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Icons of major smartphone-based video game titles are shown. (Yasuyuki Onaya)

Thanks to the soaring popularity of smartphone-based titles, Japan’s video game market is growing at a lightning speed, although concerns are rising about addictions and excessive payments to apps.

The video game market topped 2 trillion yen ($13.91 billion) in 2020, more than doubling in size in 2021 from 10 years earlier.

Games available on smartphones are generating much hype because they can be played without specialized consoles.

However, the risk of video game addiction, combined with the so-called “gacha” system for users to buy in-app items by lottery, are becoming increasingly problematic.

According to the 2022 Famitsu video game white paper, released by publisher Kadokawa Group in August, Japan’s gaming market soared from 977.6 billion yen in 2012 to 2.002 trillion yen in 2021.

Although the figure dropped 0.8 percent from 2020, video games continue to enjoy strong sales owing to stable demand among consumers who stay longer at home due to the COVID-19 pandemic.

The market size is comparable to that for barbershops and beauty salons in Japan. The scale would be larger, if relevant products, such as anime works, musical pieces and goods featuring video game characters, are included as well.

“The demand expanded dramatically in 2020 amid the novel coronavirus crisis,” said Mitsunobu Uwatoko, editor-in-chief of the Famitsu video game white paper. “Sales were thought to be possibly down in 2021 from the excessive level, but the figure worsened only slightly.

“The video game players’ population, which increased in the coronavirus outbreak, has apparently taken hold.”

While the home console market was worth 570.5 billion yen in 2021, its smartphone counterpart reached 1.3 trillion yen, accounting for two-thirds of the total. This means sales shot up greater than threefold from a decade earlier.

As such works are accessible anywhere solely with smartphones, the market of easier-to-play smartphone video games exceeded that of home consoles in 2013. These days, children often play their first video games on their smartphones.

A leading smartphone title is known as “Puzzle & Dragons,” which was released by GungHo Online Entertainment Inc. in 2012. “Uma Musume Pretty Derby,” an app put out by Cygames Inc. to star “horse girls” named after racehorses, became a hit in 2021.

Buoyed by smartphone titles’ brisk sales, the global video game sales topped 21 trillion yen in 2021 for the first time.

According to an estimate by U.S. survey firm data.ai Inc., global spending linked to smartphone games spiked by 35.2 percent in 2021 from 2019 before the coronavirus pandemic stretched out in 2020.

Now that an increasing number of people are demonstrating their prowess on video games through e-sports events, even more consumers are expected to join gaming circles in the future.

PAYMENTS ON APPS A DANGER

The smartphone video game market’s growth has some negative aspects.

Such entities as communications carrier KDDI Corp. released the results of their study in October last year, showing that people play on smartphones for 3.64 hours on holidays in August 2020, up 8 percent from December 2019 before the pandemic.

The percentage of individuals displaying signs of video gaming disorders, including a growing sense of irritation when they cannot engage in game playing, rose 1.6 times to 6 percent in August 2020 from before the health crisis broke out.

Another problem involves the lottery mechanism called “gacha,” which literally refers to toy vending machines because various materials are dispensed on game apps like capsule toys from those machines.

The system provides a major source of revenue for smartphone games and online titles. Players at times try gacha repeatedly for limited-edition characters and items, though a lottery pull costs them several hundred yen.

In more cases, children spend much money while playing video games.

The National Consumer Affairs Center of Japan said 3,723 complaints came in about payments made by elementary, junior and senior high school students ranging in age from 6 to 18 in fiscal 2020. The number more than tripled from fiscal 2016.

As the legal adulthood age was lowered from 20 to 18 in April this year, younger individuals can currently obtain credit cards and take out loans without their parents’ permission.

Consumers will thus need to well understand the dangers connected to payments on smartphone games, whereas video game developers are pushed to address the issue at the same time.

CHIP SHORTAGES CAST SHADOW OVER CONSOLES

Consoles alike are generally enjoying robust sales.

Nintendo Co.’s Nintendo Switch console sold 5.57 million units in 2021. Its total sales in Japan surpassed the 26 million mark in September this year.

That figure is larger than the sales of Famicom, marketed in 1983, of 19.35 million units in Japan. The OLED version of Nintendo Switch was pitched last autumn to display far more vivid images on a larger screen.

Software titles for Nintendo Switch dominate the top ranks in Japan’s game app sales.

A title called “Splatoon 3” hit the shelves on Sept. 9. Its sales, including the downloadable edition, topped 3.45 million units reportedly at the fastest pace ever within three days following the title’s release.

Products from the Nintendo and Sony brands are sought-after not only in Japan but all over the world. As the gaming industry is important for Japan’s economy, the Japanese government is offering support for promising content businesses.

However, a daunting challenge remains: the recent global semiconductor shortage is exerting a significant impact on the production of consoles.

The prediction by Famitsu showed that domestic sales of the PlayStation 5 console from Sony Interactive Entertainment LLC were 960,000 units in 2021.

Despite its high level of popularity, the manufacturing of the model, put on the market in November 2020, has not been dramatically stepped up due to a backup in distribution and other causes.

The supply chain for PlayStation 5 has gradually improved, as selling 100,000 units in July this year, but many retailers are still running out of stock.

(This article was written by Yasuyuki Onaya, Yasuro Suzuki and Yoshikatsu Nakajima.)

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