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Market Data

Consumer Market (Package + Digital)

Market trend

In 2021, the consumer (package + digital *including PCs) market was 87.6 billion dollars (up 2.9% from the previous year), increasing year-over-year. Packaged sales dropped slightly against the backdrop of the global shift to digital, but digital sales, including PC platforms, continue to grow with the highly profitable digital contents market now accounting for roughly 87.4% of the consumer market.

Forecast

The forecast for the 2022 consumer market is to reach 91.9 billion dollars (up 4.9% from the previous year) owing to continued growth of digital sales. In the medium term, we see the game market expanding in the developing regions of Southeast Asia, South America, and Eastern Europe and new game delivery methods such as streaming and subscriptions growing. As such, we expect the market to grow to 103.6 billion dollars by 2026 (up 18.3% compared to 2021). We also expect continued growth in the mobile market.

Major opportunities and risks

Opportunity

  • Creation of highly competitive products using new technology
  • More channels for product distribution with the appearance of new platforms
  • Expanded number of sales regions using digital distribution
  • Achievement of extended product life cycles through digital sales
  • Reduction of the used market due to penetration of digital sales

Risk

  • Rising development costs with the appearance of new technology and improved device performance
  • Development delays
  • Dependence on popular series and scarcity of hit titles
  • Platform adoption trends
  • Changes in user purchasing trends with the next generation of platforms
  • Risks due to a country’s politics, culture, or religion
  • In-game purchases becoming a social issue
  • Information leakage

Addressing major opportunities and risks

  • Focusing on improving quality and efficiency while reducing development costs by building our own development engine and enhancing our development team
  • New customer acquisition through a steady release of new major titles, creating new IPs, and the Single Content Multiple Usage strategy
  • Diversifying profit risk through multi-platform development and strengthening PC platform development to hedge against dedicated console trends
  • Lengthening product life of games with increased digital sales rates and increasing unit sales through pricing strategies
  • Developing sales approaches to meet local needs and localization by an in-house team of experts
  • Monetizing without incentivizing in-game purchases
  • Establishing the Information Technology Security Oversight Committee, receiving instruction and advice, and implementing various preventative security measures

Arcade Operations Market

Market trend

The domestic arcade facilities market dropped for the first time in six years due to the spread of the COVID-19 pandemic during the previous fiscal year (ended March 31, 2021) to 418.7 billion yen (down 22.6% from the previous year). The total number of facilities were 9,998 (down 18.1% from the previous year), and annual sales per store were 41.87 million yen (down 5.4% from the previous year.)

Although we have seen some recovery due to the operational know-how we have acquired amid the pandemic, this fiscal year (ended March 2022), the market continued to be severely impacted by COVID-19 as stores were forced to suspend operations or shorten operating hours during states of emergency while foot traffic decreased due to efforts to avoid crowds.

Forecast

The market situation next fiscal year (ending March 2023) is expected to make greater progress toward recovery of the market environment due to increasing vaccination rates and the relaxation of restrictions.

Major opportunities and risks

Opportunity

  • Acquisition of new customers through multifaceted roll-out of stores including themed venues, merchandise specialty stores, VR experiences, etc.
  • Increased awareness with new business formats and new technologies

Risk

  • Reduced ability to attract customers due to the COVID-19 pandemic
  • Changes to the market environment due to the diversification of leisure activities and declining birthrate

Addressing major opportunities and risks

  • Acquisition of new fan demographic and increased awareness through multifaceted business developments, such as cafes and merchandise.
  • Attracting customers using our home video game content and other assets

Gaming Machines Market

Market trend

In the previous fiscal year (ended March 31, 2021), the gaming machine market shrank for the eighth consecutive year to 504.8 billion yen (down 10.6% from the previous year).

This was due to the sluggish performance of stores against the backdrop of the COVID-19 pandemic, and in addition, the pachislo market is seeing slackening growth in the performance of machines with new gambling restraints, which has failed to stimulate stores’ appetite for investment. This fiscal year (ended March 2022), although the effects of the COVID-19 pandemic continued to create an extremely challenging environment, the market showed signs of recovery with the replacement demand for new regulation-compliant machines.

Forecast

Next fiscal year (ending March 2023), despite some positive factors, such as new regulation machines with relaxed voluntary restrictions and the launch of smart pachislo machines, we believe the situation will remain harsh due to continued measures to address infectious diseases and increased investment burdens on halls.

Major opportunities and risks

Opportunity

  • Expanded sales volume by responding to regulations appropriately
  • Development of machines using popular IPs created for home video games

Risk

  • Non-compliance with model testing of pachislo machines

Addressing major opportunities and risks

  • Building a system to perceive regulatory trends that allows us to quickly respond to changes in regulations through membership in industry associations

Esports Market

Market trend

The Esports Market in 2021 was 1.13 billion U.S. dollars (an increase of 14.1% over the previous year). This increase was due to increased sponsorship and expanded media rights fees. In 2022, we expect the market to grow to 1.38 billion U.S. dollars (up 21.8% from the previous year), primarily in China, which accounts for the largest share.

Forecast

The future remains unclear due to the prolonged COVID-19 pandemic, but due to medium-term growth in Asia and Central and Southern American regions, it is expected to reach 1.86 billion U.S. dollars by 2025.

Major opportunities and risks

Opportunity

  • Expanded fan base from non-game players watching events
  • Creation of new profit opportunities such as licensing rights to hold events and stream video
  • Promotion of online tournaments that leverage game characteristics

Risk

  • Reduced number of events due to COVID-19 pandemic
  • Decreased enthusiasm for competition due to rampant cheating
  • Competing with new titles from other companies

Addressing major opportunities and risks

  • Spread of online competitions
  • Flexible adjustment of competition rules
  • Continuous supply of new content with title updates
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