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In-depth Japan’s Game Industry Jumps to New Platforms
Many Ways to Play: A Mobile Game Creator Looks at Global Trends

CEO Sanada Tetsuya of the smartphone game developer KLab offers his take on the direction of the gaming industry in Japan and worldwide.

Sanada Tetsuya

Sanada TetsuyaCEO of KLab. Founded his first company as a 19-year-old college student after recognizing the huge potential of the Internet. In 1998, he founded the company Cybird, listing it on JASDAQ in 2000. That same year he launched KLab as the R&D branch of Cybird, tasked with research and development of mobile software. KLab entered the social gaming market in 2009 and produced a number of hit titles. The company was listed on the Tokyo Stock Exchange Mothers in 2011 and on the TSE First Section the following year. KLab has geared itself to the global era by opening overseas offices in Manila, San Francisco, Singapore, and Shanghai, and has begun providing mobile online games for the global smartphone market. Today KLab is pursuing its goal of becoming the world’s top smartphone application vendor.

Console Games Still Popular Outside Japan

INTERVIEWER  There seems to be a tectonic shift underway in game platforms. Now that mobile games have become the main format, companies that had dominated the console game market, like Nintendo and Sony, are in decline.

SANADA TETSUYA  It’s certainly true that Japan’s console vendors like Nintendo are not doing well. But that’s only the situation in Japan. If you look at the global market, it becomes clear that PlayStation 4 surpassed the 20 million unit sales milestone at record speed, and it has been selling even better in Europe and North America than PlayStation 3 did.

For the past few years, the console game market in Japan has been shrinking, in terms of both hardware and software. It’s now around the 400 billion yen level. In contrast, the console market in Europe and North America has been expanding, so there is a huge gap between those two situations.

But turning to Asia, the situation is again different. China and South Korea did not have console games to begin with. Plus, exports of games to China were once not possible due to the problem of piracy and restrictions placed on exports to Communist bloc countries under the Coordinating Committee for Multilateral Export Controls. Since they didn’t have consoles, the gaming culture in those two countries revolved around games played on PCs, either at home or at the PC bang LAN gaming centers. Chinese and Koreans developed their own original online gaming cultures and games that were unique to their own countries.

INTERVIEWER  How do you account for the fact that the console market in Japan has declined, while mobile phones have become the main gaming format?

SANADA In discussing the relationship between console and smartphone gaming, people in Europe or North America often draw comparisons to the dynamic between movies and television. That is to say, when television first arrived on the scene, there was a view that film culture would wither away. But what happened, in fact, was that the film industry started to produce more and more big-budget films to set itself apart from TV shows. By spending millions of dollars on such films, the industry succeeded in carving out its own niche.

This same logic can be applied to the console market. In Europe and North America, console games from studios like Take-Two Interactive and Ubisoft offer incredibly high-resolution graphics that almost rival the quality of a film. These are high-budget games that cost as much as 30 billion yen to produce. There’s no way to recreate that visual impact on a tiny smartphone screen.

The gap today between the budgets on console game production in Japan and in the United States is as wide as the gap between Hollywood movies and Japanese films.

We’ve reached the point today where the best-selling 3D smartphone games have budgets of around 200 or 300 million yen, which is more than the production costs of some Japanese films. Apart from some super-big-budget console titles, like the Final Fantasy series, about as much is spent in Japan on developing games for smartphones as for consoles.

In short, we can see in Europe and North America that there is a trend toward console games with highly realistic graphics, such as first-person shooters. Meanwhile, in Japan, it seems that one reason console games have lost out to smartphone games is that the console makers have not been able to establish a niche in the way that the movie industry once did in the face of the rise of television.

In this way, the game market in Japan began to fall into the so-called Galapagos syndrome, developing in a way that led to its isolation from global market trends. My own theory is that this development can be traced back to around the time of the first Dragon Quest game. Influenced by the popularity of that title, Japan headed in the direction of 2D role-playing games, whereas Europe and North American moved toward high-impact 3D games. And smartphones are well suited to role-playing games, since it’s possible to battle with or against a friend via those devices. This seems to me to be the reason that smartphones became the more popular gaming format in Japan.

The Tokyo head office of KLab, whose hit smartphone apps include LoveLive! School Idol Festival and Celestial Craft Fleet. In 2015, the company is set to unveil Glee Forever! and Bleach Brave Souls.

  • [2015.05.08]
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  • Video Games: A Winning Strategy for JapanJapan’s video game producers have lost their former global lead. But in some respects the industry is doing fine. Japanese firms would do well to focus on role-playing games, a genre in which they excel.
  • Smartphones Bring New Golden Age for Japan’s Games IndustrySmash-hit titles like Puzzle and Dragons and Monster Strike have made Japan’s mobile gaming market the largest in the world. Most of the games are free, but low-priced extras in the form of in-game purchases provide hefty profits for developers.

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