On the afternoon of September 28th, at the online live broadcast salon held by Game Top, the director of Japan grateek Inc. and the founder of Xiamen Lingyangnai Software Co., Ltd., Takahashi Lingyangna shared the 2022 An overview of the Japanese game market, including the situation of the blue ocean market such as Japanese Switch, Doujin, and Chain Games, as well as strategies.
In Takahashi’s view, the Japanese mobile game market is already in a red sea trend, and cross-platform games, H5 games and blockchain games have more opportunities to break through in Japan. In addition, he also conducted a detailed analysis of the localization, distribution, promotion and operation of Chinese games in the Japanese market.
For example, in terms of localization, the Japanese version must be made, and the Japanese proficiency of the company’s internal personnel must be high; in terms of legal affairs, trademarks must be registered, and copyright issues must be handled in advance; in terms of promotion, social platforms basically use Twitter, which must be published every day. new content, etc.
The following is the original speech (with abridged):
Hello everyone, I’m Takahashi Reina from Japan’s grateek Inc. and Xiamen Reina Software Co., Ltd. I have been developing games since 1997, and it has been 25 years.
During the epidemic in 2020, I founded a new company in Xiamen, China, mainly engaged in game development, publishing and localization for Chinese games exported to the Japanese market. Before this, I have also developed a lot of IP games, so I am familiar with IP.
Last week, the 2022 Tokyo Game Show was officially held. Due to the epidemic, it was too much trouble for me to travel to Japan from Xiamen, so my Japanese friends helped me to go shopping. In this exhibition, we can see almost no booths for mobile games, and there are more booths for cross-platform games, console games, metaverse (VR), and chain games.
There are also a lot of players participating in this year’s exhibition. I personally think that as far as the game industry is concerned, the epidemic is over. However, the impact of the epidemic continues. It turns out that most of the players in the Japanese mobile game market are office workers. After the epidemic, their home office hours increased, so they began to play console games.
There are now many Chinese games entering the Japanese mobile game market. Judging from the revenue rankings, 25% of the Japanese game market revenue now comes from Chinese games, which is 2 times more than before the epidemic.
Among them, the global revenue of the “Genshin Impact” game reached 3 billion US dollars, the domestic accounting for 30.7% of about 973 million US dollars, Japan accounted for 23.7% of about 711 million US dollars, and the United States accounted for 19.3% of about 570 million US dollars. The Japanese market occupies the second place, so I think Japanese players have higher spending power than American players in terms of moderate to heavy games.
Next, let’s take a look at the top 20 list of Chinese mobile games in Japan in the first half of 2022 (right in the picture below). In this list, there is only one “Romance of the Three Kingdoms Strategy Edition”. In the past, there were many “Romance of the Three Kingdoms” games in China. Going to Japan, but many did not make the list, because the cost of buying is too high.
In the past two years, “buying volume is too high” has become a must for all mobile game publishers to “say hello”. For example, the purchase volume of medium-to-heavy games is about a dozen dollars per user, and the average is about 5 dollars. So now there are too many manufacturers buying in Japan, and the cost is very high. Mobile games are already a Red Sea market. What I want to reveal today is Japan’s blue ocean market.
Overview of the Japanese game market:
Game revenue is about half of China, and the average user age is about 27 years old. AR/VR, board games, and fan games have great potential
First of all, let’s take a look at the overview of the Japanese market. Japan began to enter the game field about 50 years ago, from arcades to consoles to mobile games. Japan’s population is one-tenth of China’s, but its game revenue is one-half of China’s. The Japanese game market is developing fast and growing in size.
There are many differences between Japanese games and Chinese game markets. Due to time constraints, I will briefly explain. For example, arcade games are mostly coin-operated in China, but in Japan, in addition to coin-operated games, arcade games also have network and membership functions, which can record Player information, customer unit price is higher and more.
In Japan, game consoles are standard gifts for children’s birthdays. Nintendo’s Switch is the most popular in Japan. In 2021, the sales rate of Switch game consoles is 77.5%, and the sales rate of PS5 is about 17%. The sales rate of these two game consoles is about 4.5 times different, so there are many Switches in Japan, and Xbox is rare.
The average age of Japanese gamers is about 27 years old, and the age is generally lower . By comparison, the average age of gamers in the U.S. is about 37 and in France 41. I personally feel that the average age of gamers in China is lower.
In terms of games, among the top 30 downloads in the early 2022, 4 are games for small and medium-sized enterprises and independent teams with less than 30 employees. Therefore, in the Japanese game market, small teams also have greater opportunities .
Technically, Japanese console games can be directly developed using general engines such as Unity, Cocos, and Unreal Engine, so the technical differences between large companies and small teams are getting smaller and smaller. For example, “PICO PARK”, a game within the TOP35 of the Japanese game rankings, was developed by only one person.
In addition to console games, VR/AR and tabletop games are also developing rapidly in the Japanese game market. The all-in-one VR machine Meta Quest 2 is very popular in Japan. Earlier, most of the VR glasses were expensive and it was very troublesome to connect the equipment. At present, these problems have been basically solved, so many people use VR equipment to play games.
Table games also have great market potential . The market size of Chinese table games is about 180 million yuan (2.9 billion yen), while the market size of Japanese table games is 1.5 times larger than that of China, reaching 4 billion yen. Japanese light players especially like werewolf games and murder mysteries. After the epidemic, more and more games are played on the Board Game Arena (board game browser) on the computer.
In the above list of “Japanese Game Market Overview”, I also mentioned doujin games, which are a subdivision of computer games and a relatively special market, so I will single them out for explanation today.
Japan’s doujin game market has a history of more than 40 years. It turned out that the games that were made by individuals and bought directly when Comiket and others were active were called doujin games. Now that there is a fan game platform, it is no different from players buying games on Steam.
Most of the current Japanese two-dimensional game IPs are rewritten from fan games. For example, the Touhou Project and Fate series both started from the Doujin Circle team. During the epidemic, the Japanese government also provided subsidies for the development team of doujin, and doujin games are an important culture and industry in Japan.
Compared with independent games, the development cost of fan games is low, and they are basically developed by individuals. If you want more development expenses, you can also use crowdfunding platforms such as Ci-en to raise funds. Development tools can use no-code game development tools such as RPG Maker, and some development teams use Unity, but few. The doujin game market is a special market in Japan, and small teams have great opportunities in this market .
Changes in the Japanese mobile game market:
Mobile games have become a red ocean market, with giants entrenched, cross-platform, H5 games, and blockchain games are still blue oceans
The picture below shows the history of changes in the Japanese mobile game market, which has been 12 years. The early smartphone market began to emerge, and those platforms dedicated to the development of flip phone games turned to smart mobile game platforms. After the standardization of mobile applications, the two major APP platforms of Apple Store and Google Store have become more and more powerful, and many online game or H5 game developers have turned into Unity engineers. Later, as the smartphone market matured, price competition among companies was fierce.
At present, the Japanese mobile game market is already a red sea. Cross-platform games, H5 games and blockchain games have more development opportunities for manufacturers. At present, many Internet manufacturers have started to build H5 platforms. I have released high-quality domestic H5 games to Japan, and the income is relatively good, so I highly respect H5 games. There is not a lot of game content on the Japanese H5 platform, and players need to grow for a long time. Therefore, H5 games in Japan must be operated for a long time.
In recent years, Mirrativ and Fingger live game platforms have also become popular. These are games that can be played on the APP, but the technology developed is similar to that of H5, which requires Unity WebGL research and development. Different from China, in Japan, few people use Cocos to make H5 games, and more research on Unity WebGL, so most of them can only be developed by Unity WebGL. I think this platform also has opportunities.
In addition, it is a blockchain game. The trading of blockchain games and cryptocurrency assets is legal in Japan, so many IP holders and game companies are making their own games. However, the holding of cryptocurrencies involves taxation, such as Bitcoin, which requires a lot of taxation. Therefore, many game companies in Japan register their subsidiaries in Singapore, where the tax rate is relatively low.
There is also a special thing is that ordinary banner ads and TV commercials are generally not allowed in Japan, and the game uses social networks, media and magazines for marketing. However , the development technology of blockchain games is basically similar to that of H5 games, and the publishing technology and methods are similar to console games. So I think the domestic H5 game development team also has a good opportunity to release the blockchain in Japan.
(below) This is the Japanese game industry ecological chain system, including planning, research and development, distribution, distribution, etc. There are many game companies in Japan, such as producers, copyright owners, large companies, self-developed, commissioned outsourcing, small teams, etc. There are many forms of cooperation. There are many small teams. They are responsible for developing games and then handing them over to publishers for distribution. There are many distribution methods.
In the field of game consoles, the well-known Nintendo and Sony are making their own game consoles, publishing games, and having their own app stores, earning multiple incomes. Bandai Namco and Sega Sammi, on the other hand, publish their own games, but they do not have a platform and their income is relatively small.
The leading game manufacturers in the mobile game field include CyberAgent, Mixi, Gungho, etc. Most of them have released games since the Switch, and the scale is medium. Of course, there are smaller game companies such as KLab and Akatsuki. I think Japan’s game industry ecosystem is very large, and small companies can survive, so there must be opportunities for Chinese manufacturers to develop in the Japanese market.
Switch game release process and precautions:
The localization is mainly in Japanese, and the distribution needs to be approved by the game classification review agency. The promotion is mostly on video platforms and web media.
Finally, briefly talk about the process of Switch game release. If everyone wants their mobile games to be released in Japan, then basically games using Unity, Cocos, and Unreal Engine engines can be released to Switch. If it happens to be a mobile game, localize it first, then publish and promote it, so that it can be published on the Switch. This information is rarely mentioned in China, so I will explain it today.
The first is localization. The Japanese version must be made in Japan. There is a function to set the language on the Switch. In China, you can also buy the Japanese version of the Switch through Taobao, which can set the Chinese version. That is to say, if the game is set to Japanese, it can be released in Japan or applicable in China, achieving dual versions and dual income.
Secondly, in terms of distribution, the scale of Japanese hardware reached 202.87 billion yen, and the scale of software reached 158.52 billion yuan, totaling 361.39 billion yuan. The size of the mainframe market in China (including imported versions and national banks) will reach USD 2.16 billion (JPY 292.1 billion) in 2021.
Among them, the hardware scale reached 1.03 billion US dollars (139.3 billion yen), and the software scale reached 1.12 billion US dollars (151.4 billion yen). The domestic console game market is about the same size as the Japanese console market, so manufacturers can release both Japanese and Chinese versions to the Japanese market and get double revenue.
At the beginning of 2021, there was news that the shipments of the National Bank Switch had exceeded the 1 million mark. Proportionally, the ratio of overseas players to national players was about 9:1, and there were more players in the overseas version. Therefore, if a manufacturer releases a game in Japan, domestic players can play it. And the prerequisites for releasing a game are, but not difficult to achieve.
You can directly create an account in the Nintendo Developer Center, and then develop the Switch. The cost is about 50,000 yen , and it needs to pass the review of Nintendo. Then invite CESA (Computer Entertainment Rating Agency) to rate the game (CERO rating system, 300,000 yen) or at IARC rating (free), if the game does not have a CERO rating, it may not be included in the rankings on Nintendo’s official website , so I respect CERO’s rating system.
Finally, there is the promotion part. The promotion of Switch games is similar to that of mobile games. It is mainly invested in social platforms such as Twitter, and it is also a good choice to send press releases in Japan. This is a good opportunity to play game media for free in Japan, and the effect is relatively good. .
In addition, Nintendo also has recommended features, and there are promotions that can help the company appear at the top of the rankings in a short period of time. The effect of using game media or magazines in Japan is better. Of course, it is also suitable to cooperate with Japanese local TV stations to launch advertisements, and the cost is not as high as that of mobile games.
That’s all for today’s sharing. Next, I will also talk about our company’s business. We mainly provide Switch market consultation, developer center account, operate Japanese online platform account, and produce Japanese press releases. If you have business needs, please contact us.
Q: You just mentioned a lot about the Japanese market including Switch, fan games, blockchain games and cross-platform games. So, according to your observation, among the manufacturers from Japan and China going overseas to Japan, are there many manufacturers who are deploying cross-platform games or want to know more about it?
Reina Takahashi: There are many cross-platform games released in Japan and they are very good. Most of the games that Nintendo has released are cross-platform games. But I haven’t seen a single one from China going overseas to Japan, so this is a great opportunity, and it’s what I highly recommend today.
Q: For most Chinese manufacturers, cross-platform games are still relatively unfamiliar. If you are making cross-platform games for the Japanese market, what thresholds are generally involved, such as product design, technology, and commercialization?
Takahashi Reyana: There is basically no threshold for product settings and technology. If you use Unity and Cocos to develop, localize, apply for a developer account, apply for a rating, and pass the Nintendo review, the game can be released directly.
There are also many cases in commercialization. Many mobile games in Japan are released on the Switch. You can refer to their business models. For example, the ultra-casual game we are publishing now has more than 12 million downloads in Japan, including more than 1,000 levels. Some levels are super difficult to keep players long-term, and hyper-casual games can be released on Switch if modified like this.
Q: Last question, do you have any suggestions for manufacturers who intend to make cross-platform games?
Reina Takahashi: Going overseas and cross-platform are part of the market strategy of game manufacturers, so the problems encountered when going overseas or publishing games to other platforms are basically the same. You need to make some changes to the game according to the local market conditions and make the game well. Content setting and promotion, do one after another process mentioned in my sharing. Of course, you can also find partners, and we can also help you publish the game to Japan.
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