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Market Data

(as of February 15, 2017)

Home Video Game Software Markets - Package and digital download contents -

Consumer (Package and Digital Download Contents) Market 22.0 billion dollars Graph: Consumer (Package and Digital Download Contents) Market

First Market Expansion in Four Years, Higher Sales of Flagship Titles and Digital Downloads Drive 19.6% Net Sales Growth

1 2015 marked first positive market turnaround in four years
2 Monster Hunter X (Cross) proved extremely popular, surpassing 3.3 million unit sales to exceed our initial forecast
3 Digital sales of catalog titles in the U.S. and Europe picked up speed, expanding to 10.9 billion yen

In 2015, the consumer (package + digital download contents) market was worth 21.7 billion dollars (up 0.5% from the previous year), halting three straight years of negative growth. This was due to

  • (1) Continued steady switchover to current game consoles
  • (2) The progressive supply of major titles for current game consoles
  • (3) Growth in the digital download sales market

The consumer market is primarily comprised of North America, Europe and Japan. The U.S. and European markets, which account for approximately 85% of this market, were particularly robust. In terms of overall trends, while package sales contracted slightly, the highly profitable digital download market grew steadily to account for 43% of the consumer market.

The consumer market is forecast to grow globally to 22 billion dollars (up 1.4% from the previous year) due to an expanded title lineup for the PlayStation 4 and Xbox One and further growth in digital downloads.
Furthermore, the market is thought to be entering a harvest period due to anticipation of new trends including the launch of Nintendo's new console in March 2017, as well as PlayStation VR, Oculus Rift and other VR gear.

PC Online Market

PC Online Maket 26.5 billion dollars

Graph: PC Online Maket

Although the Market Was Flat, the Launch of New Titles in Japan and Overseas Resulted in an 18.3% Increase in Net Sales

1 Market was flat due to the stagnation of SNS games in the U.S. and Europe
2 Dragon's Dogma Online, a new title, provided steady contributions

Despite sluggish sales of package games for PC in the U.S. and Europe and games played through SNS, the Chinese and Asian markets, which account for nearly half the overall market, continued to grow, bringing the PC Online Market to 25.1 billion dollars (up 1.6% from the previous year), about the same scale as the market in the previous year.

In 2016, we expect the market to continue growing to 26.5 billion dollars (up 5.6% from the previous year). While the U.S. and Europe are expected to remain stable, the Asian market, primarily China, is expected to continue growing driven by core MMO online games. We expect this market to continue expanding, from 10.6 billion dollars in 2015, to 11.2 billion dollars in 2018 (up 5.7% from 2015).

Mobile Content Market

Mobile Contents Market 45.7 billion yen

Graph: Mobile Contents Market

Despite 73% Growth and Continued Market Expansion,
Sales and Profit Declined Due to Challenges Surrounding
the Creation of a Hit Title

1 Market continued to expand, growing 73%
2 Monster Hunter Explore launched in September 2015 and overall performed to plan, breaking 3 million downloads

In 2015, the mobile contents market was worth 39 billion dollars (up 73.3% from the previous year), expanding in scale to surpass the consumer market. The main reasons for this were

  • (1) The ongoing adoption of smartphones throughout the world
  • (2) The increase of popular native app games particularly in Japan and Asia that continue to attract game users.

By region, the Asian market including Japan was worth 22.9 billion dollars (up 97.4% from the previous year), while developing countries, Eastern European and other regional markets grew rapidly to 4.8 billion dollars (up 152.6% from the previous year).

The freemium model (virtual item purchases/ in-game purchases), an 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 many popular software titles and mobile development companies with operational expertise, the opportunity to improve earnings is growing. In Japan in particular, numerous distributions of a wide range of games that offer a style of play matching the national identity, such as those that take advantage of idle moments and games that use popular content, are driving rapid market expansion.

In 2016, the annual shipment of smartphones is expected to maintain a single-digit growth rate at approximately 1.48 billion units (up 3.1% from the previous year) compared to approximately 1.43 billion units in 2015 (up 10.1% from the previous year). However, the demand for smartphones as game devices is expected to further increase in Japan and Asia amid ongoing expanded adoption in India, the Middle East and Africa, which we think will lead to the expansion of global game contents. As a result, we expect the 2016 mobile market to increase to 45.7 billion dollars (up 17.2% from the previous year) and grow to 53.3 billion dollars in 2018 (up 36.7% from 2015).

Arcade Facilities Market Trends

Arcade Operations Market 422.2 billion yen Graph: Arcade Operations Market

店舗数推移(設置機器数別) 15,612店 Graph: 店舗数推移(設置機器数別)

Sales and Profit Declined Due to 7.5% Drop in Market Coupled with Downward Trend at Existing Stores

1 Market saw large 7.5% decline
2 Focused on acquiring new customers
3 Soft performance and decline in sales and profits due to diversification of entertainment options, such as smartphones

During the previous fiscal year (ended March 31, 2015), the size of the domestic arcade facilities market shrank to 422.2 billion yen (down 7.5% from the previous year).

This was due to the decline in personal consumption following the consumption tax increase implemented in April 2014, the spread of smartphones and the impact of scrambling to win shares of consumer free time amid a variety of leisure activities. Companies across the board closed unprofitable arcades and attempted to streamline management, resulting in the total number of arcades decreasing to 15,612 (down 2.8% from the previous year), while annual sales per facility declined to 27.04 million yen (down 4.8% from the previous year), reducing the overall scale of this market.

In terms of market outlook, we expect conditions to remain the same as in the previous year. In addition to the ongoing resurgence in prize games, we expect the introduction of popular arcade cabinets to increase customer traffic. Furthermore, revisions to the Entertainment and Amusement Trades Act (Entertainment and Amusement Trades Rationalizing Act) in June 2016 relaxed restrictions on the amount of time young people can spend in arcades when accompanied by a guardian, which is expected to give the market a boost.

Gaming Machines Market (Pachinko & Pachislo)

Gaming Machines Market 1,069.3 billion yen Graph: Gaming Machines Market

Gaming Machines Market 151.1 bullion yen Graph: Gaming Machines Market

Amid Continued Severe Market Conditions, Net Sales Increased 77.0%
on Launch of Popular Pachislo Machines

1 Amid continued severe market conditions, sales increased due to launch of popular pachislo machines
2 The Resident Evil 6 pachislo machine sold 37 thousand units

In the previous fiscal year (ended March 31, 2015), the gaming machine market shrank to 1,069.3 billion yen (down 5% from the previous year). This was due to a temporary decline in the number of new machines launched resulting from changes to rules concerning pachislo machine model certification*1 by the Security Electronics and Communications Technology Association that went into effect in September 2014 in the pachislo market, as well as the fifth straight year of declines in the Pachinko market.

*1. Model certification 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 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

In the arcade game market, although sales of claw crane and prize games were firm, arcade game and coin-operated game sales declined significantly, resulting in the third consecutive year of negative growth at 151.1 billion yen (down 7.5% from the previous year). This year (ended March 31, 2016), the gaming machine market remained weak on the impact of pachinko machine gambling restrictions and pachislo machine third stage rule changes.*2 In the arcade game machine market, despite continued sluggishness in coin-operated games, popular music games and kids' card games helped maintain the same level as in the previous year.

In terms of the market outlook, despite the passage of rule changes affecting pachislo machines, top-selling product sales lots are on the decline, thus we anticipate demand will weaken. With respect to Pachinko machines, cabinet profitability will decline in line with gambling restrictions, thus investment in hall gaming machines will be increasingly selective. Accordingly, companies will steer towards cabinet development focused on efficiency and controlling development costs.

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