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Japanese Video Gaming Trends      Past, Present & Future                               1
Japanese Video Game Market Size                       Source: Famitsu by ENTERBRAIN, INC. (Japan)   2
Japanese Video Gaming Timeline        Data Collected from December 29, 1986 to December 26, 2010        100 Millions of JP...
Arcade Gaming Sales in Japan                    250                    200Sales/Billion Yen                    150        ...
Arcade Gaming in JapanDemographics•   Over 19,000 amusement arcades in Japan•   3.94 arcades per 100,000 people•   Arcade ...
Arcade Gaming in JapanTop Genres:•   Board games•   Horse Racing•   Pachinko•   Trading card games                        ...
Arcade Gaming in JapanMajor Developers/Publishers:•   Namco Bandai•   Taito•   Sega•   Capcom•   Konami                   ...
Arcade Gaming in JapanMarket Drivers   67                            Urbanization Growth In Japan  66.5   66  65.5   65  6...
Arcade Facilities in Japan                Market Trends and Overview Units $Billions700600500400300200100 0         2004  ...
Arcade Facilities in Japan     Market Trends and Overview           DOMESTIC ARCADE FACILITY MARKET                       ...
Arcade Facilities in Japan                Market Trends and Overview                      Over 101 machines    51~100 mach...
Arcade Facilities in Japan       Market Trends and OverviewSpreading fear of "Swine Flu Contamination " that gaverise to "...
Arcade Facilities in Japan    Market Trends and OverviewMulti-player network games grew in popularity              Source:...
Console Gaming in JapanBackground•   1970s: Atari started the market•   1980s: NEC, Nintendo and Sega•   2000s: Nintendo, ...
Console Gaming in JapanConsoles unique to Japanese market:•   PSX - hybrid of PS1, PS2 and XMB•   Panasonic Q - Hybrid of ...
Console Gaming in Japan - PortableBackground        1980   Game & Watch (Nintendo)        1989   Game Boy (Nintendo), Lynx...
Console Gaming in Japan - Home ConsoleBackground         1977   TV Jack 1000, 1200, 1500, 2500, 3000 (Bandai)         1978...
Console Gaming in Japan - Home ConsoleBackground             1991   MegaCD (Sega), PC Engine Duo, Super CD-ROM (NEC)      ...
Console Gaming in JapanBackground                       35                              Total Console Unit Sales in Japan ...
Console Gaming in JapanDemographics      <18 YRS   18-35 YRS   36 YRS>         Male         Female    36%                 ...
Console Gaming in JapanPreferences driven by culture and brand loyalty•   Sony PS3 and Nintendo WII dominate•   Xbox 360 h...
Console Gaming in Japan                   Preferences                                                     Nintendo WII and...
Console Gaming in JapanPreferences              Portable Console Ownership in Japan (2011)         50         45          ...
Console Gaming in Japan vs. AmericaPreferences (Top 3 Desktop Consoles)                              North America   Japan...
Console Gaming in JapanDevelopers/PublishersNintendo (“Leave luck to heaven”)•   World’s largest gaming company by revenue...
Console Gaming in JapanNintendo-Business Model                    This key strategy has enabled Nintendo       to become t...
PC Gaming in JapanBackground•   1970-1995 was the golden age of PC gaming, with NEC and Toshiba developing their    own mi...
PC Gaming in JapanBackground•   Decline since mid 1990s•   Least popular game platform today•   Further eroded by social a...
PC Gaming in JapanTrends•   PC gaming in Japan recently growing again•   Shift from physical media to online•   Shift from...
Key Statistics - Japanese Video Gaming Industry   510 Billion Yen           469.2 Billion Yen           • YoY: 9 % Revenue...
Japan vs. USA Major Console Shipments (2005-2012)   Japan   USA                                          Source: VGCHARTZ ...
Japan vs. USA Hardware Shipments (2007-2011)                                                USA Hardware Year-Over-Year Co...
Market Value ofOnline Game Content in Japan                      Source: Famitsu by ENTERBRAIN, INC. (Japan)   33
Japanese Market Share Based on                 Actual Sales FY 201120%18%16%14%12%10%8%6%4%2%0%      Nintendo   Namco    C...
Japanese Gaming Demographics                        Japanese gamers are predominantly male.40% are female with interests i...
Japanese vs. US Video Gaming          • Realism vs. Fantasy (self escapism vs. self            expression)          • Genr...
Japanese User Preferences: GenreTop – 3 Genres In Japanese Video Game Industry in 2010                1. ACTION           ...
Japanese User Preferences: Genre Market Share in Percentiles                               Source: Famitsu by ENTERBRAIN, ...
Japanese User Preferences: Genre   Best Selling Games in Top – 3 Genres• Monster Hunter         • Pocket Monster       • T...
Platform Usage in Japan       What portable game console do        they currently use the most        ?        MALE       ...
Platform Usage in JapanHow often do they use game consoles          11%                                              ?    ...
Platform Usage in Japan   How long do they use theconsole for videogames per day                 ?            14%         ...
Platform Usage in JapanHow long do they use the console for    videogames per weekends               ?       10.30%       ...
Platform Usage in JapanIf there is any variation in the frequency andtime of playing videogames with portableconsoles comp...
Platform Usage in JapanWhere do they use portable game consoles                                                  ?    50.4...
Platform Usage in Japan                    Survey brought out …                                           Train           ...
Japanese User Preferences:Gaming Platforms Ranking W.R.T Sales                              Console Sales in Japan during ...
Top Selling Games            in Japan During FY20111,200,000                                                              ...
Top Publishers in               Japanese Video Gaming Industry                                    2011 Combined Unit2011 R...
Growth Trends in Japan 2000-2011                                        Japan Video Game Market Value History.            ...
Social/Mobile Gaming in JapanBackground•    Increasing use of mobile phones            •    Social gaming market worth $3....
Recent Social/Mobile Gaming                       Developments in JapanBackground                                         ...
Japan’s Social Game       Market Size in FY2011     US$5.4 billion                                          US$3.6 billion...
Japan’s Social Game           Market Size in FY2011     Smart Phones                        Feature Phones        US$8.3 b...
Business Model in Japanese Mobile Content Market                                                                     Out o...
Social/Mobile Gaming in JapanBackground                            Mobile Revenue/Phone category (2011)                   ...
Social/Mobile Gaming in JapanBackground                    Forecast for # of Paying Social Games Players in Japan         ...
Social/Mobile Gaming in Japan          Forecast for Average Revenue per Paying Users (ARPPU) in Japan$60.00               ...
Social/Mobile Gaming in JapanBackground      100       90                                                                 ...
Social/Mobile Gaming in Japan Background100.0%                                                                          Ga...
Social/Mobile Gaming in JapanCurrent Trends• Mobile games:   • Downloaded as Apps on smartphones   • Preinstalled on featu...
Social/Mobile Gaming in Japan                           Forecast of SNS users in Japan60           Growth in SNS adoption ...
Social/Mobile Gaming in Japan90                     Mobile Users Activity in Japan (2011)              81.7%80            ...
Social/Mobile Gaming in JapanBackground    70       Percentage of Mobile Internet Users using browsers on mobile devices (...
Social/Mobile Gaming in JapanOS share of market                     Japan Smartphone/Feature phone Penetration            ...
Social/Mobile Gaming in JapanOS share of market                      Japan Smartphone Market Share by OS (2011)           ...
Social/Mobile Gaming in JapanDemographics     70.0%                                                             Male      ...
Social/Mobile Gaming in JapanDemographics  60.0%                             53.8%  50.0%                                 ...
Social/Mobile Gaming in JapanDemographics                     Social Mobile Gaming User Activity for Japan (2011)         ...
Social/Mobile Gaming in JapanPreferences              Medium of choice for playing                 social games (2011)    ...
Social/Mobile Gaming in JapanPreferences               Frequency of Mobile game                  playing in Japan -% of   ...
Social/Mobile Gaming in JapanPreferences                Where they usually play their mobile devices (2011)  80%          ...
Social/Mobile Gaming in JapanPreferences              On which machine do you usually play games (2011) 80           76% 7...
Social/Mobile Gaming in JapanPreferences         Which do you access Social games from more: Mobile or PC                 ...
Social/Mobile Gaming in JapanPreferences      % of population that have played mobile social game in Japan (2011)         ...
Social/Mobile Gaming in JapanPreferences                 Do you want to buy a               Smartphone (Mobile Phone      ...
Social/Mobile Gaming in JapanPreferences                   Do you want to keep playing                   social games (Sma...
Social/Mobile Gaming in Japan  Preferences                Top 5 Venues for Playing mobile games in Japan (2011)           ...
Social/Mobile Gaming in JapanPreferences        Top 3 Countries by Revenue          Top 3 Countries by Revenue            ...
Social/Mobile Gaming in JapanPreferences                                           Top 3 Fastest Growing by Revenue      T...
Social/Mobile Gaming in JapanPreferences                       Top Fastest Growing Countries in Terms of Revenue in    600...
Social/Mobile Gaming in JapanPreferences                                   Mobile Social Game Players in Japan (2011)     ...
Social/Mobile Gaming in JapanPreferences                              25                                           Japanes...
Social/Mobile Gaming in JapanPreferences               Japan Iphone Apps downloaded by Users by App category (2011)       ...
Social/Mobile Gaming in JapanPreferences                                              60% 50%                             ...
Social/Mobile Gaming in Japan    Preferences                         Share of Total Traffic by                       Non-C...
Social/Mobile Gaming in JapanPreferences                 Percent of Mobile Phone users who also own a Tablet       JAPAN  ...
Social/Mobile Gaming in JapanMarket Drivers• Kompu Gacha is a huge revenue driver for social in-game purchase• Freemium bu...
Social/Mobile Gaming in JapanMarket Drivers•   Increase in mobile penetration•   Integration between mobile and social gam...
Social/Mobile Gaming in Japan“Kompu Gacha”- Revenue Generation Model                                          Source: SERK...
Social/Mobile Gaming in JapanRevenue Model Validation  35.0%                                    Kind of items purchased   ...
12 Current Social/Mobile                    Gaming Trends in JapanPresent Trends1. Most social games offer free elements c...
12 Current Social/Mobile                    Gaming Trends in JapanPresent Trends2. Focus on genre that supports female par...
12 Current Social/Mobile                    Gaming Trends in JapanPresent Trends3. Subscription and in-game item sales    ...
12 Current Social/Mobile                    Gaming Trends in JapanPresent Trends4. Enhanced capabilities to up-sell, cross...
12 Current Social/Mobile                   Gaming Trends in JapanPresent Trends5. Overseas acquisitions and mergers to ent...
12 Current Social/Mobile                     Gaming Trends in JapanPresent Trends6. Selling games for playing on smartphon...
12 Current Social/Mobile                     Gaming Trends in JapanPresent Trends7. Virtual wallet is integrated into soci...
12 Current Social/Mobile                  Gaming Trends in JapanPresent Trends8. Strong cultural difference between Wester...
12 Current Social/Mobile                  Gaming Trends in JapanPresent Trends9. (Relatively) low development costs - popu...
12 Current Social/Mobile                   Gaming Trends in JapanPresent Trends10. Short product lifecycle                ...
12 Current Social/Mobile                    Gaming Trends in JapanPresent Trends11. Different pricing strategies          ...
12 Current Social/Mobile                  Gaming Trends in JapanPresent Trends11. Gaming community creates and expands con...
Special GenresSocial Gaming Genres  PET-BREEDING                 CITY BUILDING FARMING                 RESTAURANT         ...
Special GenresManga-based Social Games                           105
Special Genres  Social RPGS                 106
Special GenresSocial Dating and Love Simulations                                     107
Special GenresSocial Idol-raising Games                            108
Special Genres               Social Collectible Card GamesTitle Screen             My Page Screen   Battle Screen         ...
Future Trends in Japan’s Social Gaming Industry                                             110
7 Future Social/Mobile                 Gaming Trends for JapanFuture Trends•   Augmented reality using smartphone features...
7 Future Social/Mobile                 Gaming Trends for JapanFuture Trends•   Growth in Near Field Communication (NFC) ad...
7 Future Social/Mobile                  Gaming Trends for JapanFuture Trends•   Location-based features of Smartphone to b...
7 Future Social/Mobile                  Gaming Trends for JapanFuture Trends•   3D holograms and voice control•   Inbuilt ...
7 Future Social/Mobile                  Gaming Trends for JapanFuture Trends•   In-built Projection of stored media       ...
7 Future Social/Mobile                  Gaming Trends for JapanFuture Trends•   Market fragmentation due to different oper...
7 Future Social/Mobile                  Gaming Trends for JapanFuture Trends•   HTML 5 will support cross platform integra...
Japans Social Game Market                       Experiencing rapid growthSales in 100 Million Yen1400                     ...
Potential Venue for Game Development                      Key Peculiarity: Facebook Japan                  Facebook Users ...
Social/Mobile Gaming in JapanPreferences                Forecast for Mobile Penetration in Japan (2011)     80.00         ...
Social/Mobile Gaming in JapanRevenue Allocation on Social/Mobile Apps Feature Phone Market                                ...
Top Publishers in JapaneseMobile & Social Gaming Sector              Source: MOBILE SOCIAL GAMING MARKET GUIDE 2011 Publis...
Social/Mobile Gaming in JapanPlatforms• Most users access via mobile phones• Top platforms:    1. DeNA (Mobage Town) over ...
Social/Mobile Gaming in JapanPublishers/DevelopersGREE        • A top mobile game developer, publisher and social mobile g...
Social/Mobile Gaming in JapanPublishers/DevelopersGREE• GREE Mobile social gaming platform was launched in 2012 enabling g...
Social/Mobile Gaming in JapanPublishers/DevelopersGREE• Global expansion into Western market with purchase of Openfeint an...
Social/Mobile Gaming in JapanPublishers/DevelopersGREE• Formed new partnership with Namco Bandai                          ...
Social/Mobile Gaming in JapanPublishers/DevelopersGREE• GREE Platform support for 15 languages to be launched             ...
Social/Mobile Gaming in JapanPublishers/DevelopersGREE• Revenue generation through:    •   Advertising (advertising sales)...
Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes• Paprika (South Korea mobile social game developer)  ...
Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes• IUGO (San Francisco based social mobile game develop...
Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes• Funzio                                      Source: ...
Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes    Openfeint    • Social platform operating on IOS an...
Social/Mobile Gaming in JapanSNS Business Model: GREE Primer    GREE Ad space                                             ...
Social/Mobile Gaming in JapanAcquisition of Funzio (Sales and position in the market)                     Sales14         ...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNA           • Top social mobile game publisher, main competition to G...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNA              • Launched Mobage platform through its acquisition of ...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNA          • Global alliance was launched with Disney Studios to reac...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNA• Increased monetization methods introduced across game titles      ...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNAMajor subsidiaries include:                                       • ...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNAMajor subsidiaries include:• DeNA China (Mobage services in China) •...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNAMajor subsidiaries include:    • Grasshopper (Japanese mobile   • Pl...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNATypes of games include:                                          • R...
Social/Mobile Gaming in JapanDevelopers/PublishersDeNA (Mobage)        1000                         917    # of Mobage Soc...
Social/Mobile Gaming in Japan                     Going mobile pays!!!Mobile-based (GREE and Mobage) more profitable than ...
Social/Mobile Gaming in Japan                   Going mobile pays!!!   Though Zynga has more users worldwide than GREE and...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Japan is a gaming nation    • 10%₁ s...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!                              • Japan ...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Card battle games are popular    • A...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!•   Higher pay walls acceptance     • ...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!•   Smooth and easy mobile payment sys...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!•   Focused and aggressive marketing c...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Pre-Installation on handsets    •   ...
Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!•   Anonymity /virtual nature of socia...
Japanese SNS Usage by Platform100                                                                                         ...
Japanese SNS Demographics      Male Users   > Female users      Age Brackets of 15-19 & 20-29                             ...
Paid-For Usage       on Social Game Content in Japan80007000                                                              ...
Video Game UsageAmong Social Gamers in Japan   Video Game Usage by Social Gamers  Non Video  Game Users     23%           ...
Video Game Usage          Among Social Gamers in Japan          Video Game Platform belonged to Social Gamers7060504030201...
Video Game Usage            Among Social Gamers in Japan       Video Game Usage by Gender/Age (Social Gamers)40353025     ...
Social Gaming Impacton Video Game Usage in JapanVideo Game Usage Frequency by Social Gamers            Fairly Increased,  ...
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
Japanese Video Game Market Overview 2012
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Japanese Video Game Market Overview 2012

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A macro-level overview of the Japanese video game market, including history and a forecasts as to where things are headed.

Recommended for those interested in the mobile and social gaming space. When it comes to mobile in particular, trends that happen in Japan are often a bellwether indicator of where the entire industry is going once the global market matures.

The folks at App Annie recently claimed that Japan has become the top country for Google Play revenues, and GMO’s report points out that the nation is the fastest growing country (560 percent) in terms of revenue on Apple’s app store (citing Distimo, June). So it’s certainly a market that you want a piece of if you’re a mobile app or game developer.

If you are a game developer considering selling your game in Japan, please contact us via infous@gmocloud.com

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Transcript of "Japanese Video Game Market Overview 2012"

  1. 1. Japanese Video Gaming Trends Past, Present & Future 1
  2. 2. Japanese Video Game Market Size Source: Famitsu by ENTERBRAIN, INC. (Japan) 2
  3. 3. Japanese Video Gaming Timeline Data Collected from December 29, 1986 to December 26, 2010 100 Millions of JPY8000 2006: 1996: Playstation 3, 2000: Nintendo 64 Wii Playstation 27000 1994: 1998: 2005: 3DO Real, NeoGeo Xbox 360 1990: Sega Saturn,6000 Pocket, NeoGeo, PlayStation Dreamcast 2002: Game Gear, PC-FX XBox SNES5000 1988: Genesis4000 1999: WonderSwan 1995: Virtual Boy 2004:3000 Nintendo DS, 1989: PlayStation Gameboy Portable2000 1987: TurboGrafx-161000 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Famitsu by ENTERBRAIN, INC. (Japan) 3
  4. 4. Arcade Gaming Sales in Japan 250 200Sales/Billion Yen 150 100 50 0 2004 2005 2006 2007 2008 2009 2010 Year Source: JAMAA 4
  5. 5. Arcade Gaming in JapanDemographics• Over 19,000 amusement arcades in Japan• 3.94 arcades per 100,000 people• Arcade games played across all age groups• 30% of arcade video game players over 60 Source: Amusement Industry Survey Report 2011, CAPCOM CO., LTD. (Japan) 5
  6. 6. Arcade Gaming in JapanTop Genres:• Board games• Horse Racing• Pachinko• Trading card games Source: Amusement Industry Survey Report 2011, CAPCOM CO., LTD. (Japan) 6
  7. 7. Arcade Gaming in JapanMajor Developers/Publishers:• Namco Bandai• Taito• Sega• Capcom• Konami Source: Amusement Industry Survey Report 2011, CAPCOM CO., LTD. (Japan) 7
  8. 8. Arcade Gaming in JapanMarket Drivers 67 Urbanization Growth In Japan 66.5 66 65.5 65 64.5 64 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Growth in urbanization has fuelled a boom in arcade video gaming. Source: WORLD BANK 2011 (Japan) 8
  9. 9. Arcade Facilities in Japan Market Trends and Overview Units $Billions700600500400300200100 0 2004 2005 2006 2007 2008 2009 2010 Source: Survey on the Amusement Industry, 2011, JAMMA (Japan Amusement Machinery Manufacturers Association) 9
  10. 10. Arcade Facilities in Japan Market Trends and Overview DOMESTIC ARCADE FACILITY MARKET 504.3 Billion yen 12.0% Decrease fromFY2008 FY2009 FY2010 previous year Shrank for the third straight year Source: Survey on the Amusement Industry, 2011, JAMMA (Japan Amusement Machinery Manufacturers Association) 10
  11. 11. Arcade Facilities in Japan Market Trends and Overview Over 101 machines 51~100 machines Below 50 machines30,000 (Units: Stores)25,00020,00015,00010,000 5,000 0 2004 2005 2006 2007 2008 2009 2010 Years Ended March 31 Currently operating store fronts: 19,213 Source: Survey on the Amusement Industry, 2011, JAMMA (Japan Amusement Machinery Manufacturers Association) 11
  12. 12. Arcade Facilities in Japan Market Trends and OverviewSpreading fear of "Swine Flu Contamination " that gaverise to "nesting consumers" who avoided going out,resulting in fewer customers in arcades. Source: Survey on the Amusement Industry, 2011, JAMMA (Japan Amusement Machinery Manufacturers Association) 12
  13. 13. Arcade Facilities in Japan Market Trends and OverviewMulti-player network games grew in popularity Source: Survey on the Amusement Industry, 2011, JAMMA (Japan Amusement Machinery Manufacturers Association) 13
  14. 14. Console Gaming in JapanBackground• 1970s: Atari started the market• 1980s: NEC, Nintendo and Sega• 2000s: Nintendo, Sony and MicrosoftTop Consoles Today:• PlayStation 3• XBOX 360• WII 14
  15. 15. Console Gaming in JapanConsoles unique to Japanese market:• PSX - hybrid of PS1, PS2 and XMB• Panasonic Q - Hybrid of GameCube and DVD Player• Dreamcast Divers 2000 CX1• Nintendo Astro Boy Game Boy• Sony Gold Gundam PlayStation 2 15
  16. 16. Console Gaming in Japan - PortableBackground 1980 Game & Watch (Nintendo) 1989 Game Boy (Nintendo), Lynx (Atari) 1990 Game Gear (Sega), PC Engine GT (NEC) 1994 Game Boy Bros. (Nintendo) 1995 Virtual Boy (Nintendo) 1996 Game Boy Pocket (Nintendo) Game Boy Light, Game Boy Color (Nintendo) 1998 Neogeo Pocket (SNK) 1999 WonderSwan (Bandai), Neogeo Pocket Color (SNK) 2000 WonderSwan Color (Bandai) 2001 Game Boy Advance (Nintendo) 2002 Swan Crystal (Bandai) 2003 Game Boy Advance SP (Nintendo) Nintendo DS (Nintendo) 2004 PSP (SCE) 2005 Nintendo DS Lite, Game Boy micro (Nintendo) 2008 PSP 3000 (SCE) 2009 PSP Go (SCE) 2011 Nintendo 3DS (Nintendo) 2012 PlayStation Vita (Nintendo) Source: COMPUTER ENTERTAINMENT SUPPLIERS ASSOCIATION 2012 16
  17. 17. Console Gaming in Japan - Home ConsoleBackground 1977 TV Jack 1000, 1200, 1500, 2500, 3000 (Bandai) 1978 Visicom (Toshiba) Video Computer System (made by Atari, sold by Epoch) 1979 Supervision8000 (Bandai) Cassette vision (Epoch), Pyu-Ta (Tomy) 1981 Game Pasocom M5 (Sword / Takara) Max Machine (Commodore) Family Computer (Nintendo), SG-1000, SC-3000 (Sega) PV-1000 (Casio), Osero Maltibision (Tsukuda) 1983 TV Boy (Gakken), My Vision (Kanto Denshi / Nihon Bussan) Cassette vision Jr. (Epoch) SG-1000 II (Sega), Super Cassette vision (Epoch) 1984 RX-78 (Bandai), Pyu-Ta Mk II (Tomy) 1985 Sega Mark III (Sega) 1986 DiscSystem (Nintendo), Twin Famicom (Sharp) 1987 Master System (Sega), PC Engine (NEC) 1988 Megadrive (Sega), CD-ROM (NEC) 1990 Super Famicom (Nintendo), Neogeo (SNK) Source: COMPUTER ENTERTAINMENT SUPPLIERS ASSOCIATION 2012 17
  18. 18. Console Gaming in Japan - Home ConsoleBackground 1991 MegaCD (Sega), PC Engine Duo, Super CD-ROM (NEC) 1992 Wondermega (Victor) 1993 Laser Active (Pioneer) PlayStation (SCE), 3DO Real (Panasonic) 3DO Try (Sanyo), Saturn (Sega), PC-FX (NEC) 1994 Playdia (Bandai), Neogeo CD (SNK) Super 32X (Sega) 1996 Nintendo 64 (Nintendo), PiPPiN@Atmark (Bandai) 1998 Dreamcast (Sega) 2000 PlayStation 2 (SCE), PSone (SCE) 2001 Nintendo GameCube (Nintendo) 2002 X box (Microsoft) 2003 PSX (Sony) 2005 X box 360 (Microsoft) 2006 Family Computer (Nintendo), SG-1000, SC-3000 (Sega) 2006 PS3 (Sony) Source: COMPUTER ENTERTAINMENT SUPPLIERS ASSOCIATION 2012 18
  19. 19. Console Gaming in JapanBackground 35 Total Console Unit Sales in Japan 30 25 SALES/MILLION UNITS 20 15 10 5 0 Source: Famitsu by ENTERBRAIN, INC. (Japan) 19
  20. 20. Console Gaming in JapanDemographics <18 YRS 18-35 YRS 36 YRS> Male Female 36% 36% 44% 56% 28% Source: Famitsu by ENTERBRAIN, INC. (Japan) 20
  21. 21. Console Gaming in JapanPreferences driven by culture and brand loyalty• Sony PS3 and Nintendo WII dominate• Xbox 360 has smaller following• Role playing games popular among both genders• Portable consoles popular due to long train commutes 21
  22. 22. Console Gaming in Japan Preferences Nintendo WII and PS3 sales in Japan 2006-2011 4.0 3.5Yearly Units (Millions) 3.0 PS3 Wii 2.5 2.0 1.5 1.0 0.5 0.0 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Source: VGCHARTZ
  23. 23. Console Gaming in JapanPreferences Portable Console Ownership in Japan (2011) 50 45 Male Female 40 35 30 25 % 20 15 10 5 0 Nintendo GB Nintendo GBA Nintendo DS PSP WondeSwan Source: MIKEMACE.COM 23
  24. 24. Console Gaming in Japan vs. AmericaPreferences (Top 3 Desktop Consoles) North America Japan 50 45 40 35 Sales/Million Units 30 25 20 15 10 5 0 Wii (Wii) Xbox 360 (X360) PlayStation 3 (PS3) Source: VGCHARTZ 24
  25. 25. Console Gaming in JapanDevelopers/PublishersNintendo (“Leave luck to heaven”)• World’s largest gaming company by revenue• Formed in 1889 and based in Kyoto• Sales of 565m and 3.4bn hardware and software units respectively₁• 19% market share of the Japanese video game market ₁• Major manufacturer of home and portable consoles Source: NINTENDO FS 2012 (Japan) 25
  26. 26. Console Gaming in JapanNintendo-Business Model This key strategy has enabled Nintendo to become the most profitable of the 3 major console manufacturers Source: ELIZABETH MENOZZI BUSINESS INSIGHTS 26
  27. 27. PC Gaming in JapanBackground• 1970-1995 was the golden age of PC gaming, with NEC and Toshiba developing their own microprocessor used on PCs• Advent of windows 95 led to the decline in overall PC gaming in Japan• PC games share of the market is constantly being eroded by the increase in social and mobile gaming• PC gaming lags behind as the least platform of adoption in Japan• PC gaming in Japan has seen increased growth recently• Historically PC games are usually a variant of console games 27
  28. 28. PC Gaming in JapanBackground• Decline since mid 1990s• Least popular game platform today• Further eroded by social and mobile gaming• Role playing most popular genre 28
  29. 29. PC Gaming in JapanTrends• PC gaming in Japan recently growing again• Shift from physical media to online• Shift from solo to social• Good opportunity for foreign titles 29
  30. 30. Key Statistics - Japanese Video Gaming Industry 510 Billion Yen 469.2 Billion Yen • YoY: 9 % Revenue Decreased Primary Reasons for Negative Growth Source: Famitsu by ENTERBRAIN, INC. (Japan) 30
  31. 31. Japan vs. USA Major Console Shipments (2005-2012) Japan USA Source: VGCHARTZ 31
  32. 32. Japan vs. USA Hardware Shipments (2007-2011) USA Hardware Year-Over-Year Comparison 10M 2007 8M 2008 2009 2010 2011 6MUnits Sold 4M 2M OM Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Japan Hardware Year-Over-Year Comparison 3500K 3000K 2007 2008 2009 2500K 2010 2011Units Sold 2000K 1500K 1000K 500K OK Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: VGCHARTZ 32
  33. 33. Market Value ofOnline Game Content in Japan Source: Famitsu by ENTERBRAIN, INC. (Japan) 33
  34. 34. Japanese Market Share Based on Actual Sales FY 201120%18%16%14%12%10%8%6%4%2%0% Nintendo Namco Capcom Square-Enix Pokemon Konami Sega SCE TECMO Level Five Others Bandai KOEI GAMES Source: Famitsu by ENTERBRAIN, INC. (Japan) 34
  35. 35. Japanese Gaming Demographics Japanese gamers are predominantly male.40% are female with interests in SNS andarcade games. Age range of hardcore gamers are between 16-45. Older women are increasing involved in playing especially arcade games. Source: Digi-Capital Investment Review 2012, SERKANTOTO.COM 35
  36. 36. Japanese vs. US Video Gaming • Realism vs. Fantasy (self escapism vs. self expression) • Genre differences e.g. RPG • Philosophy (symbolic world, emphasis on diligence and tasks, exotic settings) • Huge infusion of Anime/Manga in Japanese games • Need for console customization 36
  37. 37. Japanese User Preferences: GenreTop – 3 Genres In Japanese Video Game Industry in 2010 1. ACTION • Market Share: +16.3% w.r.t 2009 = 42.1% • 26.468 million copies sold 2. RPG • Market Share: 24.30 % • 15.2 million copies sold 3. OTHERS • Market Share: 9.40% • 5.9 million copies sold Source: Famitsu by ENTERBRAIN, INC. (Japan) 37
  38. 38. Japanese User Preferences: Genre Market Share in Percentiles Source: Famitsu by ENTERBRAIN, INC. (Japan) 38
  39. 39. Japanese User Preferences: Genre Best Selling Games in Top – 3 Genres• Monster Hunter • Pocket Monster • Tomodachi Portable 3rd Black/White Collection.• 3.48M copies sold • 4.914M Copies Sold • Wii PartyACTION RPG OTHER Source: Famitsu by ENTERBRAIN, INC. (Japan) 39
  40. 40. Platform Usage in Japan What portable game console do they currently use the most ? MALE FEMALE 10.00% 19% Playstation Playstation Portable PSP 27.40% Portable PSP 47% Nintendo DS Lite Nintendo DS Lite Nintendo DS 52.20% Nintendo DS34% Source: NET ASIA CO., LTD. 40
  41. 41. Platform Usage in JapanHow often do they use game consoles 11% ? Less than 1 day a week 12% 37% Every day 2/3 days a week 4/5 days a week 15% 1 day a week 25% Source: NET ASIA CO., LTD. 41
  42. 42. Platform Usage in Japan How long do they use theconsole for videogames per day ? 14% 29% 1 hour during weekdays Less than 15 minutes17% Almost 2 hours Almost 30 minutes More than 5 hrs/day 18% 22% Source: NET ASIA CO., LTD. 42
  43. 43. Platform Usage in JapanHow long do they use the console for videogames per weekends ? 10.30% 21.60% 1 hour 3 hour 18.10% 2 hour More than 5 hours 18.50% Source: NET ASIA CO., LTD. 43
  44. 44. Platform Usage in JapanIf there is any variation in the frequency andtime of playing videogames with portableconsoles compared with a year ago ? 22.20% Increased Decreased 33.90% Source: NET ASIA CO., LTD. 44
  45. 45. Platform Usage in JapanWhere do they use portable game consoles ? 50.40% My Room Living Room 81.50% Source: NET ASIA CO., LTD. 45
  46. 46. Platform Usage in Japan Survey brought out … Train 6.50% Friends/ 14.20% Acquaintances house 10.30% Outside Home Car 11.60%Most people use their portable game consoles at home……! Source: NET ASIA CO., LTD. 46
  47. 47. Japanese User Preferences:Gaming Platforms Ranking W.R.T Sales Console Sales in Japan during FY2011 4500000 4000000 Number of consoles sold 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 Nintendo 3DS Sony PSP Sony Nintendo Wii Nintendo DS Playstation Xbox 360 Playstation 3 Vita Source: Famitsu by ENTERBRAIN, INC. (Japan) http://goo.gl/H4rLD 47
  48. 48. Top Selling Games in Japan During FY20111,200,000 Number of copies sold1,000,000 800,000 600,000 400,000 200,000 0 Mario Kart 7 Super Mario Monster Monster Final Fantasy Final Fantasy (Nintendo 3D Land Hunter Hunter 3G XIII-2 (Sony Type-0 (Sony 3DS) (Nintendo Portable 3rd (Nintendo PS3) PS3) 3DS) (Nintendo 3DS) 3DS) Source: Famitsu by ENTERBRAIN, INC. (Japan) http://goo.gl/H4rLD 48
  49. 49. Top Publishers in Japanese Video Gaming Industry 2011 Combined Unit2011 Ranking Publisher Sales Share 1 Nintendo 10,667,868 (Down) 20.8% 2 NAMCO BANDAI 8,377,529 (Up) 16.3% Games 3 CAPCOM 4,802,106 (Down) 9.4% 4 SQUARE ENIX 4,725,621 (Down) 9.2% 5 KONAMI 3,492,342 (Down) 6.8% 6 SEGA 2,221,138 (Down) 4.3% 17 TECMO KOEI Games 2,127,995 (Up) 4.1% 8 LEVEL-5 2,016,654 (Up) 3.9% 9 SCEJ (SONY) 1,629,310 (Down) 3.2% 10 Pokemon 1,219,325 (Down) 2.4% Source: FAMITSU (Japan) MARKETING DATA SERVICE, Yearly Report CY 2011 49
  50. 50. Growth Trends in Japan 2000-2011 Japan Video Game Market Value History. 8,000.0 Software Hardware 7,000.0 6,000.0 5,000.0100 Million of JPY 4,000.0 3,000.0 2,000.0 1,000.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: FAMITSU (Japan) GAMING RESEARCH 2011 50
  51. 51. Social/Mobile Gaming in JapanBackground• Increasing use of mobile phones • Social gaming market worth $3.26bn since early 1990s in 2011 (y-o-y growth of 80%)• Early 2000s: • Expected to surpass domestic • Upswing in mobile gaming console sales by 2014 • Popular arcade titles ported to mobile• Mobile phones no. 1 platform for social/mobile gaming today Source: MINISTRY OF INTERNAL AFFAIRS AND COMMUNICATIONS (Japan) 51
  52. 52. Recent Social/Mobile Gaming Developments in JapanBackground GREE partners with DeNA acquires GREE acquires Chinese IT giant Ngmoco 100% ownership Tencent of Openfeint Smartphones DeNA expands GREE starts providing "Tsuri-Sta" Version of Smartphone services and "Pirate Kingdom Columbus" GREE launches "Mixi" launched worldwide paid for service to IPhone and Android on Iphone May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 DeNA rebrands from Capcom releases new Mixi announces new platforms GREE sets up its first "Mobage Town" to "Monster Hunter" social "Mixi Plugin" and "Mixi Graph API" US based subsidiary "Mobage" game for Mobage “Yahoo Mobage” hits 3 million users DeNA partners with Japanese mobile telecom major NTT Docomo Source: DIGICAPITAL INVESTMENT REVIEW 2012 52
  53. 53. Japan’s Social Game Market Size in FY2011 US$5.4 billion US$3.6 billionJapan’s Entire Online Japan’s Social Game Market on Game Market PCs and Mobile Devices Source: MINISTRY OF INTERNAL AFFAIRS AND COMMUNICATIONS (Japan) 53
  54. 54. Japan’s Social Game Market Size in FY2011 Smart Phones Feature Phones US$8.3 billion US$1.0 billion(Excluding Mobile Commerce) (Excluding Mobile Commerce) Source: MINISTRY OF INTERNAL AFFAIRS AND COMMUNICATIONS (Japan) 54
  55. 55. Business Model in Japanese Mobile Content Market Out of 4.4 Billion USD, 63.5% was contributed by4.4 billion dollars Trend shifting from Sell-out the "Freemium" model,generated by the Model to Freemium Model which grew 28.2% over"sell-out" model the previous year. Source: MINISTRY OF INTERNAL AFFAIRS AND COMMUNICATIONS (Japan) 55
  56. 56. Social/Mobile Gaming in JapanBackground Mobile Revenue/Phone category (2011) 3 2.65 2.5 USD/billions 2 1.5 1 0.61 0.5 0 Feature Phone Smart Phone Source: JAPAN MINISTRY OF INTERNAL AFFAIRS AND COMMUNICATIONS 2012 56
  57. 57. Social/Mobile Gaming in JapanBackground Forecast for # of Paying Social Games Players in Japan 6.2 5.98 6 5.86 5.8 5.6 Millions 5.4 5.27 5.2 5 4.8 2011 2012 2013 Source: MITSUBISHI UFJ MORGAN STANLEY 2011 57
  58. 58. Social/Mobile Gaming in Japan Forecast for Average Revenue per Paying Users (ARPPU) in Japan$60.00 $53.03$50.00 $47.42 $42.18$40.00$30.00$20.00$10.00 $0.00 2011 2012 2013 Source: MITSUBISHI UFJ MORGAN STANLEY 2011 58
  59. 59. Social/Mobile Gaming in JapanBackground 100 90 $86.35 80 70 $61.30USD 60 50 40 36.0981 30 $34.97 $32.86 $19.27 $31.92 20 $16.19 $13.53 $9.22 10 $12.34 $10.97 0 Male Female Male Male Male Male Male Female Female Female Female Female 15-19 16-29 30-39 40-49 50-59 15-19 20-29 30-39 40-49 50-59 Gender/Age Source: ENTERBRAIN INC. (Japan) 2011 59
  60. 60. Social/Mobile Gaming in Japan Background100.0% Gaming Use of SNS Platform 94.2% 90.0% 80.0% by Device Type in Japan (2011) 75.2% 70.0% 62.9% 60.0% 53.2% 50.0% 40.4% 42.0% 40.0% 32.8% 28.5% 30.0% 22.7% 20.9% 20.0% 10.0% 4.5% 4.0% 0.0% 0.0% 0.0% 0.0% 0.0% Tablet Tablet Tablet Tablet Smartphone Feature Phone Smartphone Feature Phone Smartphone Feature Phone Smartphone Feature Phone PC PC PC PC Mobage GREE Mixi Facebook Source: ENTERBRAIN INC. (Japan) 2011 60
  61. 61. Social/Mobile Gaming in JapanCurrent Trends• Mobile games: • Downloaded as Apps on smartphones • Preinstalled on feature phones• Convergence of social and mobile gaming• Feature phones market share declining• Smartphones, led by Android, taking the lead• Dominant players: • Mixi • GREE • DeNA (Mobage) 61
  62. 62. Social/Mobile Gaming in Japan Forecast of SNS users in Japan60 Growth in SNS adoption in Japan is expected to impact on gaming! 50.7%50 47.8% 44.7% 39.5%40302010 0 2011 2012 2013 2014 Source: STATISTA 62
  63. 63. Social/Mobile Gaming in Japan90 Mobile Users Activity in Japan (2011) 81.7%80 Japan United States Europe 75.2%70 66.8% 59.3%6050 43.7% 40.1% 42.3% 38.5%40 34% 31.1%30 24.9% 25.8%20100 Sent SMS Used app Used browser Mobile media usage (browsing the internet, using apps, downloading content) Source: STATISTA 63
  64. 64. Social/Mobile Gaming in JapanBackground 70 Percentage of Mobile Internet Users using browsers on mobile devices (2011) 59.3 60 50 40 34 30 25.8 20 10 0 Japan USA Europe Source: OFCOM (Office of Communications UK ) 64
  65. 65. Social/Mobile Gaming in JapanOS share of market Japan Smartphone/Feature phone Penetration (2011) Feature Phone SmartPhone 44.9% 55.1% Source: COMSCORE MOBILENS 2011 65
  66. 66. Social/Mobile Gaming in JapanOS share of market Japan Smartphone Market Share by OS (2011) 0.2 0% Android IOS 0.3 0% RIM 5.4 5% Symbian Windows Mobile 33.6 34% 60.5 61% Source: COMSCORE MOBILENS 2011 66
  67. 67. Social/Mobile Gaming in JapanDemographics 70.0% Male Female 60.0% 60.0% 52.1% 53.3% 50.0% 47.9% 47.0% 40.0% 40.0% 30.0% 20.0% 10.0% 0.0% Mixi Mobage Town(DeNa) GREE Source: COMPANIES REPORTING NUMBERS 67
  68. 68. Social/Mobile Gaming in JapanDemographics 60.0% 53.8% 50.0% Mixi 43.0% Mobage Town(DeNa) GREE 40.0% 36.0% 31.0% 30.0% 26.0% 24.0% 20.0% 15.0% 9.4% 10.0% 7.3% 7.4% 2.1% 0.0% 10-19 20-29 30-39 40-49 50> Source: COMPANIES REPORTING NUMBERS 68
  69. 69. Social/Mobile Gaming in JapanDemographics Social Mobile Gaming User Activity for Japan (2011) Active Non Active Non Mobage and GREE users 68% 32% Mobage and GREE free users 69% 31% Mobage and GREE paying Users 80% 20% Mobage and Gree Users 76% 24% 0% 20% 40% 60% 80% 100% Source: CA MOBILE 69
  70. 70. Social/Mobile Gaming in JapanPreferences Medium of choice for playing social games (2011) By Phone 1% BY PC & Phone From PC 21% 78% Source: GOO RESEARCH 70
  71. 71. Social/Mobile Gaming in JapanPreferences Frequency of Mobile game playing in Japan -% of Smartphone owners (2012) Less than Less than monthly Monthly, monthly, Daily 5% 3% Weekly Never Monthly Never, 34% Daily, 47% Weekly, 11% Source: GOO RESEARCH 71
  72. 72. Social/Mobile Gaming in JapanPreferences Where they usually play their mobile devices (2011) 80% 75% 70% 70% 60% Male Female 50% 42% 39% 38% 40% 36% 30% 20% 18% 20% 17% 10% 10% 9% 10% 0% In My Room In another room at On public transport Work or School Train Station/Bus In shops/On the home stop street Source: GOO RESEARCH (Japan) 72
  73. 73. Social/Mobile Gaming in JapanPreferences On which machine do you usually play games (2011) 80 76% 70 65% 60% 60 Male Female 50 45% 40 35% 30% 30 20 15% 15% 10% 12% 10 0 Mobile Phone Home Machine Portable Game Other Don’t Play Games Machine Source: INFOPLANT (Japan) 73
  74. 74. Social/Mobile Gaming in JapanPreferences Which do you access Social games from more: Mobile or PC Don’t Know, 1% Both about the PC, 14% same, 15% Mobile Phone, 70% Source: GOO RESEARCH 74
  75. 75. Social/Mobile Gaming in JapanPreferences % of population that have played mobile social game in Japan (2011) Don’t Know Anything, 15.6% Havent played but heard, 16.5% Have Played, 67.9% Source: CA MOBILE, 75
  76. 76. Social/Mobile Gaming in JapanPreferences Do you want to buy a Smartphone (Mobile Phone Users) 2011 Don’t Know, 24% Yes, 55% No, 21% Source: Famitsu by ENTERBRAIN, INC. (Japan) 76
  77. 77. Social/Mobile Gaming in JapanPreferences Do you want to keep playing social games (Smart Phone Users) 2011 Don’t No, 3% Know, 14% Yes, 83% Source: Famitsu by ENTERBRAIN, INC. (Japan) 77
  78. 78. Social/Mobile Gaming in Japan Preferences Top 5 Venues for Playing mobile games in Japan (2011) Before Bed 52.0% Free time 40.0% During Job breaks 37.0% At home/TV watching 36.9%Waiting for transport/Public Transport 29.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Source: CA MOBILE 78
  79. 79. Social/Mobile Gaming in JapanPreferences Top 3 Countries by Revenue Top 3 Countries by Revenue for IOS (2011) for Google Play (2011) Rest of World, Rest of 40% US, 42% World, 34% US, 45% Japan, Japan, 10% UK, 8% 10% UK, 11% Source: APPANNIE 79
  80. 80. Social/Mobile Gaming in JapanPreferences Top 3 Fastest Growing by Revenue Top 3 Fastest Growing by Revenue for Google Play (2011) for IOS (2011) US, 19% France, 12% Russia, Japan, 20% 22% Brazil, 88% US, 13% Japan, 23% Russia, 17% Source: APPANNIE 80
  81. 81. Social/Mobile Gaming in JapanPreferences Top Fastest Growing Countries in Terms of Revenue in 600% 560% Apple App Store for Iphone (May 2011-May 2012) 500% 400% 300% 200% 115% 109% 101% 100% 84% 83% 63% 59% 54% 47% 0% Japan Russia China Taiwan Thailand Brazil Mexico Korea Turkey Canada Source: DISTIMO PUBLICATION JUNE 2012 81
  82. 82. Social/Mobile Gaming in JapanPreferences Mobile Social Game Players in Japan (2011) Engineers 8.0% School students 10.0% Part time workers 12.0% Office Workers 13.0% Full time Housewives 14.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Source: GOO RESEARCH 82
  83. 83. Social/Mobile Gaming in JapanPreferences 25 Japanese Social Networks Population 24 by Asianjin 23 Million Users 22 Gree Mobage Town Mixi 21 Mobage + Y! 20 19 18 07/31/10 10/31/10 11/31/11 Date Source: GOO RESEARCH 83
  84. 84. Social/Mobile Gaming in JapanPreferences Japan Iphone Apps downloaded by Users by App category (2011) Games 61.9% 72.0% Weather 6.9% 42.8% News 7.5% 40.9% U lity 30.7% 30.6% Entertainment 21.3% 40.1% Photos 25.0% 33.9% Produc vity 21.9% 29.2% Music 2.0% 23.8% Business 23.8% 29.2% Ebooks 22.5% 29.1% Free Naviga on 8.1% 23.3% Paid SNS 6.9% 21.0% Educa onal 8.8% 19.5% Lifestyle 6.9% 17.5% Finance 7.5% 13.6% Health and Fitness 7.5% 12.1% Travel 3.8% 10.1% Medical 8.6% 10.0% Sports 5.0% 7.0% Reference 5.8% 5.0% Other 1.2% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Source: APPANNIE 84
  85. 85. Social/Mobile Gaming in JapanPreferences 60% 50% 47% Top 3 Countries by Top 5 Countries by 49% 50% 45% App Downloads (2011) App Downloads (2011) 40% 40% 35% 35% 30% 28% IOS 25% 30% Google Play 20% 18% 20% 15% 10% 10% 7% 10% 6% 5% 0% 0% US China Japan Rest of World US UK Germany Rest Of World Source: APPANNIE 85
  86. 86. Social/Mobile Gaming in Japan Preferences Share of Total Traffic by Non-Computer devices (2011) 7 6.2 5.9 6 5.3 5 4.6 4.3 4% 3 2 1 0 Australia Japan UK Singapore U.S. Source: COMSCORE MOBILENS 2011 86
  87. 87. Social/Mobile Gaming in JapanPreferences Percent of Mobile Phone users who also own a Tablet JAPAN 5.0% GERMANY 7.4% ITALY 9.2% UK 9.2% FRANCE 9.4% SPAIN 10.9% CANADA 10.9% US 14.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Source: COMSCORE MOBILENS 2011 87
  88. 88. Social/Mobile Gaming in JapanMarket Drivers• Kompu Gacha is a huge revenue driver for social in-game purchase• Freemium business model encourages premium in-game purchases• Integration of virtual wallets into social games• Advertising revenue growth• (Relatively) low development costs 88
  89. 89. Social/Mobile Gaming in JapanMarket Drivers• Increase in mobile penetration• Integration between mobile and social gaming through SNS• Increase in consumer acceptance• Increased availability of smartphones• Social gamers with moderate to high disposable income, especially females 89
  90. 90. Social/Mobile Gaming in Japan“Kompu Gacha”- Revenue Generation Model Source: SERKANTOTO.COM 90
  91. 91. Social/Mobile Gaming in JapanRevenue Model Validation 35.0% Kind of items purchased with first payment in a social game 29.8% 30.0% 27.3% Male Female 25.9% 25.2% 25.0% 21.4% 19.8% 20.0% 18.6% 18.7% 18.0% 15.7% 14.5% 14.3% 15.0% 12.0% 10.8% 9.5% 10.0% 8.8% 5.0% 0.0% Items to shorten Status/power Avatar Items Gacha Limitied edition Experience Hard to get rare Others waiting times boosting items items Points items Source: SERKANTOTO.COM 91
  92. 92. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends1. Most social games offer free elements coupled with • In-game purchases • In-game virtual item purchases • Subscription and advertising Source: ARKADIUM.COM http://goo.gl/IuA7p 92
  93. 93. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends2. Focus on genre that supports female participation 93
  94. 94. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends3. Subscription and in-game item sales 94
  95. 95. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends4. Enhanced capabilities to up-sell, cross-sell and cross promote across media 95
  96. 96. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends5. Overseas acquisitions and mergers to enter new markets 96
  97. 97. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends6. Selling games for playing on smartphones and tablets directly via app stores 97
  98. 98. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends7. Virtual wallet is integrated into social games 98
  99. 99. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends8. Strong cultural difference between Western and Japanese social games 99
  100. 100. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends9. (Relatively) low development costs - popular games profitable within months! 100
  101. 101. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends10. Short product lifecycle 101
  102. 102. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends11. Different pricing strategies 102
  103. 103. 12 Current Social/Mobile Gaming Trends in JapanPresent Trends11. Gaming community creates and expands content 103
  104. 104. Special GenresSocial Gaming Genres PET-BREEDING CITY BUILDING FARMING RESTAURANT MANAGEMENT 104
  105. 105. Special GenresManga-based Social Games 105
  106. 106. Special Genres Social RPGS 106
  107. 107. Special GenresSocial Dating and Love Simulations 107
  108. 108. Special GenresSocial Idol-raising Games 108
  109. 109. Special Genres Social Collectible Card GamesTitle Screen My Page Screen Battle Screen 109
  110. 110. Future Trends in Japan’s Social Gaming Industry 110
  111. 111. 7 Future Social/Mobile Gaming Trends for JapanFuture Trends• Augmented reality using smartphone features 111
  112. 112. 7 Future Social/Mobile Gaming Trends for JapanFuture Trends• Growth in Near Field Communication (NFC) adoption 112
  113. 113. 7 Future Social/Mobile Gaming Trends for JapanFuture Trends• Location-based features of Smartphone to be used in overall game experience 113
  114. 114. 7 Future Social/Mobile Gaming Trends for JapanFuture Trends• 3D holograms and voice control• Inbuilt Projection of stored media 114
  115. 115. 7 Future Social/Mobile Gaming Trends for JapanFuture Trends• In-built Projection of stored media 115
  116. 116. 7 Future Social/Mobile Gaming Trends for JapanFuture Trends• Market fragmentation due to different operating systems (Android/IOS) and hardware capabilities of mobile phones 116
  117. 117. 7 Future Social/Mobile Gaming Trends for JapanFuture Trends• HTML 5 will support cross platform integration and a universal App Store 117
  118. 118. Japans Social Game Market Experiencing rapid growthSales in 100 Million Yen1400 1000% 750.3% Sales 800%1200 600%1000 Growth 400% 221.3% 156.7% 800 200% 0% 600 1,171 -200% 747 400 -400% -600% 200 338 45 -800% 0 -1000% 2008 2009 2010 2011 Source: YANO RESEARCH INSTITUTE. 118
  119. 119. Potential Venue for Game Development Key Peculiarity: Facebook Japan Facebook Users 5 000 000 4 250 000 3 500 000 2 750 000 2 000 000 10.03 09.04 09.05 09.06 08.07 07.08 Source: SOCIAL BAKERS 119
  120. 120. Social/Mobile Gaming in JapanPreferences Forecast for Mobile Penetration in Japan (2011) 80.00 73.50 68.70 70.00 63.20 60.00 57.80 52.10 50.00 47.30 43.50 40.00 30.00 20.00 10.00 0.00 2010 2011 2012 2013* 2014* 2015* 2016* Source: STATISTA 120
  121. 121. Social/Mobile Gaming in JapanRevenue Allocation on Social/Mobile Apps Feature Phone Market Billing / Operator Game Developer Publisher Aggregator Portal / End Platform Mgt Hub User 50% 50% Smartphone App Store End Game Developer App Store User 30% 70% Source: CAPCOM (Japan) ANNUAL REPORT 2011 121
  122. 122. Top Publishers in JapaneseMobile & Social Gaming Sector Source: MOBILE SOCIAL GAMING MARKET GUIDE 2011 Published by MOBYAFFILIATES. 122
  123. 123. Social/Mobile Gaming in JapanPlatforms• Most users access via mobile phones• Top platforms: 1. DeNA (Mobage Town) over 43m registered users 2. GREE over 26m registered users• Both double as social networks and platform providers• Used to be closed ecosystem but now open to 3rd party developers• Rapid growth during 5 years Source: COMPANY’S WEBSITE 123
  124. 124. Social/Mobile Gaming in JapanPublishers/DevelopersGREE • A top mobile game developer, publisher and social mobile game platform • Top 5 games developer for iPad • Net revenue of ¥158bn₁ Source: COMPANIES’ WEBSITES 124
  125. 125. Social/Mobile Gaming in JapanPublishers/DevelopersGREE• GREE Mobile social gaming platform was launched in 2012 enabling game distribution in 169 countries with English and Japanese portals Source: COMPANIES’ WEBSITES 125
  126. 126. Social/Mobile Gaming in JapanPublishers/DevelopersGREE• Global expansion into Western market with purchase of Openfeint and Funzio• Integration of Openfeint into its gaming platform Source: COMPANIES’ WEBSITES 126
  127. 127. Social/Mobile Gaming in JapanPublishers/DevelopersGREE• Formed new partnership with Namco Bandai Source: COMPANIES’ WEBSITES 127
  128. 128. Social/Mobile Gaming in JapanPublishers/DevelopersGREE• GREE Platform support for 15 languages to be launched Source: COMPANIES’ WEBSITES 128
  129. 129. Social/Mobile Gaming in JapanPublishers/DevelopersGREE• Revenue generation through: • Advertising (advertising sales) • Social games (paid service sales) Source: COMPANIES’ WEBSITES 129
  130. 130. Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes• Paprika (South Korea mobile social game developer) Source: NY TIMES APRIL 2011 130
  131. 131. Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes• IUGO (San Francisco based social mobile game developer) Source: NY TIMES APRIL 2011 131
  132. 132. Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes• Funzio Source: NY TIMES APRIL 2011 132
  133. 133. Social/Mobile Gaming in JapanGREEMajor acquisitions by GREE includes Openfeint • Social platform operating on IOS and Android • Enables developers to add social networking features to their apps and games • Top mobile game social platform • Bought by GREE for $104m Source: NY TIMES APRIL 2011 133
  134. 134. Social/Mobile Gaming in JapanSNS Business Model: GREE Primer GREE Ad space Advertising Advertising revenue •Banner and Text Ads stream •Tie-Up ads Avatars GREE Avatar personalisation through Main virtual goods and upgrade Window purchases Premium Content sale Social Games •Free social games (Freemium) •In-game selling of virtual item Source: INFINITA GREE RESEARCH REPORT 134
  135. 135. Social/Mobile Gaming in JapanAcquisition of Funzio (Sales and position in the market) Sales14 Rank Corporate Name No of applications12 1st Zynga 410 2nd Funzio Inc 3 8 6 2nd EA 3 4 2nd TinyCo Inc 3 2 0 3rd Admired Inc 2 July- Sep 2011 Oct-Dec 2011 Jan-Mar 2012 3rd Diaper Gentlemen 2• Funzio sales grew rapidly, reaching $12m 3rd Pocket Gems Inc 2 from Jan to Mar 2012• In April, when Kingdom Age was released, monthly sales exceeded $5m, accelerating growth Source: DIGI-CAPITAL INVESTMENT REVIEW 2012 135
  136. 136. Social/Mobile Gaming in JapanDevelopers/PublishersDeNA • Top social mobile game publisher, main competition to GREE • Net revenue of ¥42bn₁ for FY 2011 • Growth revenue was from online auctions to the present social gaming Source: COMPANY WEBSITE 136
  137. 137. Social/Mobile Gaming in JapanDevelopers/PublishersDeNA • Launched Mobage platform through its acquisition of US based Ngmoco • Has major games on Android and IOS Source: COMPANY WEBSITE 137
  138. 138. Social/Mobile Gaming in JapanDevelopers/PublishersDeNA • Global alliance was launched with Disney Studios to reach a wider market Source: COMPANY WEBSITE 138
  139. 139. Social/Mobile Gaming in JapanDevelopers/PublishersDeNA• Increased monetization methods introduced across game titles Source: COMPANY WEBSITE 139
  140. 140. Social/Mobile Gaming in JapanDevelopers/PublishersDeNAMajor subsidiaries include: • Gameview (California based,• Ngmoco (California based, operates publishes free-to-play games for Mobage global service) Android and IOS Source: DeNA.JP/INTL 140
  141. 141. Social/Mobile Gaming in JapanDevelopers/PublishersDeNAMajor subsidiaries include:• DeNA China (Mobage services in China) • DeNA Seoul (games and partnership with Korean partners Asia • DeNA Asia (games and partnership with Asian developers) Source: DeNA.JP/INTL 141
  142. 142. Social/Mobile Gaming in JapanDevelopers/PublishersDeNAMajor subsidiaries include: • Grasshopper (Japanese mobile • Plus+ game developer) Source: DeNA.JP/INTL 142
  143. 143. Social/Mobile Gaming in JapanDevelopers/PublishersDeNATypes of games include: • Real Time Team Battle (Final Fantasy Brigade)• Farming & • Royale • Card Battle collection (Kaito Royale, (Gundam Card (Noen Hokorina) Sengoku Royale) Collection) Source: DeNA.JP/INTL 143
  144. 144. Social/Mobile Gaming in JapanDevelopers/PublishersDeNA (Mobage) 1000 917 # of Mobage Social Games (2012) 900 800 First and second party Third Party 700 600 500 400 355 300 202 200 100 48 42 7 16 12 0 Feature phone PC Smartphone( Browser based) Smartphone( App based) Source: SERKANTOTO.COM 144
  145. 145. Social/Mobile Gaming in Japan Going mobile pays!!!Mobile-based (GREE and Mobage) more profitable than web-based (Zynga) Source: GUMI RESEARCH 145
  146. 146. Social/Mobile Gaming in Japan Going mobile pays!!! Though Zynga has more users worldwide than GREE and DeNA, net income for both Japanese developers has shown considerable growth! Source: GUMI RESEARCH 146
  147. 147. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Japan is a gaming nation • 10%₁ share of Global video gaming market • Video gaming has a huge cultural impact Source: SERKANTOTO.COM 147
  148. 148. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga! • Japan is a mobile nation • 99%₁ 3g penetration in Japan • Mobile phones essential for mobile game play • Easier to sell content on mobile devices Source: SERKANTOTO.COM 148
  149. 149. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Card battle games are popular • About 70%₁ of top 20 games on GREE and Mobage are card battle games Source: SERKANTOTO.COM 149
  150. 150. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Higher pay walls acceptance • Micropayment acceptance and processing through coin collection • Users are comfortable with higher pay walls to progress through game levels 150
  151. 151. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Smooth and easy mobile payment systems 151
  152. 152. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Focused and aggressive marketing campaigns 152
  153. 153. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Pre-Installation on handsets • Collaboration with mobile operators to preinstall games on handsets 153
  154. 154. Social/Mobile Gaming in JapanReasons why GREE and Mobage monetize better than Zynga!• Anonymity /virtual nature of social graph • GREE and Mobage are used anonymously • Mass invitation of friends to play/participate 154
  155. 155. Japanese SNS Usage by Platform100 94.29080 75.270 62.560 53.250 40.4 4240 32.8 28.530 22.7 20.92010 4.5 4 0 0 0 0 0 Tablet Tablet Tablet Tablet SmartPhone PC SmartPhone PC SmartPhone PC SmartPhone PC Mobile Mobile Mobile Mobile Phone Phone Phone Phone Mobage GREE mixi facebook Source: Research Report 2011, ENTERBRAIN, INC. (Japan) 155
  156. 156. Japanese SNS Demographics Male Users > Female users Age Brackets of 15-19 & 20-29 Source: Research Report 2011, ENTERBRAIN, INC. (Japan) 156
  157. 157. Paid-For Usage on Social Game Content in Japan80007000 673260005000 478040003000 2815 2207 2489 2727 25622000 1503 12621000 962 1055 719 855 0 Total Male Female Male Male Male Male Male Female Female Female Female Female 15-19 20-29 30-39 40-49 50-59 15-19 20-29 30-39 40-49 50-59 Source: Research Report 2011, ENTERBRAIN, INC. (Japan) 157
  158. 158. Video Game UsageAmong Social Gamers in Japan Video Game Usage by Social Gamers Non Video Game Users 23% Video Game Users 77% Source: Research Report 2011, ENTERBRAIN, INC. (Japan) 158
  159. 159. Video Game Usage Among Social Gamers in Japan Video Game Platform belonged to Social Gamers70605040302010 0 DS Wii PS2 PSP PS3 3DS Xbox 360 Others Source: Research Report 2011, ENTERBRAIN, INC. (Japan) 159
  160. 160. Video Game Usage Among Social Gamers in Japan Video Game Usage by Gender/Age (Social Gamers)40353025 16.8 12.7 12.920 12.415 9.5 6.5 10.310 3.3 16.7 18.1 15.7 7 12.4 8.7 5 7.8 8.3 8.1 3.2 5.9 3.6 0 Male Male Male Male Male Female Female Female Female Female 15-19 18-29 30-39 40-49 50-59 15-19 20-29 30-39 40-49 50-59 Video Game Users Non Video Game Users Source: Research Report 2011, ENTERBRAIN, INC. (Japan) 160
  161. 161. Social Gaming Impacton Video Game Usage in JapanVideo Game Usage Frequency by Social Gamers Fairly Increased, 2% Increased, 2.00% Decreased, No Changes, 45% 37% Failry Decreased, 14% Source: Research Report 2011, ENTERBRAIN, INC. (Japan) 161

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