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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
native smart phone games smart phone games

Japan Google Play top grossing Android apps

25 Japan Google Play top grossing Android Apps of June 6, 2015 (All Categories)

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

  1. No. 1 Monster strike (by Mixi)
  2. No. 2 Puzzle & Dragons by GungHo
  3. No. 3「LINE: ディズニーツムツム」LINE Disney tsumu tsumu (by LINE Corporation & Disney)
  4. No. 4「白猫プロジェクト」”White Cat project” by COLOPL Inc.
  5. No. 5 「剣と魔法のログレスいにしえの女神・人気の本格オンラインRPG」Sword and sorcery. Logres of Swords and Sorcery – original popular online RPG by Marvelous Inc.
  6. No. 6 「クイズRPG 魔法使いと黒猫のウィズ」”Quiz RPG magic using black cat whiz” by COLOPL Inc.
  7. No. 7 「グランブルーファンタジー】」Grandblue Fantasy by Cygames Inc. (Cygames is a joint-venture company between CyberAgent (74.04%) and DeNA (24.03%), originally founded in May 2011 as a subsidiary of CyberAgent Corporation)
  8. No. 8 LINE PokoPoko by LINE Corporation
  9. No. 9 LINE by LINE Corporation
  10. No. 10 FINAL FANTASY Record Keeper by DeNA
  11. No. 11「実況パワフルプロ野球」”Actual powerful pro base ball” by KONAMI
  12. No. 12 Clash of Clans by Supercell. Supercell is now valued at US$ 5.3 billion and 73.2% owned by SoftBank.
  13. No. 13「ファントム オブ キル」”Phantom of the Kill” by gumi Inc.
  14. No. 14 Love life! School Idol Festival by KLab Inc.
  15. No. 15 OnePiece Treasure Cruise (by Bandai Namco Entertainment Inc)
  16. No. 16 LINE POP2 by LINE Corporation
  17. No. 17「スクールガールズストライカーズ」”Schoolgirl strikers” by Square Enix Ltd.
  18. No. 18 Dragon poker by Asobism Co Ltd
  19. No. 19 Dragon Quest Monsters Superlight (by Square Enix)
  20. No. 20 「戦国炎舞 ‐KIZNA‐ 【人気の本格戦国RPG】」Sengoku Enbu – KIZNA – (popular true waring states RPG) by Sumzap Inc (株式会社サムザップ) (Sumzap Inc. is a 100% owned subsidiary of CyberAgent Corporation).
  21. No. 21 LINE Rangers by LINE Corporation
  22. No. 22 Summoners War by Com2uS Corporation (a South Korean game developer company)
  23. No. 23 「ブレイブフロンティア 【無料本格RPG-ブレフロ】」 Brave Frontier by Alim Co Ltd
  24. No. 24 「消滅都市」  Extinction capital – Everything in its right place. By Wright Flyer Studios Inc.
  25. No. 25 「ユニゾンリーグ◆-ユニフレと冒険-人気本格オンラインRPG」Unison League – (popular original RPG) by Ateam Inc.

Japan game market report

(398 pages, pdf-file)

Copyright (c) 2015-2019 Eurotechnology Japan KK All Rights Reserved

Categories
smart phone games

Japan iOS App store 25 top grossing

25 Top Grossing iPhone Apps of June 6, 2015 (All Categories)

Eurotechnology report: JAPAN’S GAME MAKERS AND MARKETS – DISRUPTION BY SMARTPHONE GAMES
Eurotechnology report: JAPAN’S GAME MAKERS AND MARKETS – DISRUPTION BY SMARTPHONE GAMES
  1. No. 1 Monster strike (by Mixi)
  2. No. 2 Puzzle & Dragons by GungHo
  3. No. 3 FINAL FANTASY Record Keeper by DeNA
  4. No. 4 LINE by LINE Corporation
  5. No. 5「実況パワフルプロ野球」”Actual powerful pro base ball” by KONAMI
  6. No. 6「LINE: ディズニーツムツム」LINE Disney tsumu tsumu (by LINE Corporation & Disney)
  7. No. 7「チェインクロニクル・本格シナリオRPG/エヒクロ」”Chain chronicle original scenario RPG / Chaincro” by SEGA Corporation
  8. No. 8「白猫プロジェクト」”White Cat project” by COLOPL Inc.
  9. No. 9 Love life! School Idol Festival by KLab Inc.
  10. No. 10 MOBIUS FINAL FANTASY by Square Enix Inc.
  11. No. 11 「剣と魔法のログレスいにしえの女神・人気の本格オンラインRPG」Sword and sorcery. Logres of Swords and Sorcery – original popular online RPG by Marvelous Inc.
  12. No. 12 Clash of Clans by Supercell. Supercell is now valued at US$ 5.3 billion and 73.2% owned by SoftBank.
  13. No. 13 LINE PokoPoko by LINE Corporation
  14. No. 14 「クイズRPG 魔法使いと黒猫のウィズ」”Quiz RPG magic using black cat whiz” by COLOPL Inc.
  15. No. 15 「戦国炎舞 ‐KIZNA‐ 【人気の本格戦国RPG】」Sengoku Enbu – KIZNA – (popular true waring states RPG) by Sumzap Inc (株式会社サムザップ) (Sumzap Inc. is a 100% owned subsidiary of CyberAgent Corporation).
  16. No. 16 Dragon poker by Asobism Co Ltd
  17. No. 17 「グランブルーファンタジー】」Grandblue Fantasy by Cygames Inc. (Cygames is a joint-venture company between CyberAgent (74.04%) and DeNA (24.03%), originally founded in May 2011 as a subsidiary of CyberAgent Corporation)
  18. No. 18 Dragon Quest Monsters Superlight (by Square Enix)
  19. No. 19 OnePiece Treasure Cruise (by Bandai Namco Entertainment Inc)
  20. No. 20 Game of War – Fire Age by Machine Zone Inc. (a Palo Alto based game venture company)
  21. No. 21 Summoners War by Com2uS Corporation (a South Korean game developer company)
  22. No. 22 Tsuri Suta (Tsuri = Angling) (by GREE)
  23. No. 23 LINE Manga – free popular manga, daily renewed content by LINE Corporation
  24. No. 24 Hunter x Hunter Battle Allstars (by NamcoBandai Games Inc)
  25. No. 25 Puyo puyo!! Quest (by Sega Corporation)

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

Japan smartphone game business
Japan smartphone game business

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Categories
smart phone games

Japan smartphone app rankings by cash revenue (iOS)

Top grossing app ranking (Feb. 10, 2015)

AppAnnie showed that in terms of combined iOS AppStore + Google Play revenues, Japan is No. 1 globally, spending more than the USA. Therefore Japan is naturally the No. 1 target globally for many mobile game companies, and quite a few of the top grossing apps in Japan are of foreign origin – can you guess which?!

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

iOS AppStore-Japan “Top Grossing” ranking of February 10, 2015:

Note that the iOS ranking shown here is very similar to the Android / Google Play top grossing ranking.

  • No. 1 Monster strike (by Mixi) from rank 2 on July 13, 2014
  • No. 2 Puzzle & Dragons by GungHo (from rank 1 on July 13, 2014)
  • No. 3 白猫プロジェクト (= white cat project) (by Colopl Inc.)
  • No. 4 Dragon Quest Monsters Superlight (by Square Enix) (from Rank 12 on July 13, 2014)
  • No. 5 LINE Disney tsumu tsumu (by LINE Corporation) (ツムツム = Tsum Tsum) (from Rank 3 on July 13, 2014)
  • No. 6 Final Fantasy Record Keeper (by DeNA Ltd)
  • No. 7 LINE (by LINE Corporation)
  • No. 8 Love life! School Idol Festival (by KLab Inc.) (was rank 9 on July 13, 2014)
  • No. 9 LINE PokoPoko (by LINE Corporation)
  • No. 10 Logres of Swords and Sorcery – popular online RPG (by Marvelous Inc.) (was rank 14 on July 13, 2014)
  • No. 11 Clash of Clans (by Supercell) (was rank 5 on July 13, 2014)
  • No. 12 Runaway lives motorcycle Tiger (by Donuts Co Ltd)
  • No. 13 Drift Spirits (by Bandai Namco Games Inc)
  • No. 14 Actual powerful pro-baseball (実況パワフルプロ野球) (by KONAMI)
  • No. 15 Sengoku Enbu – KIZNA – (by Sumzap Inc) (was rank 8 on July 13, 2014)
  • No. 16 Sword Art Online Code Resister (by Bandai Namco Games Inc)
  • No. 17 Chain chronicle – real scenario RPG (ChainChro = チェンクロ) (by SEGA Corporation)
  • No. 18 Schoolgirl strikers (by Square Enix)
  • No. 19 Summons Board (by GungHo Online Entertainment)
  • No. 20 Puyo puyo!! Quest (by Sega Corporation) (was rank 11 on July 13, 2014)
  • No. 21 Granblue Fantasy (by Cygames Inc)
  • No. 22 LINE Manga – daily reload of popular manga free of charge (by LINE Corporation)
  • No. 23 Brave frontier (by Alim Co Ltd) (was rank 4 on July 13, 2014)
  • No. 24 Dragon poker (by Asobism Co Ltd) (was rank 6 on July 13, 2014)
  • No. 25 LINE POP2 (by LINE Corporation)

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

Copyright 2015-2019 Eurotechnology Japan KK All Rights Reserved

Categories
smart phone games

Japan iPhone AppStore: world’s top grossing!

iPhone AppStore-Japan “Top Grossing” games ranking of July 13, 2014:

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

Bold figures show rankings in February 2014

  1. No. 1 Puzzle & Dragons by GungHo
  2. No. 2 Monster strike (by Mixi)
  3. No. 3 LINE Disney tsumu tsumu (by LINE Corporation & Disney) (Tsum Tsum) (was rank 23)
  4. No. 4 Brave frontier (by Alim Co Ltd) (was rank 19)
  5. No. 5 Clash of Clans (by Supercell) (was rank 13)
  6. No. 6 Dragon poker (by Asobism Co Ltd) (was rank 17)
  7. No. 7 Tsuri Suta (by GREE) (same rank 7)
  8. No. 8 Sengoku Enbu – KIZNA – (by Sumzap Inc, subsidiary of CyberAgent) (was rank 8)
  9. No. 9 Love life! School Idol Festival (by KLab Inc) (was rank 14)
  10. No. 10 LINE Rangers (by LINE Corporation)
  11. No. 11 Puyo puyo!! Quest (by Sega Corporation) (was rank 9)
  12. No. 12 Dragon Quest Monsters Superlight (by Square Enix) (was rank 3)
  13. No. 13 Ange Vierge – No. 2 Public Morals Committee Member girls battle (by Sega Corporation)
  14. No. 14 Logres of Swords and Sorcery – popular online RPG (by Marvelous Inc.)
  15. No. 15 Pro yakiyu PRIDE (by Colopl Inc) (was rank 6)
  16. No. 16 Merc Storia (by Happy Elements KK)
  17. No. 17 Candy Crush Saga (by King.com Ltd) (was rank 15)
  18. No. 18 OnePiece Treasure Cruise (by Bandai Namco Games)
  19. No. 19 SG GUNDAM GENERATION FRONTIER (by Bandai Namco Games)
  20. No. 20 Summoners War: Sky Arena (by Com2u2 Corp., a South Korean game company)
  21. No. 21 Quiz RPG Witch and black cat quiz (by Colopl) (was rank 2)
  22. No. 22 LINE Pokopang (by LINE Corporation (was rank 5)
  23. No. 23 World soccer collection S (by KONAMI) (was rank 24)
  24. No. 24 Frozen Free Fall (by Disney)
  25. No. 25 Gundam Area wars (by NamcoBandai Games Inc) (was rank 18)

Dropped out of the top 25 since February 2014:

  • February 2014:No. 10 Gunzei RPG aoi no sangokushi (by Colopl)
  • February 2014: No. 11 Bousou retsuden tansha tora (by Donuts Ltd) (a motobicycle race game)
  • February 2014: No. 12 Dragon league X (by Asobism Co Ltd)
  • February 2014: No. 20 Chain cronicle. Original scenario RPG. Chencro (by SEGA Corporation)
  • February 2014: No. 21 LINE Play (by LINE Corporation)
  • February 2014: No. 22 LINE Bubble! (by LINE Corporation)
  • February 2014: No. 25 Hay Day (by Supercell)

AppAnnie showed that in terms of combined iOS AppStore + Google Play revenues, Japan is No. 1 globally, spending more than the USA. Therefore Japan is naturally the No. 1 target globally for many mobile game companies, and quite a few of the top grossing apps in Japan are of foreign origin – can you guess which?!

Japan’s iconic game companies created many game categories – this tradition carries over to mobile gaming now.

Building a business in Japan is not trivial

Many foreign game companies have failed and given up. Foreign game companies that have recently given up in Japan include Zynga and Habbo Hotel. EA has given up twice, and is now undertaking the third entry to Japan. To understand some of the key mistakes foreign companies make in Japan, read our blog about why Vodafone failed in Japan.

Lets have a look at the list of top grossing games in the Apple iOS AppStore today. Out of the 25 top grossing games in the AppStore, quite a few are by foreign originating companies. Can you guess which these are by reading the list above?

Japan is certainly not a “closed market”. It is obvious that Apple does not discriminate in any way against foreign companies in Japan – and neither do Japanese consumers!

Interestingly, neither Nintendo, nor Rovio’s games, such as Angry Birds appear among the 200 “top grossing games” in Apple’s iOS Japan AppStore.

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

Copyright (c) 2014-2019 Eurotechnology Japan KK All Rights Reserved

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:

Copyright 2014 Eurotechnology Japan KK All Rights Reserved

Categories
games M&A mobile games smart phone games Software

“Japanese superman Masayoshi Son” invests in Supercell (interview for Talouselämä, Finland’s largest business newspaper)

“Japanese superman Masayoshi Son” invests in SuperCell – interview with Finland’s largest business newspaper Talouselämä

Talouselämä (Finland’s largest business newspaper)’s news editor Mirva Heiskanen interviewed me for their article entitled “Japanese superman Masayoshi Son invests in Supercell” (Supercellin ostaja Masayoshi Son on Japanin supermies).

More interviews by Gerhard Fasol.
To understand SoftBank better, read our report on SoftBank, an analysis of SoftBank, history, current data, and the context.

Here are some of my main points:

Its not well known in Europe and US yet, but SoftBank is a very large company, and aiming to become the world’s largest company

SoftBank is really a very large company, driven by the charismatic founder Masayoshi Son. To get a feeling for the size of SoftBank, while the investment in Supercell is a large amount of money by anybody’s standards, its about 5% of SoftBank’s acquisitions this year alone (in addition to M&A type investments, SoftBank also invests substantial sums in networking equipment and other telecom business infrastructure and data centers).

SoftBank invested in about 1500 companies, the most famous currently being Alibaba

Overall SoftBank invests in about 1500 companies or more: SoftBank takes a venture capital approach to this portfolio. Overall SoftBank investments are incredibly successful. As an example, look at the currently important Alibaba case:
Softbank acquired 36.7% of Alibaba in 2000 for US$ 20 million.
Alibaba’s market cap will be determined after its IPO, but currently figures between US$ 100 billion and even up to US$ 250 billion circulate. This would value SoftBank’s 36.7% stake in Alibaba at somewhere between US$ 36.7 billion and US$ 91 billion, a return on initial investment between 1835 and 4550 times!

While SoftBank’s overall portfolio is outstandingly successful, not every single investment is successful, as is normal for a venture type investment style.

This year alone, SoftBank investments and acquisitions amount to about US$ 30 billion

This year SoftBank’s direct investments and acquisitions alone are on the order of US$ 30 billion and include:

  • Sprint US$ 21.6 billion + infrastructure investments
  • Clearwire (not sure if this is included in the Sprint figures)
  • eMobile/eAccess US$ 5 billion including debt
  • GungHo increase stake US$ 1/4 billion
  • Supercell US$ 1.5 billion
  • mobile phone distributor Brightstar which is another US$ 1.26 billion

Talouselämä questions about SoftBank and its investment in Supercell and my answers:

  • What are SoftBank’s targets? SoftBank wants to become one of the most important companies globally, has a 30 year plan and a 300 your plan
  • How does SoftBank integrate acquisitions? Case-by-case. In some cases, e.g. Vodafone-Japan KK, Softbank totally absorbed the company and its assets became much of the starting point of SoftBank Mobile, however today’s SoftBank Mobile is a dramatically different company compared to Vodafone-Japan KK, which according to Masayoshi Son in recent interviews “was going south”.
  • How important are games for Softbank? SoftBank is major investor in GungHo, which is one of the world’s most successful smartphone game companies.
  • What other businesses does SoftBank concentrate on, and what kind of goals does it have? SoftBank today focusses on mobile communications and internet, however is also active in other areas. For example, SoftBank is aggressively building an energy business, with focus on renewable energy, which includes renewable energy investments in Mongolia for example. SoftBank‘s more than 1500 investments include Alibaba and Yahoo Japan KK.

To understand SoftBank better, read our report on SoftBank, an analysis of SoftBank, history, current data, and the context.

Understand Japan’s games sector and its disruption

Report “Japan game makers and markets” (pdf file, approx 400 pages, 140 figures)

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved

Categories
games Mobile

Supercell wins SoftBank and GungHo investment

Supercell investment by SoftBank and GungHo

Supercell investment leverages paradigm shift, time shift and market disconnects

Smartphones and the “freemium” business models are bringing a dual paradigm shift to games and create a new truly global market. To take advantage of this global paradigm shift, its necessary to overcome the cultural disconnects between markets. SoftBank and GungHo‘s investment in the Finnish smartphone/tablet game maker Supercell, announced on Oct. 15, will help to overcome the disconnect between Japan’s and other game markets for both Supercell and GungHo.

The disconnect between Japan and other countries is often surprising – when BusinessWeek in 2006 commented on rumors that SoftBank might introduce an Apple “iPod-Phone” to Japan, BusinessWeek remarked that “Apple would normally never talk to a small-fry such as SoftBank” …. at that time SoftBank’s annual revenues were about twice Apple’s, and BusinessWeek printed my correction pointing out that SoftBank even at that time was anything but a “small fry”.

One of SoftBank‘s aspects is it’s “time-shift” investment model, another is SoftBank‘s 30/300 year vision – both are important factors to understand the Supercell investment.

Supercell investment: Comparing Supercell's US$ 3 billion valuation with Japanese game companies (note that the market cap for the full SONY Group is shown here)
Comparing Supercell’s US$ 3 billion valuation with Japanese game companies (note that the market cap for the full SONY Group is shown here)

This Figure contrasts the market caps of new mobile and smartphone centric game companies (GungHo, Supercell, DeNA and GREE) with traditional console, video game and arcade game companies.

SoftBank announced that because of the majority investment, Supercell will become a subsidiary of SoftBank, and GungHo will account for Supercell’s profit/loss under the equity method.

Supercell investment: Comparing Supercell with Japanese game companies and SoftBank
Comparing Supercell with Japanese game companies and SoftBank

GungHo and Supercell both are top-ranking mobile game companies: GungHo inside Japan with “Puzzle and Dragons”, and Supercell outside Japan with “Hay Day” and “Clash of Clans”. Expect both to leverage each other’s resources.

Both GungHo and Supercell show explosive growth:
GungHo’s operating profits increased 4050% (x 40) for Jan-June 2013 compared to the same period one year earlier.
Supercell’s revenues (mainly in-game purchases) jumped 500x from EURO 151,000 in 2011 to EURO 78 million in 2012.

Culture can be an issue between Japan and other countries, however, SoftBank has invested in more than 1000 comparable companies, and many of SoftBank’s investments have been outstandingly successful including Alibaba and Yahoo.

However, investment and management support by SoftBank does not automatically guarantee success in Japan – despite SoftBank’s investment and support, Zynga closed operations in Japan earlier this year. Success in Japan will remain Supercell’s responsibility, despite SoftBank’s and GungHo’s help and investment – as Zynga can tell.

SoftBank aims for global No. 1 position: Learn more about SoftBank, Masayoshi Son, and his 30/300 year vision for SoftBank

Report on “SoftBank today and 300 year vision” (approx 120 page, pdf file)

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved

Categories
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) Source: https://www.eurotechnology.com/store/jgames/
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) source: https://www.eurotechnology.com/store/jgames/

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:

Copyright 2013 Eurotechnology Japan KK All Rights Reserved

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)

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