Can Japanese mobile gaming giants take over the world?

August 27, 2012
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The fact that mobile gaming has taken off is hardly news. Thanks to phenomena like Angry Birds many people considered as outside the traditional gaming demographic have started to play games on their phones.

The free-to-play or freemium model is fast emerging as the most successful and lucrative option for developers. Newzoo suggests that 90 percent of spending on mobile games on iOS in the U.S. is from in-game purchases, the same figure for Europe is 79 percent. The basic idea is that the game is free, but players get hooked into paying for extra content, or to speed up their progress.

According to NPR, the Japanese freemium market is 40 million strong. That’s one-in-three of the population, although only around a third of them are actually active. Companies like GREE and DeNa can apparently make up to $6,000 per month from some hardcore players. Comparable companies in the U.S., such as Zynga, are also doing well with the freemium model, but they don’t make as much per player as the Japanese companies. The mobile games market in Japan is estimated to be generating around $5 billion annually.

With over 100 million mobile gamers in the U.S., it’s no surprise that the successful Japanese companies want a slice. GREE has grown its North American game business 38 percent in the second quarter of 2012, according to Venture Beat. GREE acquired Funzio for $210 million and it already owns the OpenFeint gaming network. Rival company DeNA is also looking to establish itself beyond Japan.

The freemium model is also dominating revenue on the Android platform. GREE released Modern War in Google Play in July and it appears to be pretty popular. We can expect to see many more titles from them in the coming months.

The mobile gaming market is still growing and the fight for dominance is far from over. Can the Japanese mobile gaming giants capture the lion’s share?

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