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Is Japan still setting the trends in the gaming industry?

Craig Beddis
May 31, 2018, 7:00:00 AM

Japan has been setting trends in gaming since the advent of the industry. It developed the consoles that shifted video games into the mainstream and pioneered a number of foundational genres, franchises, and studios (the Mario franchise alone is responsible for the advent of both 2D and 3D platforming games). Accordingly, the Japanese video game market has set the trends for the rest of the world and developed the lion’s share of the most played video games for the last twenty years whilst retaining an incredible dominance in the market. Currently, Japan is the third largest market according to game revenue and generates over $14 million a year.

Part of the country’s success can be attributed to the history of its biggest companies - the likes of Nintendo, Sega, and Playstation. From humble beginnings in the arcades of the 1970s to the home consoles of today, these publishers and studios continue to shape the industry and produce some of the world’s most prominent and treasured video games. This has successfully translated across the globe with strong commercial returns - simply look at the Nintendo Switch’s amazing first year as the fastest-selling console of all time in the United States, en route to the company recording a 505% increase in profits (to ¥178 billion) in the 2017 fiscal year. Similarly, the Playstation 4 retains a 60% market share of the global market with lifetime sales over the 75 million units mark, vastly outpacing the North American Xbox One’s 29% market share and 36.03 million units.

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While it isn’t the PC market that North America is or China is becoming, Japan’s still making significant contributions in that area. One of the most popular MMOs in the world, Final Fantasy Online has spun out of an originally single-player and console-based franchise and now boasts over 10 million active players. Japan has an established and dominant foothold in console gaming, but it never culturally adopted PC gaming the way that its neighbours Korea and China have. Perhaps this is the future of the market - transitioning the goodwill of its console legacy into the high growth area of PC gaming.

Right now, China has surpassed Japan and is the world’s largest video game market. For Japan to secure its place at the top of the tree and challenge China for its share in the market, it needs to keep its sight on cross cultural gaming and continue to export great character-led video games. Perhaps another key to gaining market share is to look to esports and the beginning of a cultural shift towards the idea of gambling. Esports and MMO games are the obvious future of the video game industry, and Japan is starting to change the way it approaches both to maintain its position as a gaming heavyweight.

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