Team Finland Future Watch Report: 30 signals covering 3 markets in Japan

30 Signals Covering
3 Markets in Japan

Contact information
Organization Members
Research and Consulting Division,
Japan Research Institute
2-18-1 Higashi-gotanda, Shinagawa-ku
Tokyo 141-0022 JAPAN
PHONE:+81-3-6833-0900
FAX:+81-3-6833-9480
Project Leader
Koji YAMAURA (Associate Senior Consultant)
yamaurakoji@jricojp
+81-3-6833-5369
Adviser
Hideyuki ASAKAWA (Senior Consultant)
asakawahideyuki@jricojp
+81-3-6833-2815
Project Members
Yohei KOTAKE (Consultant)
kotakeyohei@jricojp
+81-3-6833-6333
Yuki KUWABARA (Consultant)
kuwabara.yuuki@jri.co.jp
+81-3-6833-6587
Assistant
Takako IMAI (Assistant)
imai.takako@jri.co.jp
+81-3-6833-1562
Tekes – the Finnish Funding Agency for Innovation
Tekes is the main public funding organisation for research, development and innovation in Finland.
Tekes funds wide-ranging innovation activities in research communities, industry and service sectors
and especially promotes cooperative and risk-intensive projects. Tekes’ current strategy puts strong
emphasis on growth seeking SMEs.

2
S-1
Feed-in Tariff
Scheme for
Renewable
Energy
Message
The Feed-in Tariff Scheme for
Renewable Energy plays an important
role to promote the popularization of
renewable energy in Japan, as self-
sufficiency rate is low and there is some
uncertainty about the possibility in the
use of nuclear energy.
Summary
Under the Feed-in tariff scheme for
renewable energy, the regional electric
power utilities required to purchase the
electricity generated by solar, wind,
hydro, geothermal, and biomass power
at the fixed prices. Since the scheme
was introduced in July 2012, the
generation capacity has been
increasing and reached 3.7 million kW
(about 90% of the capacity is consist of
solar energy). Hereafter, the balance of
the popularization of renewable energy
and increasing electricity rate should be
carefully watched.
[A]Rating
This scheme is basis for popularization
of renewable energy and important as a
national energy policy.
[A]Macro Viewpoint
[A]Consistency with policy trends
· Self-sufficient rate is low in Japan and
popularization of renewable energy is
important.
[B]Consistency with the technology
trends
[B]Consistency with economic trends
[A]Consistency with the social trends
· The number of people who think they
should not use nuclear power has
increased since the Fukushima crisis
occurred.
[B]Micro Viewpoint
[A]Market impact
· The scheme promotes the investment in
renewable energy, especially in solar
power.
[B]Spirit of innovation
[B]Uniqueness
[Figure] Feed-in Tariff Scheme for Renewable Energy
(Source)METI “the Guidebook of Feed-in Tariff”

3
S-2
Electric
Power
Liberalization
Message
The issue of electric power liberalization
is important because it has possibility to
change the structure of Japanese
electricity market drastically.
Summary
As a part of introduction of competition
and deregulation in various fields,
Japan’s government is moving towards
the liberalization of the electricity
market. After the Great East Japan
Earthquake, a lot of new electricity
retailers, often referred to as “power
producers and suppliers,” have been
spawned (109 companies by now).
Hereafter, electricity retail market is
planned to be liberalized in 2016, and
power generation and transmission are
planned to be separated between 2018
and 2020.
[A]Rating
This is an important issue because
there is a possibility that the structure of
electricity market which has been stable
for a long time will be drastically
changed.
[A]Macro Viewpoint
· This issue is consistent with the policy
trend of the deregulation in various
fields.
trends
[A]Consistency with economic trends
· This issue is consistent with the trend of
introduction of competition in various
fields.
[B]Consistency with the social trends
[A]Micro Viewpoint
[AA]Market impact
· The stable supply of electricity will be
secured.
· The competition in the generation
market will promote efficiency and
suppress electricity bill increase.
· The business opportunity will be
expanded.
[B]Uniqueness[Figure] The Entry Situation of new
electricity retailers
(Source) METI “Liberalization of the retail electricity market” (October 2013)

4
S-3
Leadership
in Standardi-
zation of
Smart City
Message
The standardization of Smart City is
important in the view of global spread of
technology and reinforcement of
Japan’s competition in this market. The
point is that Japan, which is said to be
poor at standardization, is taking
initiative.
Summary
METI is strategically working on the
global standardization of Japanese
infrastructure industry in corporation
with public-private collaboration. The
number of proposals for ISO/IEC global
standardization increased, and The
number of acceptances as ISO / IEC
secretariat also increased to reach
almost the same level as UK and
France. The increase of the budget for
the global standardization is expected to
accelerate such efforts.
[A]Rating
Japan started to take initiative in the
standardization process that promotes
the spread of the service, which is
important from the point of view of both
macroscopic view of the worldwide
spread of the technology and
microscopic view of reinforcement of
Japan’s competition in the market.
[A]Macro Viewpoint
· The theme is positioned as one of the
three pillars of the infrastructure strategy
of Abenomics’ growth strategy.
[A]Consistency with the technology
trends
· As the technologies have been
developed in the field of Smart City,
standardization plays a key role for
spread of the services.
[A]Micro Viewpoint
[A]Market impact
· The government aims to triple the
exports of infrastructure systems by
2020.
[A]Uniqueness
· The government aims to cooperate with
emerging countries like ASEAN nations
and to make Japanese technologies
become de facto standard by utilizing
ODA.
[Figure] the number of acceptances ISO/IEC secretariat
(Source) METI “Efforts of international standardization to 2014”
[Figure] Japanese Proposals for
International standardization

5
S-4
Developments
in Smart City
by
government
supports
Message
In Japan, many innovative projects
about Smart City have received
financial supports from the government.
To commercialize the results of those
projects, government supports are still
needed. Therefore, in order to predict
the Smart City future trends in Japan, it
is necessary to understand the
concepts of the ministries and agencies.
Summary
In japan, many innovative projects
about Smart City have received
financial supports from the government.
To commercialize the results of those
projects, government supports are still
needed. Therefore, in order to predict
the Smart City future trends in Japan, it
concepts of the ministries and agencies.
[A]Rating
Concepts ministries and agencies think
are policies themselves. Therefore, in
order to conduct Smart City Projects, it
concepts of ministries and agencies.
[A]Macro Viewpoint
· Concepts ministries and agencies think
are policies themselves.
trends
· Technical studies have been included
as a theme.
· Job creation and revitalization of the
rural economy has been included as a
theme.
· Resolution of regional issues has been
included as a theme.
[A]Micro Viewpoint
[A]Market impact
· Market for Smart City industry in the
world is estimated at 4,000 trillion yen in
total by 2030.
[A]Spirit of innovation
· Through the initiative of the government,
innovation is encouraged.
[A]Uniqueness
· Features of Smart City initiative in METI,
is that the transportation infrastructure
has been studied. It is not limited to
energy.
[Figure] Smart city concepts by Japan’s
government
(Source) The Japan Research Institute
Ministry Concept Year Goal
Construction of a system for managing
overall energy including
- Electricity
- Heat
- Transportation
To solve problems by ICT
- disaster risk reduction and disaster
- Regional issues
- Job creation and economic revitalization
MAFF Smart Village ***
Building an integratedmanagement system
for renewable energy in units of local area
Cabinet Office
Environment Future
City
2011
Creation of best practices to overcome aging
andenvironmental issues as an environment
MIC ICT Smart Town 2012
METI EV・PHV Town 2009 Widespreaduse of EV and PHV
METI Smart Community 2009

6
S-5
Next-
Generation
Energy and
Social
Systems
Demonst-
ration Project
Message
As “Next-Generation Energy and Social
Systems Demonstration Project”
conducted by METI is regarded as the
main project of the Japanese
demonstration project related to Smart
City, it is worth gathering information.
Summary
Concurrently, in Japan There are four
major demonstration tests of Smart Grid
technologies: Yokohama in Kanagawa,
Toyota in Aichi, Keihannna Science
City, and Kitakyushu in Fukuoka. These
projects are subsidized by METI as
Next-Generation Energy and Social
Systems Demonstration Project. This
project is planned to last for 5 years till
2015.
[A]Rating
The Next-Generation Energy and Social
Systems Demonstration Project in the
four regions are important because it is
leading Japan’s Smart City
demonstration.
[A]Macro Viewpoint
· This project is based on the national
growth strategy.
trends
· The technologies to implement smart
cities are developed.
· The investment in Smart City is
accelerated.
[A]Micro Viewpoint
[A]Market impact
· Some estimates suggest that by 2030
US$ 40 trillion must be invested in
urban infrastructure worldwide to keep
pace with urban population growth.
· This project aims to export the
Japanese Smart City technology.
[B]Uniqueness
[Figure] The factors required for demonstration project
(Source)METI ”Selection of Next-Generation Energy and Social System Demonstration
Areas”
* Ambition targets for energy savings and CO2 emissions reduction, and
large-scale deployment of renewable energy
* Establishment of an energy management system for each site of energy
consumption and at a regional level.
* Establishment of a complementary relationship between regional energy
management and large-scale networks.
* Efficient use of energy in a transport system that includes next-generation
vehicles and railways.
* Participation of not only the local government but also energy-related
companies, system manufacturers, and other users
* Life style innovation etc.

7
S-6
Community
Energy
Management
System
Message
As a part of the Kitakyushu Smart
Community Creation Project, a
Community Energy Management
System (CEMS) was put into operation
in April 2012 to manage energy supply
and demand in the community.They
started the trial adoption of dynamic
pricing of electricity, which is pioneering
and remarkable in the world..
Summary
As a part of the Kitakyushu Smart
Community Creation Project, a CEMS
was put into operation in April 2012 to
manage energy supply and demand in
the community. In addition to
introducing as many sources of
renewable energy as possible, in order
to reduce CO2 emissions, the goal is to
balance supply and demand across the
entire community and level the load,
and ensure the quality of the power
supply.Smart meters have been
installed in 230 households and 70
businesses to collect and transmit
information. The base contract for
electricity demand has been increased
to 21MW.
[A]Rating
The trial adoption of dynamic pricing of
electricity is pioneering and remarkable
in the world.
[A]Macro Viewpoint
· This project is based on the national
policy.
trends
· EMS is essential technology for the
Smart City.
[A]Micro Viewpoint
[A]Market impact
· The market of energy management
service will be created.
[AA]Spirit of innovation
· The project revealed that dynamic
pricing is statistically effective in energy
saving for the first time in the world.
[B]Uniqueness
[Figure] CEMS in the Kitakyushu project
(Note) * “DR”: Demand Response.
(Source)Fuji Electric

8
S-7
Success of
the Demon-
stration
Experiments
of Demand
Response
Message
The demonstration experiments of
demand response have shown
successful results and validation for
commercialization will take place as a
next step.
Summary
Japan’s utilities have turned their
attention to demand-side management
as the industry continues to contend
with generation limits in the wake of the
Fukushima nuclear disaster in March
2011. The government is already
pushing building energy management
systems out of the lab and into building
stock. The OpenADR Alliance is
working with Waseda University on a
research project for METI in cooperation
with a dozen of companies.
[B]Rating
Although there has been a lot of
technology investment in the country, it
is unclear where, how and when
demand response will play out in Japan.
[A]Macro Viewpoint
· Expert Committee on the Electricity
Power Systems Reform of METI refers
to the importance of the use of demand
response systems.
trends
· International standardization is now
progressing and Japan is in line with it.
· Introducing demand response system
prevent from economic loss due to
power shortage.
· The system is consistent with the trend
that people are keen on energy saving
[B]Micro Viewpoint
[B]Market impact
· It is uncertain if there is much room for
energy saving by use of demand
response system because the Japanese
have long been energy conservationists
from cultural points.
[B]Uniqueness
[Figure] Image of the demonstration experiment by Osaka gas
(Source)Osaka gas web page

9
S-8
Advance
from test
phase to
commercial
phase
Message
Smart city is proceeding from test phase
to commercial phase, and the number
of such case will increase.
Summary
to commercial phase. In “Fujisawa
sustainable smart town” project in
Kanagawa-ken Fujisawa-shi which is
one of the commercial phase projects, it
is intended to build a city block with
commercial facilities, hospitals, and
public facilities by investing 60 billion
yen, with 3,000 people living.
The development of smart cities like
Fujisawa will be accelerated hereafter.
[A]Rating
to commercial phase, and the number
of such case will increase.
[B]Macro Viewpoint
· The promotion of Smart City is
considered an important policy.
trends
[A]Micro Viewpoint
[A]Market impact
· 60 billion yen will be invested.
· It is coming to commercialized phase
with various innovations composed.
[B]Uniqueness
[Figure] Fujisawa Sustainable smart town
(Source) Panasonic IR information
Participating companies Role
Panasonic Integrator
Accenture Planning
ORIX Mobility sharing
NIHON SEKKEI Planning of installation
Sumitomo Mitsui Trust Bank Housing loans
TOKYO GAS Home fuel cell
PanaHome Sale of smart houses
Mitsui Fudosan Sale of smart houses
Mitsui & Co. Health care service
NTT EAST Telecommunication platform
Dentsu Energy andHealth care service
etc.
Summary of the project
60 billion yen
1,000houses(all smart houses)
Solar panel in the public spaces
Share service of electric car

10
S-9
Composition
of Nikkei
Smart City
Consortium
Message
The Nikkei makes recommendations on
realization of Smart City by sharing and
transmitting information through their
“Nikkei Smart City Consortium”.
Summary
The Nikkei started “Nikkei Smart City
Consortium” with the specialists of
environment, energy, and urban
problems, municipalities and companies.
The Nikkei makes recommendations on
realization of Smart City by sharing and
transmitting information through the
symposium, general meeting, and
special web site.
[B]Rating
Although the consortium is important as
a place to collect information, it is not
sure that it drives the promotion of
Smart City in Japan.
[B]Macro Viewpoint
· The promotion of Smart City is an
important policy.
trends
· The cost to collect information is
reduced.
[B]Micro Viewpoint
[A]Market impact
· Collected information motivates
companies.
[B]Uniqueness
[Figure] Image of the Nikkei Smart City Consortium.
(Source)the Nikkei Smart City Consortium web page

11
S-10
Community
Oriented
Stand-by
MObility
Service
(COSMOS)
Consortium
Message
Consortium for the new market creation
and community revitalization using a
new vehicle of 1-2 seaters is formed by
JRI.
Summary
Consortium for the new market creation
and community revitalization using a
new vehicle of 1-2 seaters is formed by
JRI. The members of the consortium
are transportation equipment
manufacturers, telecommunications
equipment manufacturers,
transportation operators, real estate
developers, general contractors,
municipalities, and local communities.
At the consortium, the members are
going to research the needs and
consider necessary law and technology.
[A]Rating
The consortium is important from the
point of view of both macroscopic view
and microscopic view. But, there are
many items to consider because it has
just been established.
[A]Macro Viewpoint
trends
· It would make innovation to develop
one-seater electric car and smartphone
technology.
· By increase of movement of residents,
the economy of the region is activated
· The number of people which are difficult
to move the city due to reduction or
abolition of public transport and
increase of the elderly and children.
[A]Micro Viewpoint
[A]Market impact
· It is easier for company to attract
customers because residents are able
to come to the storefront more easily.
· It is new regional transportation service
which contributes to the local activation
by Activation of the traffic of residents.
[A]Uniqueness
· Same mechanism does not exist.
[Figure] The news release about the COSMOS
(Source)JRI website

12
G-1
Legalization
of Casino
Gambling
Message
Legalization of Casino Gambling is
going to be submitted during the current
Diet session, and Casino in Japan could
be opened just before the Tokyo 2020
Olympic Games.
According to Citi Research, Revenue of
Japanese Casino has the potential to be
$ 15 billion of two times the Las Vegas
revenue. And it is expected to contribute
to the economic growth of the country.
Summary
Diet members caucus for legalization of
Casino Gambling in Japan are going to
submit legislation that would allow
casinos to operate in the country during
the current Diet session, and they could
open just before the Tokyo 2020
Olympic Games. One of the Diet
member caucus’s top advisers is Japan
Prime Minister Abe.
expected to contribute to the economic
growth of the country.
Foreign companies associated Casino
Gambling business are expected to
enter the Japanese market.
[A]Rating
Legalization of Casino Gambling is very
important for the economic growth of
Japan because it could encourage
business investment and produce jobs.
[A]Macro Viewpoint
· Japan Prime Minister Abe is showing a
positive attitude to the legalization.
trends
· Holding of the Olympic Games and
Paralympic 2020 provides a critical
boost to the legalization of Casino
Gambling in Japan.
[A]Micro Viewpoint
[A]Market impact
· Investment for one Integrated Resort
including Casino is expected to be more
than 10 billion yen.
· Revenue of Japanese Casino has the
potential to be $ 15 billion of two times
the Las Vegas revenue according to Citi
Research which is group companies of
City Bank.
[B]Uniqueness
[Figure] Revenue of Casino Gambling by country
(Source) The Japan Research Institute summarized from public information
51
58
235
150
0
50
100
150
200
250
Singapore Las Vegas Macau Japan
USD Billion

13
G-2
The
Regulations
Banning
"Complete
Message
Japanese government banned
"complete gacha" which was the most
popular billing system in social games
on July 2012. But the regulations did not
have a big impact on the business
performance of social game operators
and the prevention of high claim.
Summary
Japanese government banned
"complete gacha" which was the most
popular billing system in social games
on July 2012. Kompu gacha, or
“complete gacha” is a monetization
mechanic in social games that heavily
incentivizes the practice of gacha —
paying a small amount of money to get
an item at random, similar to purchasing
toys from a vending machine.
The regulations did not have much
influence on the business performance
of social game operators and had little
effect on the prevention of high claim.
If the number of trouble by social game
is more increased, additional
regulations may be imposed in the
future.
[B]Rating
The regulations is not very important
because it had little effect on social
game business in Japan.
[A]Macro Viewpoint
· Japanese government banned
"complete gacha"
trends
· Increase of trouble by social game.
[B]Micro Viewpoint
[B]Market impact
· The impact of the regulations on social
game business in Japan is small.
[B]Uniqueness
· In Europe and the United States, a
mechanism such as "Konpugacha"
already has been regulated.
[Figure] Sales of DeNA’s Social game
(Source) The Japan Research Institute summarized from DeNA IR materials.

14
G-3
Trend of the
Japanese
Game
Industry
Message
Home video game market in Japan is
shrinking since 2008. On the other
hand, Mobile game market is growing
rapidly for the last few years. Some
major home video game makers have
entered the mobile game market. In the
future, games geared smartphone
games and home video games will be
released.
Summary
The Home video game market in Japan
is shrinking since 2008. On the other
hand, Mobile game market such as
social game and smartphone game is
growing rapidly for the last few years.
Some major home video game makers
have entered the mobile game market
and Some major mobile game
manufacturers have entered the home
video game market.
In the future, games geared smartphone
games and home video games will be
released.
[A]Rating
The trend is very important because it
means that the mmigration to mobile
phone games from home games.
[A]Macro Viewpoint
[B]Consistency with policy trends
trends
· High performance of smartphones
· Rapid diffusion of smartphones
[A]Micro Viewpoint
[A]Market impact
· Mobile game market size and home
video game market size for 2012 is
about the same.
[A]Uniqueness
· It is unique to Japan to existing huge
social game market whose market size
is 400 billion yen.
Market size of home video game （JPY 100 million）
[Figure] Market size of smartphone games and home video game in Japan
Market size of smartphone games（JPY 100 million）
(Source) CESA “CESA Games White Paper”(each year) and YRI “The 2012 survey results
on social gaming market”(2013/10)

15
G->
The Rise of
Smartphone
Game
Message
Japanese smartphone game market in
2012 is 128.5 billion yen and four times
as much as the previous year.
Smartphone game market has the
potential to exceed the home video
game market in the future.
Summary
Japanese smartphone game market in
2012 is 128.5 billion yen and four times
as much as the previous year. The
market is expected to further increase
because of improving the penetration of
smart phones.
It the future, many overseas
smartphone game makers are expected
to enter the market in Japan because
smartphone is a universal platform. On
other hand, smartphone game makers
in Japan will try to provide their games
to foreign market.
[A]Rating
Smartphone game market has the
potential to exceed the home video
game market in the future.
[A]Macro Viewpoint
trends
· High performance of smartphones
[A]Micro Viewpoint
[A]Market impact
· Japanese smartphone game market is
expected to reach the scale of about
half of the home video game market the
in two or three years.
· There are smartphone game makers
such as “GungHo” which have grown
into a global company.
[B]Uniqueness
[Figure] market size of smartphone game in japan
(Source) JOGA’s Online game market research report
0
200
400
600
800
1,000
1,200
1,400
2011年 2012年
USD 100 Million
4 times

16
G-5
The Drop in
Performance
of GREE
Message
Performance of GREE is deteriorating
rapidly. It may show the decline of
social game for feature phones. It
encourages the change in direction of
the mobile phone, smartphone game
makers.
Summary
Net income of GREE July-September
period in 2013 was 2.4 billion, 73%
year-on-year decline. And The
Operating income was 9.7 billion yen,
38% year-on-year decline. The
company decreased sales and profit for
the first time after the listing.
The drop in performance of GREE
shows the decline of social game for
feature phones. In the future, it will be
more important for mobile game makers
to develop highly interesting game as
“Pazudora” which “GungHo” provides.
[A]Rating
It is very important because it
encourages the change in direction of
the mobile phone, smartphone game
makers.
[A]Macro Viewpoint
trends
· Upgrading of mobile games and
increase in development costs of mobile
game.
[A]Micro Viewpoint
[A]Market impact
· The decline of huge social game market
in Japan has a high impact.
[A]Uniqueness
· It is unique to Japan to existing huge
social game market whose market size
is 400 billion yen.[Figure] Changes in operating income,
net income and sales of GREE
(Source) GREE IR materials
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1Q
7-9
2Q
10-12
3Q
1-3
4Q
4-6
1Q
7-9
2Q
10-12
3Q
1-3
4Q
4-6
1Q
7-9
Sales Operating income Net income
JPY Million JPY Million
73% year-on-year decline
2011 2012 2013

17
G-6
The
Dichotomizat
ion of
Japanese
Games
Message
There are only two types in Japanese
game market. One type is global game
which is aimed at global hit and another
type is Japan-only game which is
released only in Japan.
Summary
There are only two types in Japanese
game market. One type is global game
which is aimed at global hit and another
type is Japan-only game which is
released only in Japan. In the market,
domestic games are very popular and
foreign games which even become a
big hit in the world are not popular.
Japanese games meet the needs of
“escapism”, on other hand foreign
games meet the needs of "self-
realization". It is very difficult for Japan-
only games to become a real hit in the
world because most of the games are
produced based on Japanese cartoon
film and comic’s characters.
[B]Rating
It is not a huge change because it has
little effect on Japanese game market
and Japanese game makers.
[B]Macro Viewpoint
trends
[B]Micro Viewpoint
[B]Market impact
[A]Uniqueness
· Japanese games which meet the needs
of “escapism” are unique to Japan.
[Figure] The dichotomization of Japanese games
(Source) The Japan Research Institute
dichotomization
Japanese game market
Global Game
* it is aimed at
global hit
ex："Pokemon",
"BIO HAZARD",
"Final Fantasy"
Japan-only game
* it is released
only in Japan
* it is often
produced based on
Japanese anime
and manga
Global Popular Foreign Games
Global game market
×
×

18
G-7
New
Movement
under the
Influence of
Social
Games on
Home Video
Message
Some home video game makers in
Japan started to introduce some new
movements to their home video games.
In the future, Japanese game makers
could introduce various new
movements.
Summary
There are new movements under the
influence of social games on home
video game. For example, some home
video games are sold only by Internet
delivery, New series of popular games
such as “Dragon Quest” and “Final
Fantasy” changes from offline RPG to
MMORPG, and Introduction of Free-to-
play & micro transaction.
If home video game market in Japan is
shrinking, Japanese game makers will
introduce various new movements.
[B]Rating
It is not very important because the new
movements are not introduced to most
of Japanese home video games.
[B]Macro Viewpoint
trends
[B]Micro Viewpoint
[B]Market impact
· The New movements are not introduced
to most of Japanese home video games
[B]Uniqueness
[Figure] New series of “Dragon Quest”
(Source) SQUARE ENIX Website
[Figure] List of home video games which have micro transaction
(Source) SQUARE ENIX Website
Company Game tittle
Bandainamco ACE COMBAT INFINITY
Bandainamco JOJO'S BIZARRE ADVENTURE
Bandainamco One Piece

19
G-8
“Galapagos
Phenomenon”
of Japanese
Home Video
Game Market
Message
In Japanese home video game market,
portable game machines are more
popular than stationary game machines.
If this situation continues in the future,
international competitiveness of
Japanese game may be reduced.
Summary
In Japanese home video game market,
portable game machines such as
“PSP”, “PS Vista” and “Nintendo DS”
are more popular than stationary game
machines such as for ”PS3” and “Xbox”.
Result of game makers in Japan had
focused on portable game machine
software, technical capabilities of the
makers become inferior to ones of
foreign makers, and the number of
Japanese games which become a big
hit in the world decreased.
If this situation continues in the future,
international competitiveness of
Japanese game may be reduced.
[A]Rating
It is important for Japan because Japan
is aiming to increase exports of
Japanese contents.
[A]Macro Viewpoint
· “Cool Japan”：Promotion activities
overseas expansion and export of
Japanese content by the Government of
Japan
trends
· Soaring development costs of software
for stationary game machines such as
“PS3” or “Xbox”.
[A]Micro Viewpoint
[A]Market impact
It has a big impact on international
competitiveness of Japanese game
and Performance of Japanese game
makers which provide stationary game
software.
· Viewed from another side, Japanese
game makers are more advanced on
development of portable games.
[B]Uniqueness
[Figure] 2009 game sales rankings of
Japan and the United States
Rank
Type of
Console
Title Type of
Console
Title
1 DS
Dragon Quest IX: Sentinels of
the Starry Skies
XBox Prototype
2 DS
Pokemon Heart Gold / Soul
Silver
Wii Wii Fit
3 Wii New Super Mario Bros. Wii Wii EA Sports Active
4 DS Tomodachi Collection Wii Wii Sports
5 PS3 Final Fantasy XIII XBox UFC Undisputed
6 Wii Wii Sports Resort XBox Red Faction : Guerrilla
7 Wii Wii Fit Plus Wii Tiger Woods PGA Tour 10
8 DS
Inazuma Eleven 2: Kyoui no
Shinryokusha (Fire/ Blizzard)
PS3 Prototype
9 Wii Monster Hunter 3 (Tri) PS3 UFC 2009 Undisputed
10 PSP
Monster Hunter Portable 2nd
G (PSP the Best)
XBox
Gohstbusters: The Video
Game
11 DS Mario & Luigi RPG3!!! PS3 InFamous
12 Wii WiiFit DS Pokemon Platinum Version
13 DS
Layton Kyouju to Majin no
Fue
Wii Mario Kart Wii
14 DS Kingdom Hearts 358/2 Days XBox Tiger Woods PGA Tour
15 PS3 Yakuza 3 Wii Punch Out
16 PS3 Resident Evil 5 (PS3) DS New Super Mario Brothers
17 Wii Mario Kart Wii Wii Wii Play
18 PSP Phantasy Star Portable 2 DS Mario Kart DS
19 DS Rhythm Tengoku Gold PS3 Red Faction: Guerrilla
20 DS
Pokemon Mystery Dungeon
Soranotankentai
PS3 Tiger Woods PGA Tour
Japan USA
(Note) * “blue cell ": it means that game software is for portable game machines.
(Source) public information

20
G-9
The rise of
GungHo
Online
Entertainment
Message
GungHo Online Entertainment is
extending the performance because of
a big hit of a smartphone game “Puzzle
& Dragons”. And its overseas
development is also progressing
smoothly. In the future, the number of
game makers will increase, which make
a big breakthrough by a big hit of one
content.
Summary
GungHo Online Entertainment which is
smartphone game makers and
Subsidiary of Softbank extend the
performance because of a big hit of a
smartphone game “Puzzle & Dragons”.
Sales of interim results in June 2013
was 10.4 times year on year to 74.6
billion yen and the operating income
was 44 times year on year to 45.1 billion
yen. In both South Korea and North
America the software has been
downloaded more than 1 million, and
overseas development is progressing
smoothly.
If smartphones are more popular
worldwide in the future, the number of
game makers will increase, which will
make a big breakthrough by a big hit of
one piece of content such as GungHo
Online Entertainment.
[A]Rating
The rise of GungHo Online
Entertainment encourages the growth of
Japanese smartphone game market
and leads to the global expansion
Japanese game contents.
[B]Macro Viewpoint
trends
[A]Micro Viewpoint
[A]Market impact
· It increases Penetration and awareness
of the smartphone games and the
number of new entrants.
· It has attracted attention in the world as
a case of rapid growth smartphone
game makers.
[B]Uniqueness
[Figure] Changes in operating income and sales of GungHo
(Source) GungHo IR materials

21
G-10
The Drop in
Performance
of Nintendo
Message
The performance of Nintendo has
deteriorated since 2009 due to poor
sales of its new machines and a
significant reduction of them. If poor
sales of their game consoles continue,
the company will have to change in
direction.
Summary
The performance of Nintendo has
deteriorated since 2009. Operating
income was in the red for the second
consecutive year in 2011 and
2012.Sales of interim results in 2013
was 2.5% year-on-year decline, and
Operating income was in the red too.
Cause of poor performance is a poor
sales "Nintendo 3DS" and "Wii U" and a
significant reduction of the two
machines.
If poor sales of their game consoles
continue, the foundation of the business
model of Nintendo will collapse and the
company will have to change in
direction.
[B]Rating
The drop in performance of Nintendo
which was on the victorious side in
home video game market shows the
decline of home video game machine
market.
[B]Macro Viewpoint
trends
[B]Micro Viewpoint
[A]Market impact
· It has a big impact on home video game
machine market.
[B]Uniqueness
[Figure] Changes in operating income and sales of Nintendo
-100,000
-50,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
half
year
full
year
half
year
full
year
half
year
full
year
half
year
full
year
half
year
Sales Operating income
JPY Million JPY Million
Deficit has continued
2009 2012 20132010 2011
(Source) Nintendo IR materials

22
N-1
Abenomics
Message
going to be submitted during the current
Diet session, and Casino in Japan could
be opened just before the Tokyo 2020
Olympic Games.
Summary
“Abenomics” refers to the economic
policy of Abe Shinzo, the Prime Minister
of Japan. His aim was to revive the
sluggish economy with "three arrows": a
massive fiscal stimulus, more
aggressive monetary easing from the
Bank of Japan, and structural reforms to
boost Japan's competitiveness.
Although Almost a year has passed
since the Prime Minister voiced the
economic policy, Analysts remain
divided over the success of Abenomics.
[A]Rating
Abenomics is the biggest issue for the
Abe administration, and it has a big
potential to change the Japanese
economy.
[A]Macro Viewpoint
· Abenomics is one of the important
policies itself.
trends
· As Japanese economy has been
stagnant for a long period of time, the
economic reforms are highly required.
· Abenomics may become the way to
solve the social problems in Japan such
as the problems with the aging society,
weakened competitiveness in the world.
[A]Micro Viewpoint
[A]Market impact
· The policy will affect various markets
drastically.
· An important part of Abenomics' "Third
Arrow" includes policies intended to
spur growth through entrepreneurship
and innovation.
[B]Uniqueness
[Figure] Details of “Abenomics”
(Source) BUSINESS INSIDER “THE TRUTH ABOUT ABENOMICS — The Japanese
Economic Experiment That's Captivating The World”

23
N-2
Growth
Strategy
(the 3rd
Arrow of
Abenomics)
Message
The third arrow of the Abenomics, a
growth strategy, includes structural
reforms such as deregulation and
public-private support for key sectors.
Summary
The third arrow of Abenomics, a growth
strategy, aims at revitalizing industries,
expanding global outreach, and
bolstering innovation. Given that the
nation’s potential for growth itself has
extremely weakened, it is very required
to implement as quickly as possible the
third arrow of Abenomics to encourage
private sector investments.
[A]Rating
The growth strategy includes structural
reforms such as deregulation and
public-private support for key sectors. It
is not too much to say that the success
of Abenomics is determined according
to the results of the growth strategy.
[A]Macro Viewpoint
· The growth strategy is the important
policy itself.
trends
· Some industries need structural reform
to strengthen Japan’s industrial
competitiveness as mentioned in the
growth strategy.
Abenomics and the growth strategy
may become the way to solve the
social problems in Japan such as the
problems with the aging society,
weakened competitiveness in the
world.
[A]Micro Viewpoint
[A]Market impact
· The policy to boost private investment
and to reform regulatory has big impact
on various markets.
· The ggrowth strategy includes policies
intended to spur growth through
entrepreneurship and innovation.
[B]Uniqueness
[Figure] Growth Strategy in Abenomics
(Source)nippon.com “Abenomics and the Government’s New Growth Strategy”
the New Growth Strategy
Private sector revitalization
tax cuts to investment taxes, Increasing business startup/closure rate to around 10%, etc.
Business environment
establishment of national strategic special zones, lifting Japan’s ranking from 15th to 3rd
place among industrialized countries on the Ease of Doing Business Index, etc.
Commerce and Globalization
raise of FTA ratio from current 19% to 70% (by 2018),
number of foreign tourists visiting Japan: From 10 million in 2013 to 30 million by 2030, etc.
Agriculture, forestry, and fisheries
Value of “sixth-order” industries: Tenfold increase to ¥10 trillion (2020), Exports of
agricultural, forestry, fisheries products, and foods: from ¥450 billion at present to ¥1
trillion (2020), etc.
Employment, women's issues, training
Percentage of women in work (ages 25–44): Increase from 68% at present to 73% (2020),
World university rankings: At least ten universities in the Top 100 within the next ten
years, etc.
Energy
Reform electricity supply systems: Create ¥16 trillion worth of new industry, new
employment, Commercial development of the marine resources, etc.
Healthcare and medicine
health and preventative medicine market: From ¥4 trillion at present to ¥10 trillion in
2020, Scale of medical market: From ¥12 trillion at present to ¥16 trillion (2020) , etc.

24
N-3
Sales tax
Raise
Message
The sales tax rate was decided to be
raised to 8 percent from the current 5
percent next April as planned. The tax
hike put Abenomics to the test.
Summary
Prime Minister Shinzo Abe has decided
to raise the sales tax rate to 8 percent
from the current 5 percent next April as
planned. He decided that in order to
maintain confidence in the fiscal policy
of Japan and establish a social security
system that is sustainable for future
generations.
[B]Rating
Sales tax raise is an important issue
from the perspective of both restoring
the fiscal health and affecting the
consumption behavior.
[A]Macro Viewpoint
· Japan has to demonstrate a solid
commitment to making continuous and
proactive effort to restore fiscal health to
the international community.
trends
[C]Consistency with economic trends
· The tax hike has a potential to thwart
the effort of the growth strategy of
Abenomics.
· The sales tax raise is required to
confirm financial resources for social
security with Japan facing a rapidly-
aging society.
[A]Micro Viewpoint
[A]Market impact
· The decline in consumption due to a
decrease in disposable income could
have negative impact on the markets.
[B]Uniqueness
[Figure] Change in private
consumption by sales-tax hike
(Source) THE WALL STREET JOURNAL “Japan’s Abe Seen Deferring Sales Tax Decision
Until Around October”

25
N-4
Tokyo
Olympic
Games
Message
Tokyo has been chosen by the
International Olympic Committee to host
the 2020 Summer Games. The Olympic
Games will be an “explosive agent” for
Japan’s economy.
Summary
Tokyo has been chosen by the
International Olympic Committee to host
the 2020 Summer Games. Prime
Minister Sinzo Abe claimed that 2020
Olympic Games will be an “explosive
agent” for Japan’s economy. Tokyo
metropolitan government evaluates the
positive effect of 2020 Olympic Games
to the Japanese economy at ¥ 2.96
trillion for the period 2013-2020. It also
estimates Olympic Games to create
150,000 new jobs until 2020. Moreover,
it expects at 8.5 million the number of
tourists who will visit Japan for 2020
Olympic Games.
[A]Rating
The Olympic Games will be an
“explosive agent” for Japan’s economy
and have good effects on wide range of
areas.
[A]Macro Viewpoint
· Tokyo Olympic Games will be an
“explosive agent” which assists
Abenomics and the growth of Japan’s
economy.
trends
· Many people in Japan hope that the
Tokyo Olympics will have positive
effects on the economy as they do not
feel that the economy is recovering from
the prolonged slump.
· The 2020 Olympics will be organized in
a way it will contribute to disaster
recovery.
[A]Micro Viewpoint
[A]Market impact
· Hosting the Olympics will have good
effects on a wide range of areas such
as infrastructure and tourism.
· The technology for foreign tourism such
as digital signage and navigation with
smart phones would be developed.
[B]Uniqueness
[Figure] The plan for Tokyo Olympic Games 2020
(Source)Tokyo 2020 Bid Committee’s web page

26
N-5
Participation
in TPP
Message
Prime Minister Shinzo Abe aims to
revive the Japan’s sluggish economy
with “three arrows”: a massive fiscal
stimulus, more aggressive monetary
easing from the Bank of Japan, and
structural reforms to boost Japan's
competitiveness.
Summary
“Abenomics” refers to the economic
policy of Abe Shinzo, the Prime Minister
of Japan. His aim was to revive the
sluggish economy with "three arrows": a
massive fiscal stimulus, more
aggressive monetary easing from the
Bank of Japan, and structural reforms to
boost Japan's competitiveness.
Although Almost a year has passed
since the Prime Minister voiced the
economic policy, Analysts remain
divided over the success of Abenomics.
[B]Rating
The impact of TPP on Japan’s economy
will be significant and the sense of
uncertainty about what it will be in the
future is high.
[A]Macro Viewpoint
· The participation in TPP has an impact
not only on Japan’s economics but also
on Japan’s foreign policy such as the
relationship with the U.S.
trends
· The government forecasts Japan’s
participation in the Trans-Pacific
Partnership to increase its real GDP by
3.2 trillion yen, or 0.66% in its ratio to
GDP (Cabinet Secretariat 2013).
· Japanese companies seek to their
growth in Asian emerging markets and
the participation in TPP will help them.
[B]Micro Viewpoint
[A]Market impact
· There is a possibility that some markets
including the agriculture sector and the
health care sector need to be reformed.
[B]Uniqueness
[Figure] Economic partnership framework involving Japan
(Source) bilaterals.org “TPP declaration fuels other talks / European nations grow more
eager to reach trade deals with Japan”

27
N-6
Cool Japan
Message
Japan’s government promotes export of
“cool Japan”, Japanese creative
products and culture, to all overt the
world.
Summary
The term “cool Japan” refers to
Japanese products and culture which
are creative and has been accepted and
is supported internationally. The
involved industries range widely from
food to manga comics and fashion. The
ministry of economy, Trade and Industry
promotes overseas advancement of a
globally appreciated “Cool Japan”
brand, fostering creative industry,
promotion of these industries in Japan
and abroad, and other related initiatives
from cross-industry and cross-
government standpoints.
[A]Rating
The cool Japan project has potential to
improve national competitiveness.
[A]Macro Viewpoint
· The cool Japan policy was given status
as that of one of the important growth
strategies in the Abenomics.
trends
· The development of Internet technology
helps Japanese contents expand all
over the world.
· The importance of export promotion is
increasing as the domestic demand is
decreasing.
· Japanese culture is highly valued
abroad as well as in Japan.
[A]Micro Viewpoint
[A]Market impact
· The cool Japan policy has a positive
impact on the creative industries and
other surrounding markets.
[A]Uniqueness
· Japanese unique culture is highly
evaluated in the world.
[Figure] The Image of Cool Japan
(Source) All Nippon Airways’ web page

28
N-7
Social
Security
(Pension)
Message
Japan’s government has been
promoted the comprehensive reform of
social security and tax as a response to
the extreme drop in the birthrate, ageing
of society and the critical state of public
finances.
Summary
It is said that Japan’s social security
system is too generous, and current
benefit levels cannot realistically be
maintained. The system was created
when Japan enjoyed relatively high
growth and aging was not yet a serious
problem. Now that the situation has
changed, the government has been
promoted the comprehensive reform of
social security and tax as a response to
the extreme drop in the birthrate, ageing
of society and the critical state of public
finances.
[A]Rating
The problem of the social security is
getting serious. Urgent action should be
taken to maintain the system of the
social security.
[A]Macro Viewpoint
· The reform of social security is
inevitable and must be included in the
set of policies.
trends
· Changes in the economic structure in
these days make it inevitable for the
system of social security to be reformed
drastically.
· Current social security system cannot
realistically be maintained since the
society is facing advancement of aging
society with child birthrate falling.
[A]Micro Viewpoint
[A]Market impact
· The reform of social security will have a
big impact on the health care industry.
[A]Uniqueness
· The ageing of Japan is thought to
outweigh all other nations, as the
country is purported to have the highest
proportion of elderly citizens.
[Figure] Increase of social security
expenditure
(Source) Ministry of Health, Labour and Welfare

29
N-8
Aging
Infrastructure
Message
The problem of aging infrastructure is
serious problem and innovative
technologies (e.g. M2M, radar) should
be used to solve it.
Summary
A deadly Sasago tunnel collapse on a
busy highway near Tokyo has led to
doubts about the quality and safety of
Japan’s much vaunted, enormously
expensive infrastructure. Japan built a
massive amount of infrastructure in the
decades following World War II, and this
means that the number of facilities built
more than 50 years ago will increase at
an accelerated pace over the next 20
years. In order to solve this serious
problem, The government is compiling a
"Basic Plan for Extending the Service
Life of Infrastructure," in which the latest
technologies to improve safety while
holding down costs will be utilized.
[A]Rating
The problem of aging infrastructure is
serious problem and innovative
technologies should be used to solve it.
[A]Macro Viewpoint
· This topic is mentioned in the growth
strategy of Abenomics.
trends
· The development of IT technology
makes it efficient to maintain and
monitor infrastructure.
· The problem of aging infrastructure is a
serious social problem.
[A]Micro Viewpoint
[A]Market impact
· The plan for extending the Service life of
infrastructure will affect the construction
industry.
· The innovative IT technologies such as
M2M, sensor, and radar are related.
[B]Uniqueness
[Figure] The percentage of over 50-year-old equipment
(Source) Ministry of Land, Infrastructure, Transport and Tourism
16 18
40
30
65
45
7
29
56
2012.March
2022
2032
Bridge Tunnel Harbors

30
N-9
Online
Privacy
Problem
Message
Effective use of personal data and
appropriate protection of privacy has
become serious problems as the
smartphones are rapidly spreading and
the big data technology is developing.
Summary
Effective use of personal data and
appropriate protection of privacy has
become serious problems as the
smartphones are rapidly spreading and
the big data technology is developing.
Japan’s government set up a committee
which cut across ministries and
agencies to consider how to utilize
personal data.
[B]Rating
The privacy problem has impact
specifically on IT sectors.
[A]Macro Viewpoint
· The Prime Minister declared to promote
the utilization of IT and big data is one
of the key technologies of IT sector.
trends
· Privacy rights of consumers would be
more threatened as IT technology has
been developed.
· The news related to privacy problem is
increasing.
[B]Micro Viewpoint
[A]Market impact
· In the IT market, keeping the
appropriate balance between privacy
protection and data utilization is a very
important issue.
[B]Uniqueness
[Figure] Frame work for personal data protection in Japan
(Source) Office of Personal Information Protection, Cabinet Office

31
N-10
Online
Security
Issues
Message
The serious risk surrounding
cyberspace is increasing. Japan’s
government established “Cybersecurity
Strategy”, and MIC started “ACTIVE
(Advanced Cyber Threats response
InitiatiVE)” project with private
enterprise such as NTT, KDDI.
Summary
As merger and integration of
cyberspace and real-space proceed, the
serious risk surrounding cyberspace is
increasing. Information Security Policy
Council established “Cybersecurity
Strategy” as a new national strategy on
cybersecurity in June 2013. The
objectives include (1) Constriction of
“Resilient” Cyberspace, (2) Construction
of “Vigorous” Cyberspace, and (3)
Construction of “World-leading”
Cyberspace.
[B]Rating
The online security issue has impact
specifically on IT sectors.
[A]Macro Viewpoint
· This is an important policy itself.
trends
· As information technology advances,
the security issue will be more
important.
· The security issue became a social
challenge. For example, the number of
the smartphone malware is increasing.
[B]Micro Viewpoint
[A]Market impact
· Online security thread will affect wide
range of markets such as IT sector.
[B]Uniqueness
[Figure] Image of ACTIVE project
1. List the URL of sites which spread malware.
2. Alert users who tend to access dangerous sites.
3. Warn administrators of dangerous sites to take proper measures.
(Source) Ministry of Internal Affairs and Communications

Team Finland Future Watch Report: 30 signals covering 3 markets in Japan

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Team Finland Future Watch Report: 30 signals covering 3 markets in Japan