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Consumer (Package and Digital Download Contents) Market
Despite Continued Growth in Digital Download Contents, the Market Declined 8.9% in 2014
|1||Market was worth 21.6 billion dollars (down 8.9% from the previous year)
|2||The digital download market is clearly growing|
|3||Expect the market increase to 25.6 billion dollars in 2019
In 2014, the consumer (Package and digital download contents) market was worth 21.6 billion dollars (down 8.9% from the previous year), the third straight year of negative growth. This was due to
- (1) a limited supply of major titles despite the steadily increasing switchover to current game consoles
- (2) the declining average unit price of software.
The consumer market is primarily comprised of North America, Europe and Japan. In Europe and the United States, representing approximately 80% of the market, although download sales expanded along with the increasing spread of current game consoles, (1) and (2) resulted in a 5.3% decline year on year. In Japan, competition among apps for smartphones led to a 25% decline compared to the previous year.
However, in line with network infrastructure developments and the establishment of the online premium model, the digital download market, involving the download of full games, add-on content and past archive titles, is clearly growing, providing a degree support to the slumping market, which expanded globally to 8.7 billion dollars (up 17.6% compared to the previous year).
We expect a recovery and forecast a slight increase in the global consumer market to 24.7 billion dollars in 2015 (up 14.4% from the previous year) due to expanded title lineups for the PlayStation 4 and Xbox One and further digital download growth.
PC Online Market
PC Online Market
SNS Game Sluggishness Caused the Market to Shrink 14.2% in 2014
|1||Market declined to 24.7 billion dollars in 2014
|2||Forecast at 26.6 billion dollars in 2019|
Despite contributions from the spread of cloud game services and digital sales in Europe and the United States, and an increase in Massively Multiplayer Online (MMO) game users in the Asian region, games played on Facebook and other SNS were sluggish, resulting in the 2014 PC online market declining to 24.7 billion dollars (down 14.2% from the previous year).
We expect growth to resume in 2015 and forecast the market to expand to 26.4 billion dollars (up 6.9% from the previous year). In the Asian market in particular, continued expansion mainly of MMO games is expected to drive growth from 9.1 billion dollars in 2014 to 9.8 billion dollars in 2019 (up 7.7% compared to 2014). As a result, the PC online game market is forecast at 26.6 billion dollars in 2019.
Mobile Content Market
Mobile Content Market
The Market Expanded 53.1% in 2014 on Eye-Opening Growth in Japan and Asia
|1||The Mobile Contents market grew to 22.5 billion dollars in 2014 (up 53.1% from the previous year).
|2||The Asian market including Japan was up by 64.7% from the previous year.|
|3||Forecasted growth in the mobile contents market to 37.4 billion dollars in 2019|
The Mobile Contents market grew from 14.7 billion dollars in 2013 to 22.5 billion dollars in 2014 (up 53.1% from the previous year), expanding to the same size as the Consumer market. The main reasons for this were
- (1) the ongoing adoption of smartphones in all countries of the world
- (2) the rise of sophisticated tablet devices and free communication apps such as LINE
- (3) the growing game user population in line with the spread of native app games.
By region, the North American market was worth 5.4 billion dollars (up 38.5% from the previous year), the European market was worth 3.5 billion dollars (up 52.2% from the previous year) and the Asian market including Japan was worth 11.6 billion dollars (up 64.7% from the previous year). Furthermore, in emerging and Eastern European markets, as well as other areas, the global market grew steadily to 1.9 billion dollars (up 46.2% from the previous year).
The freemium (virtual item purchases/in-game purchases), a earnings model where users download a game for free, then purchase access to additional items and other game content as needed, has predominated in the market since about 2010. With freemium games, the key to manageability is using content power (brand/game function) to offer the appropriate services and premium games. For game companies with lots of popular software titles as well as mobile development companies with operational expertise, the opportunity to improve earnings is growing.
In 2014, smartphone shipments amounted to 1,252.3 million units (up 23.8% from the previous year), maintaining double-digit growth that is forecast to continue in 2015 amid the ongoing adoption of smartphones worldwide. Furthermore, higher demand for game devices in Japan and Asia and the expansion of popular content worldwide is expected to support ongoing expansion in the market. As a result, we forecast growth in the mobile contents market to 37.4 billion dollars in 2019 (up 66.2% compared to 2014).
Arcade Facilities Market Trends
Arcade Operations Market
2.9% Market Contraction Indicates Continued Downward Trend, Signs of Roadside Arcade Recovery
|1||The size of the domestic arcade facilities market decreased slightly to 456.4 billion yen
|2||There was a slight increase in the number of machines per arcade, and the sales per facility|
|3||Market is expected to remain somewhat weak overall|
During the previous fiscal year (ended March 31, 2014), the size of the domestic arcade facilities market decreased slightly to 456.4 billion yen (down 2.9% from the previous fiscal year). This was due to a decline in the number of arcades and the number of machines per arcade, the absence of a major hit product gaining traction in the market, competition from apps in line with the ongoing adoption of smartphones and increased diversity in how people spend their leisure time.
Furthermore, although the number of facilities decreased to 16,069 (down 5.4% from the previous fiscal year) , there was a slight increase in the number of machines per arcade, which was 32.7 (up 0.5 machine from the previous fiscal year), and sales per facility, which was 28.40 million yen (up 2.7% from the previous fiscal year). Many companies closed unprofitable arcades, successfully promoting management efficiency.
During the fiscal year under review, the market continued to contract as in the previous fiscal year. Despite the popularity of some prizes utilizing popular contents, the April 2014 consumption tax hike caused a drop in consumer confidence resulting in fewer customers and lower customer unit prices that drove the ongoing closure of unprofitable arcades throughout the industry.
Number of Amusement Arcades (by number of machines)
In terms of outlook for the future, although conditions vary from one arcade to the next, we expect the market to remain somewhat weak overall. Specifically, arcades in shopping centers will continue to face severe business conditions due to declining customer numbers at large commercial facilities and merchandise lineups that do not sufficiently appeal to families. At the same time, the introduction of character merchandise popular with young people and leading music game machines are expected to maintain brisk business at roadside arcades.
Gaming Machines Market (Pachinko & Pachislo)
Gaming Machines Market
The Pachislo Market Significantly Contracted Due to Model Certification Method Revisions
|1||A decline in the number of new machines caused by a change to the rules governing Pachislo machine model certification methods.|
|2||Despite the elimination of changes to the rules governing Pachislo machine model certification methods, expect ongoing uncertainty in the second half of the fiscal year.|
During the previous fiscal year (ended March 31, 2014), the Pachinko and Pachislo market declined to 1,083.2 billion yen (down 10.0% from the previous year). The main reason for this was a fourth consecutive year of contraction in the Pachinko machine market. At the same time, the increasing size of new facilities contributed to the Pachislo market, which grew for the fourth consecutive year, to 473.3 billion yen (up 10.1% from the previous year), propping up the market.
This fiscal year (ended March 31, 2015), the Pachislo market contracted significantly due to a decline in the number of new machines caused by a change to the rules governing Pachislo machine model certification methods*1, which the Security Communications Association made effective in September 2014.
In terms of the future outlook, despite the elimination of changes to the rules governing Pachislo machine model certification methods, we plan to implement functional limitations on sub-substrates in December 2015 and expect ongoing uncertainty in the second half of the fiscal year.
|*1. Model certification||A public test to verify whether or not gaming machines are in accordance with regulations conducted by the Security Communications Association on behalf of public safety commissions in each of Japan's administrative divisions.|
|*2. Changes to certification methods||Three self-imposed restraints implemented in stages. Up to November 2014 (1) guarantee a minimum (55%) ball dispensing ratio, (2) implement limits on penalty functions, and from December 2015 (3) implement functional limitations in sub-substrates.|
Gaming Machines Market (Arcade Games Sales)
Arcade Game Market Trends
Arcade Games for Amusement Facilities Market Struggled Amid Effects of the Consumption Tax Hike
|1||Classic characters and prizes using popular content led to brisk sales in the arcade games market.|
Classic characters and prizes using popular content led to brisk sales in the arcade games for amusement facilities market, amounting to 36.6 billion yen (up 18.4% from the previous year). However, coin-operated games, accounting for 15% of the market, were pushed back by a stream of low-cost products from Asia, resulting in sales of 24.5 billion yen (down 29.8% from the previous year). As a result, the overall arcade games for amusement facilities market remained nearly the same at 163.5 billion yen (down 2.4% from the previous year).
This fiscal year (ended March 31, 2015), the market continued to decline due to a loss of investment appetite caused by the April 2014 consumption tax hike.
In terms of the future outlook, in the arcade games for amusement facilities market, we anticipate sales of music game machines, card game machines and a variety of other prominent machines will likely spur investment among facility operators and maintain market stability.