $15 billion, estimated to exceed $20 billion in 2028.
Japan’s strong economy translates into high purchasing power and ubiquitous access to high-end mobile devices. Mobile internet connection rate also reflect Japan’s strong economy. With good hi-tech infrastructure, the average speed of mobile internet connection is above the average broadband connection speeds of most countries, according to Ookla.
Japan’s population is getting older and declining slightly, but this doesn’t mean the mobile games market user pool is diminishing. On the contrary, mobile games market penetration is projected to be 85.0% in 2023 and is expected to increase to 96.9% by 2028. This means that the number of users will exceed 118 million by 2028. A potential user pool that is higher than the population of many countries.
On the other hand, the number of people between the ages of 25 and 44 accounts for more than 63%. The significance of this age range is that they are mostly economically independent, active and contribute to most of the spending.
Looking at this data, the Japanese game market may look like heaven for mobile game developers and publishers, but it’s not all roses and sunshine. First, it’s a very saturated market with its own authentic dynamics. Almost everyone knows about the Japanese pride and their commitment to traditions. Japanese people and their culture are energetic and keen on trying new things but also picky and persistent in their habits.
Japanese people are also enthusiastic gamers, which leads to high game expenditures and revenue per capita. Creating a drawback for outside challengers, the country is home to some of the biggest gaming companies in the world, like Sony and Nintendo, to name a few. Japanese culture and its language also pose a challenge for newcomers to the Japanese game market.
How to penetrate the Japanese game market
Mobile Games
The players in the mobile game industry have a higher chance of surviving in the Japanese mobile game market. Mobile games and gaming hardware get the two largest shares of the market, and Statista predicts it to be so until 2028
Japan has 92.99 million internet users, providing the perfect playground for immersive mobile game experiences. Japan’s gaming market is dominated by handheld consoles, making it the world’s largest market for mobile games.
Esports is making waves, albeit gradually. The Japanese government aims to boost the esports industry by supporting major tournaments. The key players here are Nintendo Switch, Sony PlayStation, and the launch of 5G networks in 2020, influencing the gaming landscape, including the burgeoning cloud gaming market.
A comprehensive marketing with a high budget
According to Testee, referrals by family and friends are the second highest reason for gamers to hear about or pick a game, right after app store searches and rankings, followed by TV programs and commercials with narrow margins.
This means that a comprehensive and holistic marketing and advertising approach is needed, and such campaigns require massive budgets. Even considering a newcomer has an unlimited marketing budget, the campaigns require meticulous data collection, remarketing, optimization, and targeting to be effective.
Meticulous localization, translation, and transcreation are crucial
Besides its culture, the Japanese language differs significantly from Western languages in almost all aspects. Its syntax, intricacies, cultural applications, and conceptual logic are very different. In Japan, 30% of the population can speak English, with less than 10% being fluent despite it being mandatory in schools.
A thorough cultural adaptation process is required when localizing games for the Japanese audience. Japanese have multiple writing systems named kanji, hiragana, katakana, and romaji, which doesn’t make the localization efforts any easier. To top it all off, the Japanese Ministry of Education annually reviews these systems. It has various levels of politeness according to hierarchical status and social dynamics, making the neutral level sound excessively polite and dull in the context of gaming. Gender-based nuances, symbolic intricacies, and color significances also demand careful consideration. Localizing games involves navigating linguistic complexities, ensuring a balance between the informal nature of English source texts and the politeness expected in Japanese translations.
Cultural sensitivity is paramount to success. Religious, tobacco, and drug-related themes must be handled with care, considering the negative perceptions within the Japanese gaming culture. While violence or nudity rarely leads to game bans, stringent censorship prevails, discouraging depictions of murder, torture, or harm to children and innocent individuals.
Additionally, verifying the authenticity of cultural elements prevents confusion, as Japanese and Chinese cultures are often misunderstood. Successful entry into the Japanese gaming market necessitates a nuanced understanding of language and culture, where localization becomes not just a strategy but an essential component of gaming success.
A more solid and tangible example can be given on the typology of heroes. In RPG games, for instance, the Western world favors big, muscular warriors in bulky armor regardless of gender. In Japanese game culture, feisty teenagers going head to head with giant monsters and even triumphing over them is widespread. The Japanese people’s perception and taste of some elements is so different that some games are destined to fade away in the Japanese market, even with a thorough localization. They need to be completely overhauled, even rewritten and re-illustrated. Such differences in style, application, and perception even gave birth to genres like JRPG to emerge as distinctive sub-genres.
These efforts require a considerable budget and access to competent, skilled, creative specialists. The market itself is not an open ground waiting to embrace new competitors. It has many established companies with a long history, experience, and home-field advantage. Game marketing in Japan needs an intricately planned complex campaign. Long story short, the Japanese game market looks intimidating to penetrate, and it should be, but it can be very lucrative for those who are well-prepared and have the means and will to overcome the challenges it represents.
A success story: How Peak Games got a foothold in the Japanese mobile game market?
Istanbul-based Peak Games is the first unicorn to emerge in Turkiye and is a top-tier worldwide mobile gaming company. The company was acquired by Zynga in 2020 for $1.8 billion. The reasons for Zynga’s acquisition are another matter of interest. Peak Games’ largest audience is in the United States, followed by Japan. Zynga acquired Peak Games to set foot in the Japanese mobile game market and then expand into other Asian markets like China and South Korea. To summarize, it’s the story of an American company buying a Turkish company to get a foothold in the Japanese market.
Zynga’s President of Publishing, Bernard Kim, affirms this presumption, stating:
“Japan is strategic to Zynga with regards to growing our presence in Asia, so that’s really where (Peak) is a great, great company for Zynga.”
So what made Peak Games so successful in the Japanese mobile game market that an American company, one of the world’s giants, decided to buy them to get into that market?
They tell the story of their success in Japan on their official website, and what they say confirms what we have been saying in this article. In “Entering a Unique Market, Japan,” they describe how they embraced a complete hands-on approach, discovering cultural clichés, finding proper ways to include or apply them to their games, and communicating back and forth with their local partners and users. They emphasize they didn’t delegate their work to a local partner and expect results, unlike most Western companies.
Peak Games also ran a successful TV campaign in Japan, sticking to the same principles. They changed the style of their illustrations, characters, and sometimes almost all of the game. In digital marketing campaigns in Western markets, starting with a spray-and-pray approach and then focusing on where you hit the target may work. You start with a big budget and a broad audience and then optimize the campaign as you collect data. You may never hit anything with such an approach in the Japanese mobile game market.
Before wrapping up the article, I’d like to give another example of the peculiarity of the Japanese market. In Guns, Germs and Steel, scientist and author Jared Diamond tells about why foreign milk companies cannot compete in the Japanese market:
“The Japanese are fanatics for fresh food. A container of milk in a US supermarket bears one date: the expiration date. In Japan, a milk container bears three dates: the date the milk was manufactured, the date it arrived at the supermarket, and the expiration date. Milk production in Japan always starts at one minute past midnight, so that the milk that goes to market in the morning is today’s milk. If the milk were produced at 11:59 PM, the date on the container would have to indicate that the milk was made yesterday, and no Japanese person would buy it. As a result, Japanese food-processing companies enjoy local monopolies. A milk producer in northern Japan cannot compete in southern Japan because transporting milk there would take several days.”
The Japanese market is unique, with an audience that has distinctive characteristics. Fortunately, the mobile game industry doesn’t have the restrictions the food industry has. Still, Mobile game companies that have an eye on the Japanese market should do their homework well even before attempting to enter the market.
