At the 2009 Tokyo Game Show, Keiji Inafune, creator of Mega Man, Onimusha and Dead Rising said the following:

“Man, Japan is over. We’re done. Our game industry is finished.”

With this comment, Inafune announced to the world the death of the Japanese gaming industry.  To many gamers, it was as if a Cardinal walked into the Vatican, announced that God had forsaken the Catholic Church and told everyone they might as well become Protestant.  It seemed surreal.  How could gaming die out in the country that spawned it?  How could so many amazing series just disappear?  But on the other hand, there was this feeling that “Inafune was a Japanese game creator, so he would know, right?”  Countless websites were quick to point out that, indeed, game and console sales figures plainly showed the gaming industry was not as profitable as it had been in years past.  Thus, it was accepted as a foregone conclusion.  Japanese gaming was on the way out.

Yet, as Charles Darwin once said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” And while it is true that the Japanese gaming market is shrinking, it is also changing in a far more dramatic way.

During the current generation, portable gaming has exploded in Japan.  Including 2006, the debut year of the Wii and PS3 (and year two of the xbox 360), the amount of portable systems sold per year has consistently dwarfed the sales of the current generation of home consoles.¹ In fact, 2009 was the first year that the DS alone did not outsell all the home consoles combined.²

In order to survive, the Japanese game industry has been evolving quickly to fit in this new environment.  In 2008, 21 of the top 30 bestselling games in Japan were handheld titles.  Five of those were in the top ten.³ This trend continued in 2009 where 30 of the top 50 best-selling games were handheld titles. Again, five of those were in the top ten.⁴ Compare this to the US market where only one portable game per year was in the top ten for 2008⁵ and 2009⁶, and it becomes clear that the US and Japan have already become two very different markets.

But why is this the case?  In both the US and Japan, the most popular console of the last generation was the PlayStation 2 and home gaming, not portable gaming, was at the forefront.  So why the change in the market?

First of all, with this generation came the invention of HD home gaming and HD home gaming has a high entry bar financially.  The common Japanese perception is that to truly enjoy an HD system, one must first have an HDTV.  And despite many of said HDTVs being made in Japan, it is not uncommon for them to cost double or triple what they do in the US.  Moreover, it is important to remember not only that most families in Japan are single income oriented, but also that the average salary of a Japanese employee is only around $30,0000.⁷ According to a 2008 report, only about 20% of Japanese had an HDTV in 2007.⁸ In December 2009, with the switch over to digital broadcasting only a year away, a recent report showed that only 59.6% of those surveyed were HD ready.⁹

Yet, if the HDTV adoption rate was the only reason for slow home console sales in Japan, then there would have been a large jump in home console sales over the last three years.  However, an April 2010 survey showed that while 61.9% of those surveyed have a current generation portable system (DS, PSP), only 34.8% have a current generation home console (Wii, 360, PS3).¹⁰

There is no doubt that there are several social factors contributing to the recent success of portable gaming in Japan in addition to the financial ones.  While in America cars are the most popular form of transportation, by far the most popular way to travel in Japan is via train.  Hour or more daily commutes are common not only for office workers, but for high school and college students as well.  Thus most Japanese find themselves in situations perfectly suited to portable gaming on a daily basis.

In addition, with the popularity of Monster Hunter, portable gaming has become a social activity for young people.  It is not uncommon to see Japanese children in a park or train station, playing co-op for hours on their portable gaming systems.  Parents just seem to be happy to have the TV free and their children out of the house.

Finally, instead of trying to force the gaming market back onto its old path, game companies are working hard to promote this new growth in the portable market.  The fact that a numbered Dragon Quest—the most revered of Japanese titles—would be put out exclusively on a handheld was unthinkable as little as six years ago.  Yet this, along with big-named sequels like Kingdom Hearts: Birth By Sleep and Metal Gear Solid: Peace Walker appearing on portables, is testament to how serious the gaming industry is about letting portable gaming take the lead in Japan.

Simply put, the Japanese gaming market is neither dying nor dead.  Instead, due to socio-economic factors, the Japanese gaming market is evolving along a different path than the western market with portable gaming at the forefront. It is a simple case of divergent evolution.  The two species, videogamus-americanus and videogamus-japanus started out largely the same, but one has had to change drastically to adapt to the changes in its environment.  It’s the same reason that mammoths evolved to have warm furry coats while elephants did not.

-Richard Eisenbeis

Sources:

¹VGChartz.com http://vgchartz.com/hwtable.php
²VGChartz.com http://vgchartz.com/hwtable.php
³Dengeki Online http://news.dengeki.com/elem/000/000/130/130812/
⁴Famitsu Online http://www.famitsu.com/game/news/1231257_1124.html
⁵Kotaku http://kotaku.com/5132576/what-was-2008s-best-selling-game-in-the-us
⁶Industry Gamers http://www.industrygamers.com/news/npd-top-10-games-through-november-reveal-nintendo-dominance/
⁷World Salaries http://www.worldsalaries.org/japan.shtml
⁸Reuters http://www.reuters.com/article/idUSL0959077120070209
⁹What Japan Thinks http://whatjapanthinks.com/2010/01/20/television-most-often-watched-on-lcd-in-japan/
¹⁰What Japan Thinks http://whatjapanthinks.com/2010/04/19/games-machines-sonys-torne-and-nintendos-3ds/
Data Reflected in the Graphs http://vgchartz.com/hwtable.php