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smart phone games

Japan top grossing smartphone apps

5 top listed smartphone app companies have combined market cap of US$ 14 billion (excluding LINE)

LINE is currently a private company and LINE’s company value is generally estimated in the US$ 10-15 billion range, so if we include LINE, the combined market value of Japan’s top 5 smartphone game companies is on the order of US$ 24 – 29 billion.

Top grossing apps in Japan’s iPhone and Google Play/Android app stores on June 6, 2015

Japan’s smartphone app market is the world’s largest in terms of cash revenues according to AppAnnie. Lets analyze which apps are at the top-grossing in the world’s largest app market.

Japan game market report (398 pages, pdf-file)

iPhone app store top grossing ranking (June 6, 2015)

  1. Monster Strike by MIXI
  2. Puzzle & Dragons by GungHo
  3. Final Fantasy Record Keeper by DeNA
  4. LINE by LINE Corporation
  5. Actual powerful pro baseball by KONAMI
  6. all 25 top-grossing iPhone apps on June 6, 2015

Google Play Android app store top grossing ranking (June 6, 2015)

  1. Monster Strike by Mixi
  2. Puzzle & Dragons by GungHo
  3. LINE Disney tsumu tsumu by LINE Corporation and Walt Disney Corporation
  4. White Cat Project by Colopl Inc.
  5. Sword and sorcery. Logres of Swords and Sorcery – original popular online RPG by Marvelous Inc.
  6. all 25 top-grossing Google-Play store Android apps on June 6, 2015

Market capitalization of the companies involved:

  • Mixi: YEN 443 billion (US$ 3.5 billion)
  • GungHo: YEN 580 billion (US$ 4.6 billion)
  • LINE: unlisted
  • Konami: YEN 324 billion (US$ 2.6 billion)
  • Colopl: YEN 312 billion (US$ 2.5 billion)
  • Marvelous: YEN 86.8 billion (US$ 0.7 billion)

Analyzing the market capitalization of these companies, it is obvious that a large part – or all – of the value is in the smartphone games.

As an example, Mixi’s core business was the mixi Social Network, which lost weight with the success of Facebook in Japan, until the breakthrough success of its Monster Strike game during FY2014.

How are foreign companies doing in Japan’s smartphone app market?

Disney achieved consistently high rankings in cooperation with LINE for the tsumu-tsumu game.

Next highest ranking foreign game is the Finland based, 73.2% SoftBank owned, Clash of Clans by Supercell on rank 12.

Japan game market report (398 pages, pdf-file)

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Categories
mobile games smart phone games

Top Japanese game companies

25 listed top game companies listed on Tokyo Stock Exchange have total market cap of US$ 30 billion

Japan game market report (398 pages, pdf-file):

Japan is the cradle of many global games

Japan created much of today’s global game market with icon’s such as Nintendo. However, today the moment has been taken over by new online game companies. Their combined income now exceeds the traditional icons.

Top Japanese game companies: disruption by newcomers making mobile apps

We wrote in our blog first back in 2009 about the disruption of Nintendo’s blue ocean (Wii and DS) by smartphone app stores.

Top Japanese game companies: top 25 public game companies have added market cap of US$ 30 billion

Today, 25 Japanese online game companies listed on the Tokyo Stock Exchange, have a combined market cap of about YEN 3000 billion (US$ 30 billion).

These are (data of May 9, 2014):

  1. Konami (TSE Code 9766)
  2. DeNA (TSE Code 2432) market cap = YEN 246 billion (US$ 2.5 billion)
  3. Gree (TSE Code 3632) market cap = YEN 216 billion (US$ 2.2 billion)
  4. Square Enix Holdings (TSE Code 9684)
  5. Capcom (TSE Code 9697)
  6. GungHo (TSE 3765), market cap = YEN 612 billion (US$ 6 billion)
  7. Colopl (TSE Code 3668), Market cap = YEN 257 billion (US$ 2.6 billion)
  8. find the full list in our report on Japan’s game sector

Total market cap= YEN 2954.2 billion (=US$ 29 billion)

Top Japanese game companies: list above does not include LINE

This list does not include LINE, which is a private company, and has built a substantial games business.

Japan game market disruption – market report:

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disruption games Mobile

Japan game market disruption: GungHo + DeNA + GREE overtake Japan’s game icons

Japan game market disruption: new smartphone game companies overtake Japan’s game icons like Nintendo in income

[日本語版はこちらへ]

Since last financial year (ended March 31, 2013), three newcomers (GungHo, DeNA, and GREE) combined achieved higher operating income and higher net income than all 9 iconic Japanese game companies (Nintendo + SONY-Games + SegaSammy + BandaiNamco + Konami + TakaraTomy + SquareEnix + Capcom + TecmoKoei) combined.

While the newcomer’s revenues are increasing (except for GREE), the traditional 9 game companies’ revenues peaked in 2008, and have been falling rapidly ever since.

Clearly Japan’s the 2003-2005 mergers in Japan’s game sector did not make the sector “future proof” – more dramatic changes will be either initiated by the iconic incumbents, or imposed on them from newcomers such as GungHo.

Note that the position of foreign entrants remain weak in Japan’s game market overall.

Read more in the article below or in our report on “Japan’s game makers and markets”, and in the following post “Brutal disruption of Japan’s Game Markets”.

Three new game companies (GungHo, DeNA, GREE) overtake Japan's 9 iconic game companies in operating profits
Three new game companies (GungHo, DeNA, GREE) overtake Japan’s 9 iconic game companies in operating profits (note that the last data point for 2013 for GungHo is only for the first 6 months, i.e. full year results will show that the “new” game companies are doing even better compared to the “old” game companies than visible in this figure)

Three newcomers (GungHo, DeNA, GREE) achieve higher net profits than all 9 Japanese game icons combined
Three newcomers (GungHo, DeNA, GREE) achieve higher net profits than all 9 Japanese game icons combined (note that the last data point for 2013 for GungHo is only for the first 6 months, i.e. full year results will show that the “new” game companies are doing even better compared to the “old” game companies than visible in this figure)

Japan game market disruption: online and smartphone came company GungHo with Puzzle and Dragons

GungHo started as OnSale KK, a joint-venture between SoftBank and the US company OnSale Inc., the purpose of this JV was Japan market entry for this US company, an ecommerce company.
OnSale KK pivoted from ecommerce to games and started to distribute the Korean game Ragnarok and others, and changed its name to GungHo.
GungHo’s breakthrough came with “Puzzle and Dragons” – Jan-June 2013 operating profits increased 4050.1% (four thousand fifty percent) compared to the same period one year ago. GungHo is part of the SoftBank group.
More in our report on “Japan’s game makers and markets”

Japan game market disruption: GREE

GREE on the other hand – although a successful new venture in Japan’s game sector – is not doing so well currently: reported revenues and income have both been falling. Essentially, GREE has difficulties to implement the plan to build a global business based on their Japanese methods and business models. The factors are both “hard” and “soft”, i.e. business models, and human factors.
Details on GREE’s performance, and reasons for GREE’s current issues in our report on “Japan’s game makers and markets”

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Categories
games Mobile

Japan game sector disruption

Japan’s iconic game companies (Nintendo, Sony, Sega-Sammy, Bandai-Namco, Konami, Takara-Tomy, Square-Enix, Capcom, Tecmo-Koei) see brutal disruption by smart phone games

Japan game sector disruption: Three newcomers (GREE, DeNA and GungHo) achieve higher operating income than all top 9 incumbent game companies combined

Japan’s top 9 iconic game companies, Nintendo, Sony, Sega-Sammy, Bandai-Namco, Konami, Takara-Tomy, Square-Enix, Capcom, Tecmo-Koei created much of the world’s games markets, and many of the world’s most loved game characters.

They are now seeing brutal disruption.

Japan game sector disruption

With the Financial Year ending March 31, 2013, for the first time, just three Japanese newcomers (GREE, DeNA and GungHo) achieved higher operating income than all top 9 Japanese iconic incumbent game makers:

In FY2012 combined operating income of all 9 incumbent game companies was YEN 67.6 billion (US$ 700 million), combined operating income of the 3 newcomers was YEN 174 billion (US$ 1.8 billion) – even though for GungHo only the first 6 months of 2013 are included in the calculation.

Operating income of Japan's top 9 games companies declined steadily since 2009 - combined operating income for FY2012 was YEN 67.6 billion (US$ 700 million)
Operating income of Japan’s top 9 games companies declined steadily since 2009 – combined operating income for FY2012 was YEN 67.6 billion (US$ 700 million)
In 2013, three newcomers (GREE, DeNA, GungHo) achieved higher operating income than all nine established Japanese game makers. Combined operating income for FY2012 was YEN 174 billion (US$ 1.8 billion) 
In 2013, three newcomers (GREE, DeNA, GungHo) achieved higher operating income than all nine established Japanese game makers. Combined operating income for FY2012 was YEN 174 billion (US$ 1.8 billion) 

The incumbents: Nintendo, Sony, Sega-Sammy, Bandai-Namco, Konami, Takara-Tomy, Square-Enix, Capcom, Tecmo-Koei

Because of its size, Nintendo has the greatest weight in the overall performance of Japan’s traditional game sector. Nintendo has been dramatically affected by the shift from traditional game consoles to smartphones. Still, Nintendo (as all other Japanese iconic game companies) has tremendous resources, tremendous creativity, globally loved characters and brands, and huge cash reserves. I don’t think that Nintendo (and other Japanese game companies) risk as much to follow Nokia and RIM/BlackBerry’s fate, but may be more resilient. However, there has been substantial consolidation in Japan’s games sector of recent years, and the current challenges could lead to more M&A in Japan’s games sector.

The disruptors

We have only picked three important new market entrants – there are many more in Japan’s vibrant mobile game venture scene.

DeNA

DeNA initially started as a mobile auction group, and sees continuous strong growth and high margins.

GREE

Of these three, GREE is currently suffering some set-backs originating from GREE’s business model. GREE started as a SNS and social game platform on Japan’s “galake” (Galapagos Keitai) relying on Japan’s mobile internet services i-Mode, EZweb and Yahoo-Mobile, where operators traditionally take 9% commissions. Initially GREE tried to transfer this “platform on platform” business model to other countries, but this does not seem to work out. So GREE is now pivoting to original games, and has seen setbacks.

GungHo

GungHo started as a joint-venture with a US company, the purpose of this JV was Japan market entry for this US company. GungHo then pivoted away from this joint-venture to become a games company, and produced a series of games, which all did well, but not extraordinarily well. That is, until GungHo created “Puzzle and Dragons”, which is growing spectacularly well: Jan-June 2013 operating profits increased 4050.1% (four thousand fifty percent) compared to the same period one year ago, and net profits increased 2507.8% (two thousand seven percent) compared to Jan-June one year ago.

The disruption

The shift to smartphones is hitting Japanese traditional iconic game makers from all sides:

  • the shift from TV to tablets and mobile phones
  • the shift from dedicated game consoles to smart phones and tablets
  • the shift from Japan’s “galake” feature phones to smart phones
  • the shift in business model from traditional US$ 40-60 game cassettes-type to free game downloads with in-game purchases and advertising
  • …and more

Japan’s game sector report

Learn more: read our report on Japan’s game makers and markets
(approx. 400 pages, pdf file)

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved