Overview of the market

While the rise of smartphone gaming apps helped to expand the Japanese video game market as a whole, it is also thought to contribute to the decline of other parts of the industry, such as handheld and home consoles. Compared to consoles, smartphone gaming applications profit from a high potential user base, as consumers do not need to buy specific hardware to play games. Games are usually free to play, but often feature the possibility of in-game purchases for additional content, such as items or characters. This type of monetization was pioneered by companies like DeNA and GREE in the mid-2000s and has since become a staple of the mobile gaming market. A look at the monthly market share held by smartphone operating systems reveals that Android and iOS are close competitors, with hundreds of gaming apps being newly released for both operating systems every year. A survey from 2020 showed that puzzle games were the most commonly experienced smartphone game genre among people who had played at least one smartphone game.

Shift towards online distribution

Accompanying the growth of the mobile game market is a shift towards online distribution in the gaming industry. Video games constitute the main driver behind the rise of content distributed online in Japan, making up more than two thirds of consumer expenditure on online content. In the mobile gaming market, domestic companies like CyberAgent, Mixi, GungHo Online Entertainment and the aforementioned DeNA and GREE still play a dominant role, with the majority of recent best-selling titles coming from Japanese companies. As recent news reports have pointed out, however, foreign companies, especially from China and South Korea, are making inroads into the Japanese market.

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