Can Japan Maintain Its Leadership Status in the Gaming Industry?

September 8 2022

Names like Sony, SEGA, and Nintendo are synonymous with both gaming and Japan. At one point or another in the last half a century, each one of these companies has been the global leader in video game consoles.

And while SEGA has bowed out of that market, it continues to produce popular titles that can be played on other hardware. Nintendo and Sony, on the other hand, are still at the top of their games, driving the industry and the entire medium forward.

An old Nintendo Entertainment System console.

An old Nintendo Entertainment System console.

But today, these Japanese giants face a lot of competition, not just from Microsoft and its Xbox consoles or the myriad of other video game developers, but from other forms of gaming.

Smartphones, tablets, and virtual reality headsets have all joined the battle against consoles, providing alternative ways to play. Meanwhile, online casinos, casual games, and microtransactions have all changed player appetites.

With so many challenges in their way, can Japanese gaming companies continue to hold the high scores in the industry?

New Types of Game

In decades gone by, most people played video games by purchasing a disc or cartridge from a store and inserting it into their console or computer.

In this model, players would receive the entire game in one go, though they'd often have to work to progress through the levels and enjoy all parts of it.

Today, however, there are more ways in which games are distributed, monetised, and played.

Casual games are one of the most notable examples of this. They don't require the same time commitments as traditional console titles and offer players more choice and flexibility.

This is why releases like Angry Birds, Fruit Ninja, Candy Crush, and Stardew Valley have all become incredibly popular among players.

Online casino games have seen similar success. Although these games are often centuries old, they remain incredibly engaging, especially thanks to the extra variants and features that iGaming companies have created.

For example, rather than just offering one roulette game to their players, online casinos often have several, each with slightly different rules and mechanics. This might be an extra ball, slow-motion cameras, side bets, or simply a different theme. Other times, the number of pockets on the roulette wheel are varied to change the house edge, with American games typically having an extra pocket.

This variety has allowed more companies to wrestle in on the turf of Sony and Nintendo, but smaller developers from the country are also part of this. Therefore, Japan's role is arguably only strengthened by having more niches for other studios to conquer.

We're already seeing successes in this area with indie games like Of Mice and Sand Revised, Eryi's Action, and Minus Zero.

The Sega Mega Drive console, or Sega Genesis as it was originally known in Japan in the late 1980s.

The Sega Mega Drive console, or Sega Genesis as it was originally known in Japan in the late 1980s.

New Hardware

Smartphones and tablets are fast becoming some of the most popular devices for playing video games. Unlike the traditional consoles designed by Japanese companies, almost everyone already has a smartphone, making gaming much cheaper on these devices.

Not only that but the portability of smartphones makes them far more flexible.

That, obviously, poses a threat to many Japanese companies who have shaped their entire business models around locking customers into their console-based ecosystems.

However, it also creates new opportunities. Nintendo, for example, has begun creating content for these new platforms.

The company already has a long list of ported and specially-designed titles specifically for mobile devices, including Mario Kart Tour, Dragalia Lost, Animal Crossing Pocket Camp, Fire Emblem Heroes, and Super Mario Run.

Virtual reality is another form factor that is growing in popularity. However, Nintendo has been burned once by this before and is, understandably, reluctant to try again.

Sony, on the other hand, has dived right in, creating the PlayStation VR and the soon-to-be-released PS VR 2. These headsets work in conjunction with the company's consoles and add new elements to existing games while also allowing for specially-created VR titles.

Popular VR games available for PS VR include Beat Saber, No Man's Sky, Blood & Truth, and Astro Bot Rescue Mission.

Combined, this has helped Sony to become one of the leaders in the VR space, albeit behind the American company Meta.

Overall, Japan's gaming giants look well placed to compete in these new niches. Rather than being a threat to the companies, their size, resources, and experience can be an asset to them.

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