JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
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Nintendo and Japan’s games
industries
Research report by Gerhard Fasol PhD
Eurotechnology Japan K. K.
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Version 6, October 14, 2008
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Executive Summary
 Japan’s game industry’s importance comes from
 the large market size: US$ 17 billion excluding Pachinko/ Pachislo and US$ 44 billion
including Pachink/Pachislo, and
 from the dominating influence Japanese game companies have on the global gaming
industries and markets, and on global entertainment culture
 Currently several paradigm shifts in the global game industry are underway – all are
driven by Japanese innovations:
 Nintendo’s Wii and DS expand the user base from traditional “hard core gamers” to
the general population: women, the silver generation, old people’s homes, families.
 Nintendo broke the PC-style race instead aiming for low cost consoles
 With Wii and DS, Nintendo entered an exceptional growth phase and became the
undisputed winner in the games industry. Several competitors face losses.
 Shift from disk media to online distribution, online games, network games and mobile
games.
 Networks and internet shifts some power from console platform owners to those
software publishers which take advantage of this shift
 Increasing development costs cause industry consolidation and mergers.
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Agenda (List of Contents)
 Game industry structure and segmentation
 Hardware:
 Arcade games
 7th generation console platforms: Wii, PS3, Xbox-30
 The paradigm shifts
 Handheld: DS, PSP
 The two remaining Japanese console platform companies
 Nintendo
 SONY Computer Entertainment
 Japan’s game software markets
 Game software companies
 Overview of Japan’s games software companies
 Financials
 Recent consolidation
 Profile of top ranking Japanese games software and equipment companies
 Mobile gaming
 Video game generations and history
 Pachinko and Pachislo (short overview)
 Summary
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Japan’s game market in the world
 Purely from the consumption view
US, Japan, EU markets for
point (not from the production
game hardware, software and PC games viewpoint), Japan’s game market
is the third largest national
50 UK US$ 6.7 Bill
market.
 US and EU game markets are 3-4
40
times larger than Japan’s market
c 2008 Eurotechnology Japan KK
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EU excl UK US$ 20 Bill
 US market currently grows at
annual sales US$
30 40% per year, while Japan’s
market grows 10%/year
20  In terms of production, Japan has
USA US$ 20 Bill, Growth 43 a much stronger global position
both in the games software and
10
game hardware fields
Japan US$ 7 Bill, Growth 10  From the consumption viewpoint,
0
2007 the EU game market (hardware +
software) is about as large as the
USA + Japanese game markets
combined.
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Japan’s Game Industry
Structure and Overview
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Game Platform Segmentation�
 Arcade games
 PC based games (delivery on CDROM, or download via internet, played off-line)
 Dedicated game platforms
 SONY Computer Entertainment (SCE)
 PS One
 PS2
 PS3
 PSP
 Nintendo
 Wii
 Game Cube
 Gameboy Advance
 Gameboy Advance SP
 DS
 Dsi (from end 2008)
 Microsoft
 Xbox
 Xbox 360
 Mobile phone games (JAVA applications)
 Online games (played online via Web-Browser or dedicated interface - in principle accessible
from many devices)
 -
 Pachinko and Pachislo
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Hardware:
Arcade games and game consoles
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Console Platforms
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Wii
Nintendo’s internal code name:
“Revolution”
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
PS3
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Paradigm shift in Business models:
prices vs manufacturing costs
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Handheld game platforms
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Japan’s two remaining console
platform companies:
Nintendo and SONY Computer
Entertainment (SCE)
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Nintendo
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Nintendo Company History�
Year�
1889� Fusajiro Yamauchi starts to manufacture Japanese playing cards in Kyoto�
1933� Fusajiro Yamauchi founded the partnership “Yamauchi Nintendo & Co” to produce, market and
expert playing cards�
1962� IPO on the Osaka Stock Exchange and on the Kyoto Stock Exchange�
1970� Started to use opto-electronics, introduces electronics into the toy industry: “Beam gun series”�
1974� Developed image projection system, exports to US and to Europe�
1975� Develops video game system based on microprocessor in cooperation with Mitsubishi Electric�
June 15, 1983� Launches “Family Computer” (=“Famicom”) home video console including custom CPU and PPU
(=Picture processing unit) in Japan�
1985� Launches Famicom in the USA under the product name “Nintendo Entertainment System” (NES)
with the games “Duck Hunt” and “Super Mario Brothers”�
1987� Computer Game “Legend of Zelda” sells more than 1 million copies�
April 21, 1989� Launches Game Boy (Total sold globally: 118.69 million, including Game Boy Color)�
March 21, 2001� Launches Game Boy Advance (total sold globally: 81.24 million)�
No 21, 2004� Launches DS (total sold globally until June 30, 2008: 77.54 million)�
Nov 19, 2006� Launches Wii (total sold globally until June 30, 2008: 29.62 million)�
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Sony Computer Entertainment
SCE
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Japan’s game software markets
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Game software companies
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Sega Sammy Holdings
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Bandai Namco Holdings
Bandai acquired Namco e ective with Sept. 29, 2005
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Konami
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Hudson (part of Konami)
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Takara Tomy
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Square-Enix
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Capcom
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
KOEI
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Tecmo
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Electronic Arts (EA) in Japan
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Games on mobile phones
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Games on DoCoMo’s i-Mode
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Games on KDDI/AU
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Games on Softbank
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Video Game Generations
and History
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Pachinko and Pachislo
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Pachinko and Pachislo�
 The pachinko + pachislo machine industry in Japan is on the order of
US$ 10 billion/year
 Pachinko + pachislo industry sales are on the order of US$ 17 billion/
year
 Total: pachinko machines + pachislot machines + gaming are on the
order of US$ 27 billion/year
 About 17 million people play pachinko or pachislo in Japan�
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Summary
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Summary
 Nintendo’s Wii and DS created paradigm shifts in the global game
industry and made Nintendo the undisputed leader of the industry.
 Nintendo entered a strong growth phase while several competitors
face losses and need to restructure or merge.
 Japan’s game industry is important for several reasons:
 Because of market size and size of Japanese game companies
 Japanese companies, especially Nintendo drive paradigm shifts,
and also SONY Computer Entertainment and others set trends in
the global game industry
 We see a paradigm shift from disk based distribution to online media,
network games, network distribution including wireless, and mobile
games
 Game markets are strongly growing globally, however less in Japan.
Increasing game software development costs force consolidation of
Japanese game software companies.
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
More information:
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JCOMM - Japan’s Telecom industries
Nintendo and Japan’s game Markets March 21, 2006
Oct, 14, 2008
Contact
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