In Japan, Mobile Startups Take Gaming To Next Level
On the subway, in doctor's waiting rooms and during college lectures, millions of Japanese can be found glued to their smartphones. But they're not texting or making phone calls — they're playing video games.
In the U.S., video games are usually played on computers and consoles, like the PlayStation or Wii, but in Japan, gaming has migrated to smartphones.
With an ice coffee in one hand and an iPhone in the other, grad student Yoshiro Hinoki is fixated on slaying tiny cartoon monsters.
"I like that you can play games whenever you have a few minutes, and, for just a little money, you get quick results," he says. "I like that feeling of achievement."
Hinoki is one of an estimated 40 million users — that's one out of every three Japanese — who have signed up to play games on their cell phones. Only about a third of these players are active, but that's enough to have ignited a mobile gaming juggernaut over the last few years, dominated by a few Japanese startups.
A Profitable Pastime
Unlike the complex, intense and cinematic experience of sit-down video games, the cell phone variety is about as deep as a round of tic-tac-toe. Still, consultant Serkan Toto says mobile gaming perfectly satisfies one of the most basic of human needs — killing those slices of time when you're on the way to something else.
"The majority of these games are designed in a way that they can be played in short bursts, in five-minute to 10-minute intervals, because most people don't like to use games on their mobile devices for extended gaming sessions," Toto says.
All those minutes of play add up to huge revenues. Morgan Stanley predicts that by next year, the mobile gaming business could be worth more than $5 billion. Meanwhile, old-school gaming companies like Nintendo, Sony and Sega are in decline.
Like most players, Hinoki does his best to play for free, but this takes willpower. Without buying weapons and other virtual gear, games end in seconds and can't be restarted without a waiting period. Some hardcore gamers spend upwards of $6,000 a month, enough to generate windfall profits for gaming operators.
Even if you've never heard of Fishing Star or Slam Dunk, it's almost impossible to escape the glitzy ads of gaming giants like Gree, which has made its 35-year-old founder, Yoshikazu Tanaka, into Japan's youngest billionaire.
Access to fast broadband, the pre-installation of games on phones and Japan's long love affair with gaming are among the reasons why mobile gaming has taken the country by storm. But the fact that almost all players are anonymous has been even more critical to that success. Serkan Toto says the setup is tailor-made for the Japanese.
"My personal take is that this has something to do with the Japanese way of interacting socially in the real life, where, you know, direct confrontation or direct interaction with people is not usually the norm," he says.
So a buttoned-down corporate executive could easily team up with his taxi driver or his bar hostess and no one's the wiser. Businessman Takashi Taira spends two hours a day trading "virtual" collectible cards with people he'll never speak with or see.
"Most of the people I play with are near-total strangers," Taira says. "If they say they're 30, they might be 60 or even in grade school. If everyone is anonymous, then it doesn't matter if people lie."
Taira's avatar is a cute boy with tousled hair. It couldn't be less like the real Taira, a middle-aged man in a suit, but he says that's part of the allure.
"In gaming, you can become someone else," Taira says. "This is very appealing to the Japanese. I don't know about the other players, but as for me, when I play, I try to become that character."
An International Challenger
Japanese gaming companies took a hit this year after regulators banned a lucrative practice that left children saddled with huge bills. But some analysts say this won't slow the companies down; they've proven adroit at creating new ways of separating players from their money.
Meanwhile, Gree and its Japanese rival DeNA are taking on the San Francisco-based Zynga in an effort to recreate their Japanese success in the U.S. Zynga has more users but is far less profitable, and in the social gaming world, that means game on.
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