Thrive in Japan's Growing Gaming Market

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Thrive in Japan's Growing Gaming Market

August 10, 2023

Gaming and Japan hold a long history of firsts and milestones that have shaped the gaming industry since companies like Sega, Nintendo, and PlayStation first propelled beloved favorites like Sonic, Super Smash Brothers, and Final Fantasy into our homes and hearts. It is no surprise gaming culture thrives in Japan today more than ever. With the 3rd largest video game market globally and a higher proportion of active players, Japan represents a huge market for game developers and publishers to cultivate and grow an audience for their games. As game lovers ourselves, Xsolla opened up an office in Tokyo to help local developers and publishers capitalize on our industry expertise, better serve our current partnerships in the regional market, and help Japanese developers scale their business on a global level. The online games market is projected to reach USD 3.77 billion this year, with an increase to $4.42 billion by 2027, which makes now the perfect time for Japanese developers to unlock more payment and monetization solutions with Xsolla, no matter the company size or development stage.

Japan's Gaming Landscape

Over the last few years, the rise in mobile gaming combined with trends in eCommerce has made Asian markets a hotbed of growth for mobile games and digital payment methods. In Japan, the proliferation of smartphones, expanding 5G coverage, and the behavioral effects of the Covid-19 pandemic generated $13 billion in mobile game revenue in 2021 -- half of that year's total video game revenue. While some of that growth can be attributed to the lockdowns, the mobile game market will likely generate $22 billion by 2026. Japanese mobile gamers also hold the highest average revenue per user (ARPU) and are on track to spend $546.09 billion by 2026. It's clear how closely tied Japanese culture is to gaming since nearly 58% of the population actively play games daily, regardless of platform. PC games are also gaining a bigger following, previously considered a niche market with consoles and mobile dominating. Japanese gamers have begun to embrace PC gaming as indie games have become more accessible, and platform availability continues to expand. Since 2015, PC gaming in Japan has grown from 11 million to 16 million users in 2021. Acceptance of payment methods outside of credit cards or cash is also rising in Japan. While credit and cash are still the preferred spending methods, mobile payment apps like PayPay are used in 41% of consumer transactions. In a recent report by Statista, the number of users choosing to use mobile wallets is expected to reach 151 million users by 2025. So what does this mean for game developers? Japan's deep cultural ties to gaming produce more gamers that spend more time and more money on gaming than countries with bigger populations. Breaking into Japan's video game market presents huge opportunities for developers looking to find an audience for their mobile games and boost revenue.

Strategies to Success in the Japanese Gaming Market

While the opportunities are very clearly abundant, breaking into Japan's gaming market can present some challenges, specifically regarding localization. A successful gaming business in Japan requires preparation, such as when dealing with local laws and regulations, and an understanding of Japan's unique gaming culture.

Understand your target audience. Japanese gamers have their own preferred game genres, themes, and art styles and differ in their motivation to play a game compared to their US or Chinese counterparts. Learning about Japanese cultural and social preferences is essential to your long-term success.
Localize your game. Fluency in Japanese is crucial to ensure that your game and your marketing strategy provide an immersive experience for your target audience, so they can quickly learn about and enjoy your game.
Learn and adhere to laws and regulations. Japan is protective of its people and has strict laws and regulations related to virtual currency, game rewards, remote operation, and email communications. The more you know, the better prepared you will be.
Partner with a local entity. Having a trusted partner local to Japan will allow you to better navigate all the complexities of the country’s various rules and regulations and cultural differences. Xsolla's local presence in Japan allows our company to:
Support local game developers in scaling their games globally and reaching more players
Provide market expertise for regulations and tax complexities of the Japanese market on your behalf as your merchant of record
Unlock expansion opportunities for international game developers that want to enter the Japanese gaming market
Offer comprehensive payment solutions for international game developers to accept payments from Japanese players
Develop and launch Japan-tailored marketing. Localized marketing campaigns should appeal to Japan's diverse gamers and focus on particular gamer segments (free, light, and hardcore). Xsolla's marketing and legal team can provide analysis and reevaluation to run the most effective marketing campaigns.
Access more payment options. Player purchasing behaviors are evolving, with digital payment methods on the rise. Getting your games to the right players and providing the best payment options for them can be overwhelming. But with Xsolla, you have instant access to 700+ payment methods across 200+ locations plus the industry's leading fraud protection. You can make your players happy and increase your revenue at the same time.

If you are a Japanese game developer or publisher looking for new monetization solutions and to level up your business, Xsolla is the trusted partner you need. Contact an expert from our team and explore Xsolla’s range of tools and solutions today and see how we can help expand your presence in Japan and worldwide.