Enter the Japanese Gaming Industry

Japan has long been a leader in video game development; take Mario Kart 8 Deluxe, for example. With over 62.9 million units sold worldwide, it not only makes it the best-selling game of Nintendo but also reinforces the influence of the Japanese video game sector on a global scale. 

Understanding what it takes to enter the Japanese gaming industry is crucial for anyone aiming to succeed in this dynamic and competitive market. In this article, we’ll explore the key factors to consider before bringing your business to Japan and offer some tips that will best equip you for a successful entry into this thriving sector.

What makes Japan such an attractive place for game developers?

The Japanese gaming industry is known for its innovation, creativity, and passionate fanbase. In 2023 alone, Japan had over 73 million gamers, each spending an average of US$249, making the Japanese gaming market the third-largest and one of the most influential in the world. 

This success is deeply rooted in Japan’s unique blend of cutting-edge technology and rich cultural heritage. With a strong emphasis on storytelling and aesthetics, as well as the country’s deep appreciation for art and tradition, Japan integrates its forward-thinking approach to game design, resulting in games that are not only visually appealing and technically advanced but also culturally resonant. 

This fusion of innovation and tradition, combined with a customer-centric approach, is a key factor in why Japan continues to lead the global gaming industry and attract game developers from all over the world. 

Top trends in the Japanese gaming market

Live service games

Live service games (LSG) are the ones that constantly evolve and update after release, often through downloadable content or in-game events. They are designed to keep players engaged as much as possible by providing new experiences and features.

Shift from console to mobile gaming

Despite Japan being one of the world’s largest and most influential markets for console gaming, there’s been a slow but noticeable shift towards mobile devices among Japanese players. Currently, mobile gaming is the most dominant platform, both domestically and internationally, accounting for more than 50% of the global revenue in the gaming industry. With long commuting times in Japan, particularly in major cities like Tokyo and Osaka, mobile devices offer a convenient and accessible way for people to enjoy gaming throughout the day. 

Handheld console gaming 

One of the big differences between the Japanese gaming industry and the Western one is the popularity of handheld console gaming. Handheld consoles form a big part of the gaming culture in Japan, as they allow players to have a personal and immersive experience on the go. 

Expansion of VR and AR

Virtual reality (VR) and augmented reality (AR) have become increasingly popular in Japan as they allow players to have an immersive experience like no other. There’s been an increased adoption of VR and AR technologies in Japan in 2023, and it’s expected to grow in the future. Many famous titles like Hatsune Miku, Horizon Call of the Mountain, and Gran Turismo 7 have been adapted to VR/AR experiences, pushing the boundaries of traditional gaming.  

Haptic feedback devices

Haptic feedback devices have a long history in the gaming industry, but the ever-changing technological developments have recently brought them to a whole different level. Haptic feedback allows players to gain a more improved gaming experience due to the sense of realism and immersion. Japanese players are known for their appreciation of technology and desire for unique gaming experiences, making haptic feedback devices popular in the Japanese gaming industry.

How can foreign companies enter the Japanese market?

Given the competitive nature of the gaming market in Japan, thorough preparation is essential for a successful expansion of your business here. Below are the things you can do to enter the Japanese gaming industry confidently:

Understand the market and consumers

The first and one of the most important steps to launching your business in Japan is to understand the market you’re trying to enter. By learning about the consumers and their needs, as well as market behavior, you can improve the products and services you offer and gain valuable business insights. This will give you a competitive advantage and foster your company’s growth. Some of the things that can help you with this include:

• Studying your competitors (both large corporations like Bandai Namco and start-ups like Playco)
• Understanding consumers’ cultural preferences 
• Conducting targeted research and running focus groups 

Build your local partnership

Business networking gives access to professional connections, new opportunities, and potential clients, keeps you informed about the latest industry trends, and gives confidence in presenting yourself and your business. Many people underestimate the power of building local partnerships, but forming strong connections with other professionals in the industry is key for long-term business growth and success. 

There are many ways to expand your network and get professional recognition from potential clients and other experts. If you want to enter the Japanese gaming industry as a foreign company, you might want to consider the following networking options:    

• Engaging with Japanese gaming communities through websites like X (Twitter) or Meetup
• Attending eSports events, gaming conventions, and conferences 
• Joining local events exclusively for start-ups 

Leverage social media and marketing 

Today, establishing an online presence is necessary to increase visibility and build a good reputation in a competitive industry. By doing so, you’ll be able to directly engage with players, share updates, and receive feedback, which in return will help you adapt your business strategies and build your game community. 

Being new to social media and not knowing where to start can be overwhelming, especially if you’re trying to get brand recognition. A good approach to building your presence effectively is to explore these strategies:

• Partnering with popular gamers in Japan for brand recognition 
• Using social media platforms like Twitch and Nico Nico Douga 
• Collaborating with other brands that might be relevant to your audience   

Challenges faced by foreign companies

Entering a new market is always a challenge, and this becomes even more complex when the market is not only foreign but also competitive. However, by anticipating potential obstacles and developing effective strategies to overcome them, you can significantly reduce the time, energy, and financial resources required to enter the Japanese gaming industry successfully.

Language and Cultural Barriers

Japan is known for its distinct cultural landscape, with long-standing traditions and social norms that influence consumer behavior and business practices. To establish a positive reputation here, it’s necessary to understand the nuances of Japanese communication styles, which often put an emphasis on politeness, modesty, and ambiguity. Our article on Japanese business etiquette will help you avoid misunderstandings and build meaningful connections in Japan.

Japanese society predominantly consists of monolingual individuals, which can pose a significant challenge due to language barriers. Learning the language and hiring bilingual professionals will help you and your business to better understand your customers and build a stronger brand image here

Intense Competition

The Japanese gaming industry is not only vast but also highly competitive, with numerous established domestic businesses that have influenced the market and have a loyal customer base. Companies like Nintendo and SEGA have set high standards for quality, innovation, and brand image. This intense competition makes it challenging for foreign companies aiming to establish a presence in Japan, as they must offer something truly unique and eye-catching to what is already available. 

Additionally, Japanese gamers are known for their high expectations for graphics, character designs, and storylines. As a foreign company, you should focus on investing in research and development to create games that will stand out. This can involve developing exclusive content, securing partnerships with local companies, or focusing on creating new technologies for a better gameplay experience.

Local Regulations 

Navigating local regulations is another critical challenge for foreign companies entering the Japanese gaming industry. Japan has specific laws and guidelines that govern the gaming sector, so it’s always worth consulting professional services to ensure that your business complies with the latest regulations. For example, popular eSports games never host their competitions in Japan due to the strict local regulations on the prize pool, which cannot exceed JP¥100,000. The prizes offered at tournaments in the US far exceed this amount.  

Best Events for Game Developers

Gaming events are crucial platforms for game developers to connect with industry professionals, showcase their work, and foster business growth. Japan is known for hosting a variety of initiatives tailored specifically for gaming start-ups and foreign companies wishing to enter the Japanese gaming industry. Here are some of the events you might want to visit:

BitSummit

BitSummit is an annual game festival held in Kyoto that focuses on showcasing indie games from both domestic and international developers. The event features a wide range of activities, including game exhibitions, live demonstrations, panel discussions, and award ceremonies. BitSummit is known for its vibrant atmosphere, where indie developers can connect with fans, receive feedback, and network with other creators and industry insiders.

Tokyo Game Show (TGS)

Tokyo Game Show is one of the largest and most influential gaming conventions in the world, and it is held annually in Tokyo. It’s a platform for game developers, publishers, hardware manufacturers, and industry professionals to showcase their latest products and technologies. TGS features a mix of business days, where industry professionals can network and establish their business presence, as well as public days, where gamers and fans can experience new games, attend panels, and participate in various activities.

GPU Technology Conference (GTC) Japan

The GPU Technology Conference Japan is an annual event organized by NVIDIA that focuses on the latest advancements in GPU (Graphics Processing Unit) technology and its applications across various industries relevant to the Japanese market. This conference focuses on new and innovative ways to utilize AI in entertainment, particularly in game programming, and serves as a platform for networking, collaboration, and learning about the latest trends and breakthroughs in GPU-powered technologies.

Computer Entertainment Developers Conference (CEDEC)

CEDEC is an entertainment-focused programming conference held annually in Kanagawa, aimed specifically at video game development. Organized by the Computer Entertainment Supplier’s Association (CESA), CEDEC brings together game developers, programmers, artists, and other industry professionals worldwide to learn from each other and stay updated on the latest gaming trends and developments. 

5 Tips for aspiring foreign game developers in Japan

1. Understand your consumer 

To thrive in the evolving Japanese gaming market, you have to anticipate potential shifts in consumer preferences and adapt your business strategies and game development accordingly. By actively seeking feedback, staying informed about industry trends, and investing in research, you can ensure your offerings remain relevant and resonate with the Japanese game audience.  

2. Focus on localization

Localization is the process of adapting a product or service to a specific market or culture. This involves translating content, tailoring features, and incorporating cultural nuances to best connect with your target audience. To effectively engage with the Japanese market, it’s important to prioritize localization. This will guarantee that what you offer is customized to fit Japan’s distinct cultural and linguistic environment. 

3. Introduce more payment options

Japanese consumers have diverse payment preferences that range from credit and debit cards to e-wallets and mobile payments like PayPay. Offering a wide range of payment options ensures that you cater to the preferences of a wider audience, making it easier for them to purchase your games or in-game content.

4. Find a start-up accelerator 

Start-up accelerators can provide your business with the valuable mentorship, networking opportunities, funding, and market insights needed to enter and thrive in the Japanese gaming industry. 

5. Focus on the quality over quantity 

Developing a game product that features an elaborate storyline, detailed character designs, and high-quality vocalization will attract loyal customers who will be willing to invest in the game and stay with you long-term. 

Final Thoughts

Once you enter the Japanese gaming industry, you’ll be presented with a unique set of challenges and opportunities. As a global leader in video game development, Japan’s market is both highly competitive and deeply rooted in a rich cultural heritage. To succeed, foreign companies must understand the cultural nuances and local regulations, navigate the intense competition, and strategically leverage emerging trends in the market. Building strong local partnerships, investing in market research, and focusing on localization should be your strategies for a successful entry.

For your gaming business to thrive in Japan, it’s very important to have thorough preparation and remain adaptable to the country’s evolving landscape. Whether you’re a start-up looking to break into this market or an established company seeking expansion, understanding the complexity of the Japanese gaming industry will set you on the path to success. 

Our CEO, Tyson Batino, Has founded 3 Successful business
in Japan

Scale your business in Japan and beyond. Book a free consultation with us today and let us help you do the same.

CONTACT US