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(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPAN’S GAMES INDUSTRIES
Version 19 of August 13, 2013
by Gerhard Fasol PhD, Eurotechnology Japan KK
http://www.eurotechnology.com/
fasol@eurotechnology.com
Latest revision available from: http://www.eurotechnology.com/store/jgames/
1
JAPAN’S GAME MAKERS
AND MARKETS
Version 30 of June 21, 2015
by Gerhard Fasol PhD,
Eurotechnology Japan KK
http://www.eurotechnology.com/
fasol@eurotechnology.com
This is a preview with selected pages.
Download full report from:
http://www.eurotechnology.com/jgames/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
LICENSE
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(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPAN’S GAME MAKERS AND MARKETS REPORT -VERSIONS
3
Our reports are works in progress - subscribe to receive updates:
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Version Date Comments
1
2
3
4 September 5, 2005
5 September 2, 2008
6 October 7, 2008
7 October 14, 2008
8 October 14, 2008
9 October 15, 2008
10 January 9, 2009
11 February 14, 2009
12 May 25, 2009
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPAN’S GAME MAKERS AND MARKETS REPORT -VERSIONS
4
Version Date Comments
13 July 11, 2009
14 July 13, 2009
15 July 19, 2009
16 July 20, 2009
17 July 27, 2009
18 August 18, 2009
19 August 13, 2013 rewritten
20 October 1, 2013 rewritten, financial analysis added
21 October 6, 2013 compare new vs old game co’s.
22 Dec 13, 2013
23 April 7, 2014 company coverage added
24 April 9, 2014 company coverage added
Our reports are works in progress - subscribe to receive updates:
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JAPAN’S GAME MAKERS AND MARKETS REPORT -VERSIONS
5
Version Date Comments
25 May 10, 2014 LINE, Colopl, and more added
26 May 11, 2014 corrections, market caps update
27 May 29, 2014 Casino law, Konami Gaming
28 June 1, 2015 financial updates, 25 new co’s
29 June 9, 2015 update new companies
30 June 21, 2015 update new companies
31
32
33
34
35
36
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(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
EXECUTIVE SUMMARY -
JAPAN’S GAME MAKERS AND MARKETS
6
•Japanese companies have created many of the global game genres, platforms and characters, and represent a US$ 50
billion industry sector - far higher still if Pachinko and Pachislot are included.
•With consumer focus shifting from dedicated game platforms such as Nintendo’s Wii or DS, Sony’s Playstation or
Microsoft’s Xbox to smartphones, Japan’s traditional game companies are facing unprecedented disruption, as shown in
the figure above: 24 new game companies combined exceed and achieve almost double the net income of all 8 traditional
game companies in operating income.
•Most established game companies, including Nintendo and SONY, see an erosion of business, while at the same time
new a large number of new game industry startups (at least 24 publicly traded on theTokyo Stock Exchange) are rapidly
growing and filling the space vacated by traditional game companies.
•This report presents a detailed overview of Japan’s traditional game sector, as well as an overview of some (25) new
emerging players in Japan’s game sector.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
100
200
300
400
netincome(YENbillion)
Japan's major game companies (annual net income, excl. SONY)
US$
US$ 1 billion
US$ 2 billion
US$ 3 billion
US$ 4 billion
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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
100
200
300
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netincome(YENbillion)
Japan's new game companies net income
US$ 1 billion
US$ 2 billion
US$ 3 billion
US$ 4 billion
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(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
AGENDA - LIST OF CONTENTS
7
•Executive Summary
•Game trends for 2015: smartphone games disruption
•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: 9 traditional video game companies + 25 new smartphone game
companies
•Overview of Japan’s games software companies
•Financials
•Recent consolidation
•Profile of top ranking Japanese games software and equipment companies
•Video game generations and history
•Pachinko and Pachislo (short overview)
•Ethics and rating organizations
•Summary
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
SMARTPHONE GAME
DISRUPTION
8
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPAN = NO. 1 APP MARKET
GLOBALLY
9
Japan’s App-Market is a direct continuation of i-Mode / EZweb / Jsky which
started in 1999.
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPANESE APPS AND JAPANESE APP COMPANIES HAVE A
PROMINENT POSITION INTHE APP STORES
10
Japanese apps and Japanese app companies rank very high in the global “top grossing” rankings for Apple and Google App
stores.The table below shows that:
• the top ranked company by revenue globally for iOS+Google Play is the Japanese company LINE.
• 5 out of 10 top ranked “top grossing” apps globally are Japanese apps
top-grossing ranks for global iOS+Google Play stores (source:AppAnnie, 2014)
Rank companies by revenue top apps by revenue
1 LINE (J) LINE (J)
2 Pandora(USA) Pandora Radio (USA)
3 InterActiveCorp (USA) Spotify (S)
4 Spotify (S) Zoosk (USA)
5 Zoosk (USA) LINE Play (J)
6 Microsoft (USA) LINE Manga (J)
7 Disney (USA) Skype (USA)
8 Smule (USA) Dragon Quest (J)
9 MagazineCloner (UK) Badoo (UK)
10 Voltage (J) PocketColony (J)
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
SMARTPHONE DISRUPTION - REVENUES
11
•Left hand side: top 9 traditional video game companies
•Right hand side: top 25 new smartphone game companies (24 are traded onTokyo Stock
Exchange + LINE)
•While traditional Japanese game companies seem to have peaked during 2008-2010, and are
dropping rapidly in size, new start-up game companies are emerging.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
1000
2000
3000
4000
5000
revenues(YENbillion)
Japan's first generation game companies (annual revenues)
US$ 10 billion
US$ 20 billion
US$ 30 billion
US$ 40 billion
US$ 50 billion
Nintendo
Sony Games
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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
1000
2000
3000
4000
5000
revenues(YENbillion)
Japan's new game companies (annual revenues)
US$ 10 billion
US$ 20 billion
US$ 30 billion
US$ 40 billion
US$ 50 billion
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(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
NEW GAME COMPANIES HAVE ALREADY OVERTAKENTHE
TRADITIONAL GAME SECTOR
15
•Left hand side: annual net income of Japan’s top 8 traditional video game companies
•Right hand side: annual net income of Japan’s top 24 smartphone game companies
•Net income of Japan’s traditional video game companies peaked in 2008 at almost US$ 3.5 billion,
but in 2013 fell back to around US$ 1 billion mainly due to a shift of consumer interest to smart
phones
•Combined net income of the 24 smartphone game companies (shown on the right hand side) is
approachingYEN 200 billion (US$ 2 billion), about twice as much as combined net income of
traditional video game companies
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
100
200
300
400
netincome(YENbillion)
Japan's major game companies (annual net income, excl. SONY)
US$
US$ 1 billion
US$ 2 billion
US$ 3 billion
US$ 4 billion
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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
100
200
300
400
netincome(YENbillion)
Japan's new game companies net income
US$ 1 billion
US$ 2 billion
US$ 3 billion
US$ 4 billion
(c)2015EurotechnologyJapanKK
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(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
TRADITIONALVS NEW GAME COMPANIES - NET INCOME
16
•Combined net income of 24 top smartphone game companies is almost twice as high as combined
net income of the top 8
●
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●
●
●
●
●
●
●
■
■ ■
■
■
■
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2005 2010 2015 2020
0
100
200
300
400netincome(BillionYEN)
US$ 1.0 Bill.
US$ 2.0 Bill.
US$ 3.0 Bill.
Net income of Japan's game companies: 8 old vs 24 new
top 8 established game companies
top 24 new game companies
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(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPAN’STWO REMAINING CONSOLE PLATFORM
COMPANIES:



NINTENDO AND SONY COMPUTER
ENTERTAINMENT (SCE)
19
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPAN’S GAME INDUSTRY

STRUCTURE AND OVERVIEW
23
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
HARDWARE:

ARCADE GAMES AND GAME
CONSOLES
30
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ARCADE GAMES
32
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CRANE GAMES - UFO-CATCHER
42
•Crane games are games where the player pays typicallyYEN 100 (US$ 1) and operates a crane. If the player is lucky he/she can pick
a prize, move the prize to a shute, and drop the prize into the shute and pick the prize and take the prize home.
•The UFO-catcher/crane game machine on the right is cooled and the prizes are cups of icecream
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
CONSOLE PLATFORMS
44
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WII- (NINTENDO’S INTERNAL
CODE NAME:“REVOLUTION”)
54
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PS3
65
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PS4
69
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PS4
71
•Our reports are works in progress - this section will be included in one of
the next updates
•subscribe to receive updates:
•http://www.eurotechnology.com/store/jgames/
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XBOX & XBOX 360 IN JAPAN
72
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PARADIGM SHIFT IN BUSINESS
MODELS:

PRICESVS MANUFACTURING COSTS
77
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HANDHELD GAME
PLATFORMS
80
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
7TH GENERATION HANDHELD GAME CONSOLES
81
SONY PSP
•Japan release: Dec 12, 2004
•Total sold: 41 million (as of August 20, 2008)
Nintendo DS
•Japan release: November 21, 2004
•Total sold: 77.54 million (as of June 30, 2008)
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
NINTENDO DSI ANDTHE INTERNET
86
•Nintendo DSi is fully internet capable with a
WiFi connection.
•The image on the left demonstrates the
http://www.eurotechnology.com/ home page
as seen on the screen of a DSi.The lower
touch-screen allows data input, and allows to
zoom in on details of the page shown on the
upper screen
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
WITH 2 CAMERAS AND WIFI DSI HAS MANY SIMILARITIES 

WITH IPOD-TOUCH AND MOBILE PHONES
87
•Nintendo wants the DSi to be at the top of everybody’s wish list.
•Personalization: one DSi per person – not one DSi per family
•DSi aims to enrich everybody’s daily life: education, camera,
pictures, internet access (WiFi), applications to download
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPAN’S GAME SOFTWARE
MARKETS
88
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JAPANESEVIDEO GAME
SOFTWARE COMPANIES
96
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 201597
Company Founded Origin, first products Key products
Annual sales (approx.)
FY ending March 2013
Nintendo Sept 23, 1889 Playing cards > games Wii, DS, games, characters US$ 6.5 billion
SCE (SONY) Nov 16, 1993 Founded within SONY Playstation, PSP, games US$ 4.8 billion
Sega Sammy Holdings
SEGA: 1940 in Hawaii
Sammy: Nov 1, 1975
SEGA: games
Sammy: Pachinko
Game software, arcade
games, pachinko
US$ 4 billion
BandaiNamco
Bandai: July 5, 1950
Namco: 1955
Toy Maker
children’s rocking horses
Pac-Man US$ 1.3 billion
Konami March 21, 1969
Juke box rentals and
repairs
Metal Gear, Dance Dance
Revolution,YuGiOh cards
US$ 2.7 billion
TakaraTomy
Takara: 1955
Tomy: 1924
Toys, pre-school
education toys
Jinsei Game (game of life),
TOMICA cars
US$ 1.9 billion
Square-Enix
Enix: Sept 22, 1975
Square: Sept 1986
Role playing games,
characters
Final Fantasy, Dragon
Quest, Kingdom Hearts
US$ 0.64 billion
Capcom
1979 as “Japan Capsule
Company”
manufacturing electronic
game machines
Monster Hunter US$ 0.83 billion
KOEI July 1978 initially business software
historical simulation
games,Three Kingdoms
US$ 0.2 billion
for comparison:
EA Electronic Arts
1982 Computer games
Racing games, sport
games, action games
US$ 4.1 billion
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
JAPANESEVIDEO GAME
SOFTWARE COMPANIES
ON JAPAN’S STOCK EXCHANGES
98
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NINTENDO
106
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NINTENDO AND NEW STRATEGY
SMARTPHONE GAME PARTNERSHIP WITH DENA
107
•Nintendo was founded in 1889 and has succeeded through many
pivots.
•During the FY2006-FY2012 period Nintendo saw extraordinarily
high revenues and income because of the great success of the
disruptive Wii and DS platforms.
•Today financially Nintendo is essentially back to pre-FY2006 days
in terms of revenues and income, however, Nintendo is clearly in
defensive mode faced with the shift of people’s interest to
smartphones.
•Recently, Nintendo has announced several measures to adapt to
the new environment. Nintendo has announced a partnership with
DeNA to develop games for smartphones based on Nintendo
characters.
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015108
Nintendo 任天堂
お任せ=leave the responsibility to someone, 天=heaven
therefore 任天= leave responsibility to heaven/god
Founded Sept 23, 1889 in Kyoto for the production of handmade “hanafuda” cards
Founder FujasiroYamauchi
Headquarters Kyoto
Stock Exchange TokyoTSE 7974, Nasdaq NTDOY
Consolidated sales YEN 635.422 Billion (US$ 6.4 Billion) (FY2012, March 31, 2013)
Number of employees 5095 consolidated (September 2012)
Major share holders
HiroshiYamauchi (10%), Bank of Kyoto (4.50%), Japanese indiv.(14.91%), Japanese
institutions (26.33%), foreign: (45.98%)
Major business areas games, characters, game devices game software
web https://www.nintendo.com/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
HIROSHIYAMAUCHI
(NOV. 7, 1927 - SEPT. 19, 2013)
109
•Nintendo CEO from 1949 - 2002
•Transformed Nintendo from a “hanafuda” playing card company
into today’s video game company
•Initially shifted strategy from playing cards to board games, toy
guns, baseball machines, then arcade games
•Resigned as Nintendo’s Chief Executive in 2002
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
NINTENDO’S CEO, SATORU IWATA
110
•Nintendo’s CEO Satoru Iwata at a
recent press conference inTokyo
•Asked about his strategy in the crisis,
his answer:
•We work to have Nintento products
at the top of everyone’s wish list
•We do not intent to cut prices (we
want to make our products so unique
that they do not compete on price)
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
CEO SATORU IWATA AND 

CHIEF GAME DESIGNER SHIGERU MIYAMOTO
111
•CEO Satoru Iwata and Chief Game Designer
Shigeru Miyamoto introduce the DSi at a recent
Press Conference inTokyo.
•They want to personalize the DSi, so that there
will be one DSi per person – not one per family.
•Their strategy:
•DSi to enrich everyday’s life
•Personalize by incorporating two cameras
•Oneline store for downloads to personalize
the installed software
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015112
Year Nintendo company history
1889 FusajiroYamauchi starts to manufacture Japanese playing cards in Kyoto
1933
FusajiroYamauchi 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)
Nov 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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NINTENDO’S HQ IN KYOTO
114
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SONY
SLOGAN:“SONY. LIKE NO OTHER.”
118
for detailed analysis of Japan’s electronics sector read our report:
http://www.eurotechnology.com/store/j_electric/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015122
SONY artificial word, to sound like sunny
Founded
1945 Masaru Ibuka started radio repair shop, joined in 1946 by Akio Morita.They
jointly foundedTokyoTsushin Kogyo KK.
Founder Masaru Ibuka and Akio Morita
Headquarters Tokyo
Stock Exchange
TokyoTSE 6758
Sony FinancialTSE 8729
Consolidated sales YEN 7181 Billion (US$ 90 Billion) (FY2010 ending March 31, 2011)
Number of employees 167,900 consolidated (March 31, 2010)
Major share holders
Major business areas
electronics, Sony Music Entertainment, SONY Pictures, SONY Computer
Entertainment, SONY Finance
web
http://www.sony.jp/CorporateCruise/SMOJ-info/
http://www.sony.jp/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
THE SONY BUILDING ANDTHE SONY BRAND
123
- Sony was a relatively small company
when SONY acquired the famous
building at Ginza crossing inTokyo.
- Acquiring the Sony building was a
strong brand statement and part of
Sony’s successful strategy to build a
strong global brand.
- Interbrand estimates that the SONY
brand is ranked as the 5th most
valuable global brand, with a value on
the order of US$ 10 billion
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
SONY: REVENUES AND INCOME
124
•SONY’s revenues/sales are essentially flat all the way since 1998 - no growth
•SONY’s operating and net income have been falling steadily since 1998
•SONY has reported losses for years ending March 31, 2009 - 2012.
•In the year ending March 31, 2013, SONY reports a small profit, however much of this profit is due
to profits on asset sales (NY and Osaki HQ buildings, and reassessment of the value of SONY’s
holding of the medical information and services company M3).
•SONY income averaged of the period FY1998-FY2012 is:
•average annual operating incomeYEN 171 Billion (US$ 1.7 Billion)
•average annual net incomeYEN 46 Billion (US$ 460 million)
1998 2000 2002 2004 2006 2008 2010 2012 2014
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US$ 120 Bill.
Annual revenues of SONY
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0
US$ 6 Bill.
US$ 4 Bill.
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US$ 6 Bill.
Annual operating and net income SONY
mean operating income ¥ 171 Billion
mean net income ¥ 46 Billion
c2013EurotechnologyJapanKK
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SONY: MARGIN
125
•SONY’s operating margins have been steadily declining since SONY’s “better times” where stellar
products including Walkman andTrinitronTV’s contributed to high margins
•Margins averaged over the period FY1998-FY2012 are:
•average operating margin = 2.3%
•average net margin = 0.5%
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
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8
6
4
2
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annualoperatingandnetmargin
Annual operating and net margin SONY
mean operating margin 2.3
mean net margin 0.5
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SONY COMPUTER
ENTERTAINMENT

SCE
128
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SONY COMPUTER ENTERTAINMENT/SCE
FINANCIALS
132
•SCE (Sony Computer Entertainment) records revenues on the order of US$ 8-15 billion.
•During the period FY1997-FY2014, SCE went through ups and downs
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SEGA SAMMY HOLDINGS
134
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Sega Sammy Holdings
Founded October 1, 2004 by merger of SEGA and Sammy.
Founder Hajime Satomi (founder of Sammy)
Headquarters Tokyo
Stock Exchange TokyoTSE 6460
Consolidated sales YEN 396 Billion (US$ 4 Billion) (FY2011)
Number of employees 6700 consolidated (September 2012)
Major share holders Hajime Satomi (16.36%), Mellon Bank NATreaty Client Omnibus (6.8%)
Major business areas games, arcades, pachinko, pachislot
web https://www.segasammy.co.jp/
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SEGA SAMMY HOLDINGS FINANCIALS
145
•Averaged over the period FY2004-FY2014, the mean operating margin is about 10%, while the
mean net margin is just below 5%
•There is a downward trend of margins, which indicates the necessity to adjust business models.
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BANDAI NAMCO HOLDINGS
152
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BANDAI NAMCO MARGINS
• Bandai Namco’s margins are now recovering to 10% operating margin and 7% net
margin
• Average margins over the period FY2004-FY2014 are:
• mean operating margin = 7.1%
• mean net margin = 3.1%
162
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BANDAI NETWORKS AND NAMCO ON “GALAKE” I-MODE
PHONES
163
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KONAMI
167
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BEATMANIA
173
•Image on the left shows a Beatmania IIDX
machine.
•Play: on the screen of the game machine,
notes fall downwards and when they cross a
line, the player must press buttons, move the
turntable etc in rhythm with the music. Every
time the players touches the controls correctly
and in tune, a sound is played completing
missing parts of the song.
•Beatmania has given the name BEMANI to
the whole series of music games by Konami
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KONAMI GAMING JAPAN KK
(IN PREPARATION FOR JAPAN’S
POTENTIAL CASINO LAW)
176
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HUDSON
(ACQUIRED BY KONAMI)
179
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Hudson
Hudson Soft Company Ltd
March 1, 2012 merged with Hudson Digital Entertainment
Founded May 18, 1973 in Sapporo, Hokkaido as amateur radio store
Founder 工藤裕司
Headquarters Tokyo (integrated with Konami), previously Sapporo
Stock Exchange
TokyoTSE 4822 (from Dec 20, 2000 - March 29, 2011),
delisted due to acquisition by Konami
Consolidated sales YEN 14.3 Billion (US$ 144 Million) (FY 2011)
Number of employees 433 consolidated (March 2011)
Major share holders Konami (100%)
Major business areas game software
web
http://www.hudson.co.jp
http://www.konami-digital-entertainment.co.jp/
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TAKARATOMY
183
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SQUARE ENIX
191
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SQUARE ENIX
192
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TAITO
(ACQUIRED BY SQUARE ENIX)
203
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CAPCOM
207
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KOEITECMO HOLDINGS
214
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KoeiTecmo Holdings
English:Tecmo Koei Holdings Co Ltd
Japanese: コーエーテクモホールディングス株式会社
Founded
April 1, 2009 by the merger of Koei andTecmo
short form: Koei-Tecmo (コーエーテクモ)
Founder
Headquarters Yokohama, Kanagawa
Stock Exchange TSE 3635
Consolidated sales YEN 35.5 Billion (US$ 360 Million) (FY 2011, March 2012)
Number of employees 1386 consolidated (March 31, 2012)
Major share holders 株式会社光優 (KK Kouyu) (32.5%), 環境科学(株) 7.24%
Major business areas game software
web https://www.koeitecmo.co.jp/
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KOEITECMO HOLDINGS FINANCIALS
216
•Koei-Tecmo Holdings revenues are steadily increasing, approximately doubled between FY2000 and
FY2014.
•Operating and net income are seeing ups and downs, with the exception of a temporary drop
around FY2009-FY2010, and steady increase in recent years since 2010
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operating income
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KOEITECMO MARGINS
217
•KoeiTecmo Holdings’ margins are high- with a peak around 40% operating margin in FY2003-
FY2004.
•Even average operating margin for the period FY1999 - FY2014 is around 25%, while net margin is
18% on average over the same period.
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KOEI
218
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Koei 光栄 = koei = honor, privilege, in the past: KOEY, now: KOEI
Founded
founded initially as software development dept. of Miyamoto Masafumi’s fathers
electricity service company in October 1983
Founder
ErikawaYouichi (襟川陽一)
(pen name Shibuzawa Kou, シブサワ・コウ)
Headquarters Tokyo
Stock Exchange
TSE 9654 (from November 16, 1994 - March 25, 2009) until merger intoTecmo Koei
Holdings
Consolidated sales YEN 20.2 Billion (US$ 204 million) (March 2009)
Number of employees 1191 (March 31, 2008)
Major share holders Tecmo-Koei Holdings (100%)
Major business areas
computer software and development tools, history simulation games,
especially historic “Battle of three kingdoms” games (三國志)
web www.koei.co.jp/
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KOEI - HISTORY
220
Year History
July 25, 2979
Founded byYoichi Erikawa and Keiko Erikawa close to Keio University campus in Hiyoshi/Yokohama.
initial business: PC sales and production of business software
Company name
several explanations: (1) rearranged KEIO-University name KEIO-> KOEI, (2) pen names of authors:
Kou Shibusawa and Eiji Fukuzawa are used as pen names of the founders/game authors
1983
Releases historic strategy game “Nobunaga’s ambition” set during Japan’s Sengoku period. Start of a
series of games with historic content:“Romance of the three kingdoms”,“Uncharted waters”
1988 US subsidiary established
1994 Neoromance series “Angelique”
Sept 2008 Talks to potentially acquireTECMO announced
April 1, 2009 acquiresTECMO
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KOEI’S MAIN GAME SERIES
221
Series title numbers sold globally (as of 2007) number of titles in series
Dynasty warriors 11.84 million
Nobunaga’s ambition 7.8 million
Romance of the three kingdoms 6.55 million
Samurai warriors 4.28 million
Winning post 3.81 million
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TECMO
222
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Tecmo
Founded
Sept 1964 as 帝国管財株式会社, for building maintenance
July 31, 1967 (reestablished on March 15, 2010)
Founder Yasuhiro Fukushima (福嶋 康博)
Headquarters Tokyo
Stock Exchange TSE 9650 (until delisting on March 26, 2009)
Consolidated sales
Number of employees 300 (March 31, 2008)
Major share holders KoeiTecmo Games (100%)
Major business areas game software
web www.tecmo.co.jp/
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TECMO - HISTORY
224
Year History
Sept 1964 Teikoku Kanzai KK, (帝国管財株式会社), for building maintenance, supplier of cleaning equipment
July 31, 1967
April 1981 releases arcade video game “Pleiads”
Jan 8, 1986 changed name toTECMO
August 29, 2008 Square Enix offers friendly take over
Sept 4, 2008
TECMO rejects Square Enix’ offer
press reports thatTECMO is in discussions with KOEI about potential merger
April 1, 2009 Merged with KOEI to form KOEI-TECMO Holdings
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TECMO’S MAIN GAME SERIES
225
Series title numbers sold globally (as of 2007) number of titles in series
Dead or alive 7.5 million
Ninja garden 5.5 million
TECMO bowl 5 million
Monster farm 4 million
CaptainTsubasa 2.62 million
Gallop racer 1.55 million
Fatal Frame (Project zero) 1.35 million
Dino Crisis 4.4 million 13
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JAPAN’S SMARTPHONE GAME
COMPANIES
226
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SMARTPHONE GAME COMPANIES
227
•Japan is the world’s No. 1 app market for smartphones by cash value (source:AppAnnie)
•Global top-grossing app-company ranking: For iOS and Google-Play combined, in terms
of downloads on a per company basis, Facebook, Google,Apple, Sungy Mobile, Cheetah
Mobile, Baidu, Microsoft etc are top ranked. However, ranked by company cash revenue,
the Japanese company LINE is ranked globally No. 1, and the Japanese companyVoltage is
ranked No. 10 - thus there are two Japanese companies among the top 10 companies
ranked by cash revenues (source:AppAnnie).
•Global top-grossing app ranking:Again combining iOS and Google-Play, ranking Apps by
revenues, there are 5 Japanese Apps among the top 10, these are:
•LINE
•LINE Play
•LINE Manga
•Dragon Quest by Square Enix
•PocketColony by Cocone
In the following section, we describe and analyze Japanese new smartphone game
companies.This is a work in progress - please subscribe to this report and receive updates.
To subscribe:
http://store.esellerate.net/s.asp?
s=STR0576176470&Cmd=BUY&SKURefnum=SKU85943952648
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LINE
“the leading provider of sticker-based
communications”
invented stickers for chat apps
resulting from the Tohoku disaster 2011
230
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LINE KK LINE Corporation
Founded
September 4, 2000 as Han Game Japan KK,August 28, 2003: changed to NHN Japan
KK.April 1, 2013 changed to LINE KK.
Founder
founder CEO:Akira Morikawa
current CEO:Takeshi Idezawa
Headquarters Tokyo
Stock Exchange -
Consolidated sales YEN 86.3 Billion (US$ 689 million) (2014, ended Dec 31, 2014)
Number of employees 790 (October 10, 2014)
Major share holders Naver (S-Korea)
Major business areas
messaging, stamps, creators market, smartphone games, communications, phone
services, payments, taxi app and more
web http://linecorp.com/
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DENA (2432)
“DELIGHT AND IMPACTTHE WORLD”
240
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DeNA “Delight and impact the world”
Founded March 1999
Founder Tomoko Namba (南場智子) and Shogo Kawada (川田尚吾)
Headquarters Tokyo
Stock Exchange TSE 2432 (IPO: December 12, 2007)
Consolidated sales YEN 142.4 Billion (US$ 1.14 Billion) (March 31, 2014)
Number of employees 2108 (March 31, 2013)
Major share holders
Tomoko Namba (13.0%), SONY (11.7%), JapanTrustee Service (2.8%), Shogo
Kawada (2.6%)
Major business areas games, ecommerce, SNS, software, online services, online auctions
web http://dena.com/
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DENA FINANCIALS
242
•DeNA showed very healthy growth for revenues and income until FY2011, when margins started
to drop, followed by drops in income and revenues from FY2013.
•The main reasons for these difficulties are increasing competition in the smartphone space,
difficulties in transitioning from a platform business on traditional feature phones, and webbased
games to smartphone games, and - common with many Japanese companies - difficulties in
developing global business
•recently Nintendo and DeNA announced a cooperation to create smartphone games based on
Nintendo characters, including mutual investments. It remains to be seen how the Nintendo-DeNA
will develop, and if this cooperation is successful, revenue and income growth for DeNA may resume.
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operating income
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DENA MARGINS
243
•DeNA operating margins were stable around 40%, while net margins are stable around 20% up until
FY2011, when margins started to drop due to difficulties in globalizing the company, and difficulties in
the transition to the smartphone space
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GREE (3632)
244
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GREE
Founded December 7, 2004
Founder YoshikazuTanaka (田中良和 )
Headquarters Tokyo
Stock Exchange TSE 3632 (IPO December 17, 2008)
Consolidated sales YEN 152.2 Billion (US$ 1.54 Billion) (June 2013)
Number of employees 2582 (June 2013)
Major share holders
YoshikazuTanaka (48.92%), State Street Bank andTrust Company (4.21%), KDDI
(3.41%)
Major business areas SNS, games, software, game platform
web http://gree.jp
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GREE FINANCIALS
247
•GREE showed good growth until FY2012, but recently ran into problems which led to drops in
revenues, and dropping income.
•GREE tried to grow aggressively internationally, and invested in acquisitions in USA and opening
branches in several countries outside Japan, however, some of these overseas business activities were
not successful and lead to saturation of growth and dropping income.
•In addition GREE changes business model from “platform-on-platform” to native games
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US$ .4 Bill.
US$ .6 Bill.
Annual operating and net income GREE
operating income
net income
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GREE MARGINS:“PLATFORM ON PLATFORM” DOES NOT WORK
248
•GREE margins were high in the past - about 30% operating margin and 15% net margin in FY2012,
however, margins are dropping indicating problems with GREE’s business model.
•Net margin has dropped to essentially zero in FY2014.
•GREE’s business model was essentially “platform on platform”, ie GREE created its own game
platform on top of Japanese mobile operator’s platform, ie on top of i-Mode, EZweb, andYahoo-
Mobile. However this model does not seem to be successful on top of global smartphone platforms
Google/Android and iPhone, since both Android and iPhone have their own platforms.Therefore
GREE seems to return to a business model of creating or acquiring original games instead of the
platform business model.This change of strategy is reflected in saturating revenues and dropping
margins.
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FOR COMPARISON
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EA
AND
ELECTRONIC ARTS JAPAN
352
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ELECTRONIC ARTS IN JAPAN
353
•By market capitalization, EA is the world’s largest game software company, and EA’s market share in
Japan is about 2%.
•EA opened and closed offices in Japan several times…
•EA’s sales in Japan were US$ 71 million for the year ending March 31, 2004, which corresponds to a
market share of less than 2% of Japan’s US$ 4 billion game software market.We estimate that for
2007 EA sales in Japan dropped to around US$ 40 million
•EA’s presentation focused on EA’s core properties/licences:“FIFA Soccer”, Starwars, and others.
Currently biggest seller is SimCity for DS
•Japan is EA’s largest market in Asia, and EA aims for US$1 billion sales in Asia by 2010
•On October 6, 2004 EA announced a videogame software studio in China
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ELECTRONIC ARTS - HISTORY IN JAPAN
354
Year History
1989
Rejected Nintendo’s conditions (which would have involved agreeing not to provide the same games
to Nintento’s competitors such as SEGA). Focused on SEGA platform (Genesis machine)
1990 Electronic Arts KK established (according to EA KK’s website)
1990
started development for Nintendo’s 8-bit machines (Super NES) (Nintendo had changed conditions,
allowing to run games on competing platforms as well as Nintendo’s platforms)
September 1992
Joint-Venture: Electronic ArtsVictor (Electronic Arts=65%,Victor=35%)
http://en.wikipedia.org/wiki/Electronic_Arts_Victor
Electronic ArtsVictor JointVenture dissolved, sold to Mervellous:
http://en.wikipedia.org/wiki/Victor_Interactive_Software
1998 JointVenture with Square: Square Electronic Arts: Square=70%, Electronic Arts=30%
2003
Square merged with Enix, bought back EA’s 30% of Square-Electronic-Arts JV, and established Square
Enix USA Inc.
from approx. 2003 Electronic Arts KK becomes 100% subsidiary of EA and independent of Square (now Square Enix)
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ELECTRONIC ARTS - RANKING IN JAPAN
355
Nintendo BandaiNamco ... Electronic Arts
Rank 2007 1 2 ... 14
Rank 2006 1 2 ... 11
Games sold in
Japan 2007
26.4 million 9.3 million 782,821
Number of titles
offered
84 163 76
Estimated sales in
Japan
US$ 1.3 billion US$ 0.47 billion US$ 39 million
Market share 34.8% 12.3% 1%
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ELECTRONIC ARTS - SALES IN JAPAN BY PLATFORM
356
Title Platform Sales 2007
1 Simcity DS 193,826
2
Boku to Sim no machi Resourt
ni genki o torimo douzou
DS 51,642
3 Boku to Sim no machi Wii 40,924
4 Medal of honor vanguard PS2 31,956
5 Need for Speed Carbon PS2 30,919
6 Thema Park DS 23,908
7 Godfather PS2 22,936
8 Medal of honor heros PSP 22,489
9 NBA Live 08 PS2 19,967
10 Need for speed. Most wanted PS2 19,921
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ELECTRONIC ARTS - SALES IN JAPAN BY PLATFORM
357
Platform Share of EA sales in Japan
1 DS 39.8%
2 PS2 24.9%
3 PS3 10.3%
4 PSP 10.1%
5 Wii 8.7%
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
ELECTRONIC ARTS (GLOBAL) FINANCIALS
358
•Electronic Arts globally achieves about US$ 4 billion in revenues, however income has been quite
unstable, with losses around 2009.
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
100
200
300
400
500
600
annualrevenueYENBillion
US$ 1 Bill.
US$ 2 Bill.
US$ 3 Bill.
US$ 4 Bill.
US$ 5 Bill.
Annual revenues Electronic Arts
c2013EurotechnologyJapanKK
www.eurotechnology.com
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
150
100
50
0
50
100
150
annualoperatingnet
incomeYENBillion
US$ 1 Bill.
US$ 0.5 Bill.
0
US$ 0.5 Bill.
US$ 1 Bill.
Annual operating and net income Electronic Arts
mean operating annual income
mean net annual income
c2013EurotechnologyJapanKK
www.eurotechnology.com
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
ELECTRONIC ARTS (GLOBAL) MARGINS
359
•Electronic Arts income and margins are quite unstable and have fluctuated between +30% and
-25% over the period 2004-2012.
•This Electronic Arts maybe thought of falling in a similar class as a movie studio, where particular
games (or movies) can be either very successful, or creating losses.
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
30
20
10
0
10
20
30
annualoperatingmargin
Annual operating and net margin Electronic Arts
mean operating margin 0.45
mean net margin 1.2
c2013EurotechnologyJapanKK
www.eurotechnology.com
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
VIDEO GAME GENERATIONS
AND HISTORY
360
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
PACHINKO AND PACHISLOT
371
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
RATING ORGANIZATIONS
377
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
COMPUTER ENTERTAINMENT
RATING ORGANIZATION -
CERO
379
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
ETHICS ORGANIZATION OF
COMPUTER SOFTWARE -
EOCS
383
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
CASINO LAW OF JAPAN
386
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
SUMMARY
389
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
SUMMARY:
JAPAN’S GAME MAKERS AND MARKETS
390
•Japanese companies have created many of the global game genres, platforms and characters, and
represent a US$ 50 billion industry sector, excluding pachinko.
•Japanese companies have prominent position in the global “top grossing” rankings for iOS and
Google-Play app-stores: the world’s No. 1 top-grossing company is Japanese (with Korean origin) - the
company LINE.
•With consumer focus shifting from dedicated game platforms such as Nintendo’s Wii or DS, Sony’s
Playstation or Microsoft’s Xbox to applications or online games on smartphones, Japan’s traditional
game companies are facing unprecedented disruption, and 25 new companies combined achieve
about twice as high revenues than all top 9 traditional game companies combined.
•Most established game companies, including Nintendo and SONY, see an erosion of business, while
at the same time new a large number of new game industry startups are rapidly growing and filling
the space vacated by traditional game companies.
•This report presents a detailed overview of Japan’s traditional game sector, as well as an overview of
some of the new emerging players in Japan’s game sector.
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
EUROTECHNOLOGY JAPAN KK
391
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
EUROTECHNOLOGY JAPAN KK
FOUNDED: FEBRUARY 1997 INTOKYO
392
Services and products - focus areas are high-technology, telecommunications, software, middle-ware,
environmental technology and medical equipment:
- Market entry to Japan for European and US high-tech companies, turn-round, reshaping, planning
and building of distribution networks
- European business development and strategy for Japanese companies
- M&A (European and US companies acquiring Japanese companies, Japanese companies acquiring or
investing in Europe)
- Turn-round preparations and management of foreign business in Japan
- Market research and strategy
- Due diligence of high-tech companies, environmental due-diligence
- Advisory services for investment fund managers and investors in technology fields
- we publish a series of market reports for about 10 years, which are purchased world-wide,
distributed direct and via distribution partners: http://www.eurotechnology.com/store/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
EUROTECHNOLOGY JAPAN KK
393
- Leading high-technology business development boutique inTokyo, working globally
- Founded in 1996/1997 - 14 years experience, relationships, cooperations and success record.
- CEO works with Japan’s high-tech / telecom sector since 1984 - 27 years experience, resources, cooperations.
- Wide network of cooperations in Governments, Embassies, trading companies, distributors, finance,VCs, traditional
corporations, venture start-ups, industry associations
- Experience: market-entry, restructuring, M&A, acquisitions, due-diligence
Customers include:
- More than 100 investment fund managers
- Industrial customers:
- NTT-Communications, SIEMENS, DeutscheTelekom, Cubic, Unaxis (now: Oerlikon), CITI Group, CLSA Asian
Markets, Genscape, Google, IKEA, Isabellenhuette, Landis+Gyr, National Instruments, Swisscom,TechnoCom,
- Government
- NewYork Police Department, European Union,TEKES (Technology Research funding organization of the
Government of Finland)
Deep Japanese technology market knowledge - we publish a series of market reports for about 10 years, which are
purchased world-wide.You can purchase our reports on Bloomberg: https://www.bmart.com/search?&nuts%5B
%5D=WIRE%3AEUT, and via eSellerate: http://store.eSellerate.net/s.aspx?s=STR0576176470 and from http://
www.eurotechnology.com/store/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
GERHARD FASOL
PROFILE: HTTP://WWW.FASOL.COM/PROFILE/
394
- Worked successfully with Japan’s high-tech sector since 1984 - 27 years. Came first to Japan in 1984 to help build NTT’s first
international R&D cooperation on semiconductor lasers
- Entrepreneur inTokyo since 1996, Eurotechnology Japan KK worked with many large corporate groups (e.g. SIEMENS, NTT,
DeutscheTelekom,Asahi Glass...), more than 100 investment fund managers
- Assoc. Professor of Electrical Engineering atTokyo University. Record of Fasol-Laboratory atTokyo University: http://
www.fasol.com/tokyo_university/
- Elite “Sakigake” (Pioneer) R&D project on Spin-Electronics of Japanese Government Science andTechnology Agency.This
work was evaluated by US National Science Foundation and US Department ofTrade: http://www.wtec.org/loyola/erato/
ch7_5.htm
- Co-initiator of spin-electronics device research in Japan, one of the first to start work on spin-electronics in Japan in 1991
- Tenured Faculty member at Cavendish Laboratory/University of Cambridge.
- Assoc. Professor of Electrical Engineering atTokyo University
- PhD in Solid-State Physics (Cambridge University,Trinity College, UK)
- Diplom-Physiker, Ruhr-University Bochum (Diplom-Thesis on Superconductivity)
- Publication list (Books, patents and publications, several publications are specifially concerning electron-spin and spin-
electronics): http://www.fasol.com/profile/publications.shtml
- Languages: English, German (native), French, Japanese, and some Swedish
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
GERHARD FASOL WITHTETSUZO MATSUMOTO, EXECVP OF
SOFTBANK MOBILE CORPORATION
395
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
“POST GALAPAGOS STUDY GROUP”
25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR
ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT”
396
see: http://www.eurotechnology.com/2013/10/07/galapagos/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
“POST GALAPAGOS STUDY GROUP”
25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR
ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT”
397
see: http://www.eurotechnology.com/2013/10/07/galapagos/
(c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015
CONTACT AND MORE INFORMATION
398
Contact
•Gerhard Fasol PhD
•Eurotechnology Japan KK,Tokyo, Japan
•http://www.eurotechnology.com/
•Mobile +81-90-8594-6291
•fasol@eurotechnology.com
•gfasol@gmail.com
More information:
•reports:http://www.eurotechnology.com/store/
•twitter: http://twitter.com/gfasol/
•website: http://www.eurotechnology.com/
•personal site: http://fasol.com

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Japan's games industries

  • 1. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’S GAMES INDUSTRIES Version 19 of August 13, 2013 by Gerhard Fasol PhD, Eurotechnology Japan KK http://www.eurotechnology.com/ fasol@eurotechnology.com Latest revision available from: http://www.eurotechnology.com/store/jgames/ 1 JAPAN’S GAME MAKERS AND MARKETS Version 30 of June 21, 2015 by Gerhard Fasol PhD, Eurotechnology Japan KK http://www.eurotechnology.com/ fasol@eurotechnology.com This is a preview with selected pages. Download full report from: http://www.eurotechnology.com/jgames/
  • 2. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 LICENSE • Thank you for purchasing licenses to our reports, and for your cooperation with our licensing conditions. • Only through your purchases can we continue to produce high-quality market reports from Japan • INTHE CASE OF SINGLE LICENSE: If you have purchased a single copy license of this report, you are not permitted to copy this report except for a single back-up copy • INTHE CASE OF CORPORATE LICENSE: in the case that your company has purchased a corporate license, you may distribute this report inside your company including protected corporate information servers locked to the outside, but you cannot distribute this report outside your company • ANNUAL SUBSCRIPTION: we offer annual subscriptions for a particular report, and also for all our reports in one single transaction at a great discount - please contact us for details. Corporations subscribing will receive all updates at the time of publication, so that you can be sure to have the latest up-to-date information • This research report comes without any warranty of any kind.The authors and Eurotechnology Japan K. K. do not warrant that the information in this report is without error, nor that the information serves any particular purpose. For legal advice please consult properly licensed legal professionals, for investment advice please consult properly licensed financial advisors.Trademarks mentioned are the property of their owners.
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  • 3. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’S GAME MAKERS AND MARKETS REPORT -VERSIONS 3 Our reports are works in progress - subscribe to receive updates: single bench license, subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR651896906&Cmd=BUY&SKURefnum=SKU33252735489 corporate license, subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU85943952648 Version Date Comments 1 2 3 4 September 5, 2005 5 September 2, 2008 6 October 7, 2008 7 October 14, 2008 8 October 14, 2008 9 October 15, 2008 10 January 9, 2009 11 February 14, 2009 12 May 25, 2009
  • 4. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’S GAME MAKERS AND MARKETS REPORT -VERSIONS 4 Version Date Comments 13 July 11, 2009 14 July 13, 2009 15 July 19, 2009 16 July 20, 2009 17 July 27, 2009 18 August 18, 2009 19 August 13, 2013 rewritten 20 October 1, 2013 rewritten, financial analysis added 21 October 6, 2013 compare new vs old game co’s. 22 Dec 13, 2013 23 April 7, 2014 company coverage added 24 April 9, 2014 company coverage added Our reports are works in progress - subscribe to receive updates: single bench license, subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR651896906&Cmd=BUY&SKURefnum=SKU33252735489 corporate license, subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU85943952648
  • 5. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’S GAME MAKERS AND MARKETS REPORT -VERSIONS 5 Version Date Comments 25 May 10, 2014 LINE, Colopl, and more added 26 May 11, 2014 corrections, market caps update 27 May 29, 2014 Casino law, Konami Gaming 28 June 1, 2015 financial updates, 25 new co’s 29 June 9, 2015 update new companies 30 June 21, 2015 update new companies 31 32 33 34 35 36 Our reports are works in progress - subscribe to receive updates: single bench license, subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR651896906&Cmd=BUY&SKURefnum=SKU33252735489 corporate license, subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU85943952648
  • 6. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 EXECUTIVE SUMMARY - JAPAN’S GAME MAKERS AND MARKETS 6 •Japanese companies have created many of the global game genres, platforms and characters, and represent a US$ 50 billion industry sector - far higher still if Pachinko and Pachislot are included. •With consumer focus shifting from dedicated game platforms such as Nintendo’s Wii or DS, Sony’s Playstation or Microsoft’s Xbox to smartphones, Japan’s traditional game companies are facing unprecedented disruption, as shown in the figure above: 24 new game companies combined exceed and achieve almost double the net income of all 8 traditional game companies in operating income. •Most established game companies, including Nintendo and SONY, see an erosion of business, while at the same time new a large number of new game industry startups (at least 24 publicly traded on theTokyo Stock Exchange) are rapidly growing and filling the space vacated by traditional game companies. •This report presents a detailed overview of Japan’s traditional game sector, as well as an overview of some (25) new emerging players in Japan’s game sector. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 100 200 300 400 netincome(YENbillion) Japan's major game companies (annual net income, excl. SONY) US$ US$ 1 billion US$ 2 billion US$ 3 billion US$ 4 billion (c)2015EurotechnologyJapanKK www.eurotechnology.com 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 100 200 300 400 netincome(YENbillion) Japan's new game companies net income US$ 1 billion US$ 2 billion US$ 3 billion US$ 4 billion (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 7. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 AGENDA - LIST OF CONTENTS 7 •Executive Summary •Game trends for 2015: smartphone games disruption •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: 9 traditional video game companies + 25 new smartphone game companies •Overview of Japan’s games software companies •Financials •Recent consolidation •Profile of top ranking Japanese games software and equipment companies •Video game generations and history •Pachinko and Pachislo (short overview) •Ethics and rating organizations •Summary
  • 8. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SMARTPHONE GAME DISRUPTION 8
  • 9. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN = NO. 1 APP MARKET GLOBALLY 9 Japan’s App-Market is a direct continuation of i-Mode / EZweb / Jsky which started in 1999.
  • 10. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPANESE APPS AND JAPANESE APP COMPANIES HAVE A PROMINENT POSITION INTHE APP STORES 10 Japanese apps and Japanese app companies rank very high in the global “top grossing” rankings for Apple and Google App stores.The table below shows that: • the top ranked company by revenue globally for iOS+Google Play is the Japanese company LINE. • 5 out of 10 top ranked “top grossing” apps globally are Japanese apps top-grossing ranks for global iOS+Google Play stores (source:AppAnnie, 2014) Rank companies by revenue top apps by revenue 1 LINE (J) LINE (J) 2 Pandora(USA) Pandora Radio (USA) 3 InterActiveCorp (USA) Spotify (S) 4 Spotify (S) Zoosk (USA) 5 Zoosk (USA) LINE Play (J) 6 Microsoft (USA) LINE Manga (J) 7 Disney (USA) Skype (USA) 8 Smule (USA) Dragon Quest (J) 9 MagazineCloner (UK) Badoo (UK) 10 Voltage (J) PocketColony (J)
  • 11. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SMARTPHONE DISRUPTION - REVENUES 11 •Left hand side: top 9 traditional video game companies •Right hand side: top 25 new smartphone game companies (24 are traded onTokyo Stock Exchange + LINE) •While traditional Japanese game companies seem to have peaked during 2008-2010, and are dropping rapidly in size, new start-up game companies are emerging. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 1000 2000 3000 4000 5000 revenues(YENbillion) Japan's first generation game companies (annual revenues) US$ 10 billion US$ 20 billion US$ 30 billion US$ 40 billion US$ 50 billion Nintendo Sony Games (c)2015EurotechnologyJapanKK www.eurotechnology.com 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 1000 2000 3000 4000 5000 revenues(YENbillion) Japan's new game companies (annual revenues) US$ 10 billion US$ 20 billion US$ 30 billion US$ 40 billion US$ 50 billion (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 12. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 NEW GAME COMPANIES HAVE ALREADY OVERTAKENTHE TRADITIONAL GAME SECTOR 15 •Left hand side: annual net income of Japan’s top 8 traditional video game companies •Right hand side: annual net income of Japan’s top 24 smartphone game companies •Net income of Japan’s traditional video game companies peaked in 2008 at almost US$ 3.5 billion, but in 2013 fell back to around US$ 1 billion mainly due to a shift of consumer interest to smart phones •Combined net income of the 24 smartphone game companies (shown on the right hand side) is approachingYEN 200 billion (US$ 2 billion), about twice as much as combined net income of traditional video game companies 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 100 200 300 400 netincome(YENbillion) Japan's major game companies (annual net income, excl. SONY) US$ US$ 1 billion US$ 2 billion US$ 3 billion US$ 4 billion (c)2015EurotechnologyJapanKK www.eurotechnology.com 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 100 200 300 400 netincome(YENbillion) Japan's new game companies net income US$ 1 billion US$ 2 billion US$ 3 billion US$ 4 billion (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 13. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 TRADITIONALVS NEW GAME COMPANIES - NET INCOME 16 •Combined net income of 24 top smartphone game companies is almost twice as high as combined net income of the top 8 ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2005 2010 2015 2020 0 100 200 300 400netincome(BillionYEN) US$ 1.0 Bill. US$ 2.0 Bill. US$ 3.0 Bill. Net income of Japan's game companies: 8 old vs 24 new top 8 established game companies top 24 new game companies (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 14. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’STWO REMAINING CONSOLE PLATFORM COMPANIES:
 
 NINTENDO AND SONY COMPUTER ENTERTAINMENT (SCE) 19
  • 15. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’S GAME INDUSTRY
 STRUCTURE AND OVERVIEW 23
  • 16. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 HARDWARE:
 ARCADE GAMES AND GAME CONSOLES 30
  • 17. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ARCADE GAMES 32
  • 18. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 CRANE GAMES - UFO-CATCHER 42 •Crane games are games where the player pays typicallyYEN 100 (US$ 1) and operates a crane. If the player is lucky he/she can pick a prize, move the prize to a shute, and drop the prize into the shute and pick the prize and take the prize home. •The UFO-catcher/crane game machine on the right is cooled and the prizes are cups of icecream
  • 19. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 CONSOLE PLATFORMS 44
  • 20. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 WII- (NINTENDO’S INTERNAL CODE NAME:“REVOLUTION”) 54
  • 21. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 201564
  • 22. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 PS3 65
  • 23. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 201566
  • 24. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 PS4 69
  • 25. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 201570
  • 26. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 PS4 71 •Our reports are works in progress - this section will be included in one of the next updates •subscribe to receive updates: •http://www.eurotechnology.com/store/jgames/
  • 27. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 XBOX & XBOX 360 IN JAPAN 72
  • 28. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 201573
  • 29. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 PARADIGM SHIFT IN BUSINESS MODELS:
 PRICESVS MANUFACTURING COSTS 77
  • 30. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 HANDHELD GAME PLATFORMS 80
  • 31. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 7TH GENERATION HANDHELD GAME CONSOLES 81 SONY PSP •Japan release: Dec 12, 2004 •Total sold: 41 million (as of August 20, 2008) Nintendo DS •Japan release: November 21, 2004 •Total sold: 77.54 million (as of June 30, 2008)
  • 32. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 NINTENDO DSI ANDTHE INTERNET 86 •Nintendo DSi is fully internet capable with a WiFi connection. •The image on the left demonstrates the http://www.eurotechnology.com/ home page as seen on the screen of a DSi.The lower touch-screen allows data input, and allows to zoom in on details of the page shown on the upper screen
  • 33. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 WITH 2 CAMERAS AND WIFI DSI HAS MANY SIMILARITIES 
 WITH IPOD-TOUCH AND MOBILE PHONES 87 •Nintendo wants the DSi to be at the top of everybody’s wish list. •Personalization: one DSi per person – not one DSi per family •DSi aims to enrich everybody’s daily life: education, camera, pictures, internet access (WiFi), applications to download
  • 34. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’S GAME SOFTWARE MARKETS 88
  • 35. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPANESEVIDEO GAME SOFTWARE COMPANIES 96
  • 36. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 201597 Company Founded Origin, first products Key products Annual sales (approx.) FY ending March 2013 Nintendo Sept 23, 1889 Playing cards > games Wii, DS, games, characters US$ 6.5 billion SCE (SONY) Nov 16, 1993 Founded within SONY Playstation, PSP, games US$ 4.8 billion Sega Sammy Holdings SEGA: 1940 in Hawaii Sammy: Nov 1, 1975 SEGA: games Sammy: Pachinko Game software, arcade games, pachinko US$ 4 billion BandaiNamco Bandai: July 5, 1950 Namco: 1955 Toy Maker children’s rocking horses Pac-Man US$ 1.3 billion Konami March 21, 1969 Juke box rentals and repairs Metal Gear, Dance Dance Revolution,YuGiOh cards US$ 2.7 billion TakaraTomy Takara: 1955 Tomy: 1924 Toys, pre-school education toys Jinsei Game (game of life), TOMICA cars US$ 1.9 billion Square-Enix Enix: Sept 22, 1975 Square: Sept 1986 Role playing games, characters Final Fantasy, Dragon Quest, Kingdom Hearts US$ 0.64 billion Capcom 1979 as “Japan Capsule Company” manufacturing electronic game machines Monster Hunter US$ 0.83 billion KOEI July 1978 initially business software historical simulation games,Three Kingdoms US$ 0.2 billion for comparison: EA Electronic Arts 1982 Computer games Racing games, sport games, action games US$ 4.1 billion
  • 37. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPANESEVIDEO GAME SOFTWARE COMPANIES ON JAPAN’S STOCK EXCHANGES 98
  • 38. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 NINTENDO 106
  • 39. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 NINTENDO AND NEW STRATEGY SMARTPHONE GAME PARTNERSHIP WITH DENA 107 •Nintendo was founded in 1889 and has succeeded through many pivots. •During the FY2006-FY2012 period Nintendo saw extraordinarily high revenues and income because of the great success of the disruptive Wii and DS platforms. •Today financially Nintendo is essentially back to pre-FY2006 days in terms of revenues and income, however, Nintendo is clearly in defensive mode faced with the shift of people’s interest to smartphones. •Recently, Nintendo has announced several measures to adapt to the new environment. Nintendo has announced a partnership with DeNA to develop games for smartphones based on Nintendo characters.
  • 40. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015108 Nintendo 任天堂 お任せ=leave the responsibility to someone, 天=heaven therefore 任天= leave responsibility to heaven/god Founded Sept 23, 1889 in Kyoto for the production of handmade “hanafuda” cards Founder FujasiroYamauchi Headquarters Kyoto Stock Exchange TokyoTSE 7974, Nasdaq NTDOY Consolidated sales YEN 635.422 Billion (US$ 6.4 Billion) (FY2012, March 31, 2013) Number of employees 5095 consolidated (September 2012) Major share holders HiroshiYamauchi (10%), Bank of Kyoto (4.50%), Japanese indiv.(14.91%), Japanese institutions (26.33%), foreign: (45.98%) Major business areas games, characters, game devices game software web https://www.nintendo.com/
  • 41. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 HIROSHIYAMAUCHI (NOV. 7, 1927 - SEPT. 19, 2013) 109 •Nintendo CEO from 1949 - 2002 •Transformed Nintendo from a “hanafuda” playing card company into today’s video game company •Initially shifted strategy from playing cards to board games, toy guns, baseball machines, then arcade games •Resigned as Nintendo’s Chief Executive in 2002
  • 42. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 NINTENDO’S CEO, SATORU IWATA 110 •Nintendo’s CEO Satoru Iwata at a recent press conference inTokyo •Asked about his strategy in the crisis, his answer: •We work to have Nintento products at the top of everyone’s wish list •We do not intent to cut prices (we want to make our products so unique that they do not compete on price)
  • 43. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 CEO SATORU IWATA AND 
 CHIEF GAME DESIGNER SHIGERU MIYAMOTO 111 •CEO Satoru Iwata and Chief Game Designer Shigeru Miyamoto introduce the DSi at a recent Press Conference inTokyo. •They want to personalize the DSi, so that there will be one DSi per person – not one per family. •Their strategy: •DSi to enrich everyday’s life •Personalize by incorporating two cameras •Oneline store for downloads to personalize the installed software
  • 44. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015112 Year Nintendo company history 1889 FusajiroYamauchi starts to manufacture Japanese playing cards in Kyoto 1933 FusajiroYamauchi 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) Nov 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)
  • 45. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 NINTENDO’S HQ IN KYOTO 114
  • 46. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SONY SLOGAN:“SONY. LIKE NO OTHER.” 118 for detailed analysis of Japan’s electronics sector read our report: http://www.eurotechnology.com/store/j_electric/
  • 47. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015122 SONY artificial word, to sound like sunny Founded 1945 Masaru Ibuka started radio repair shop, joined in 1946 by Akio Morita.They jointly foundedTokyoTsushin Kogyo KK. Founder Masaru Ibuka and Akio Morita Headquarters Tokyo Stock Exchange TokyoTSE 6758 Sony FinancialTSE 8729 Consolidated sales YEN 7181 Billion (US$ 90 Billion) (FY2010 ending March 31, 2011) Number of employees 167,900 consolidated (March 31, 2010) Major share holders Major business areas electronics, Sony Music Entertainment, SONY Pictures, SONY Computer Entertainment, SONY Finance web http://www.sony.jp/CorporateCruise/SMOJ-info/ http://www.sony.jp/
  • 48. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 THE SONY BUILDING ANDTHE SONY BRAND 123 - Sony was a relatively small company when SONY acquired the famous building at Ginza crossing inTokyo. - Acquiring the Sony building was a strong brand statement and part of Sony’s successful strategy to build a strong global brand. - Interbrand estimates that the SONY brand is ranked as the 5th most valuable global brand, with a value on the order of US$ 10 billion
  • 49. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SONY: REVENUES AND INCOME 124 •SONY’s revenues/sales are essentially flat all the way since 1998 - no growth •SONY’s operating and net income have been falling steadily since 1998 •SONY has reported losses for years ending March 31, 2009 - 2012. •In the year ending March 31, 2013, SONY reports a small profit, however much of this profit is due to profits on asset sales (NY and Osaki HQ buildings, and reassessment of the value of SONY’s holding of the medical information and services company M3). •SONY income averaged of the period FY1998-FY2012 is: •average annual operating incomeYEN 171 Billion (US$ 1.7 Billion) •average annual net incomeYEN 46 Billion (US$ 460 million) 1998 2000 2002 2004 2006 2008 2010 2012 2014 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 annualrevenueYENBillion US$ 20 Bill. US$ 40 Bill. US$ 60 Bill. US$ 80 Bill. US$ 100 Bill. US$ 120 Bill. Annual revenues of SONY c2013EurotechnologyJapanKK www.eurotechnology.com 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 600 500 400 300 200 100 0 100 200 300 400 500 600 annualoperatingnetincomeYENBillion 0 US$ 6 Bill. US$ 4 Bill. US$ 2 Bill. US$ 2 Bill. US$ 4 Bill. US$ 6 Bill. Annual operating and net income SONY mean operating income ¥ 171 Billion mean net income ¥ 46 Billion c2013EurotechnologyJapanKK www.eurotechnology.com
  • 50. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SONY: MARGIN 125 •SONY’s operating margins have been steadily declining since SONY’s “better times” where stellar products including Walkman andTrinitronTV’s contributed to high margins •Margins averaged over the period FY1998-FY2012 are: •average operating margin = 2.3% •average net margin = 0.5% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 10 8 6 4 2 0 2 4 6 8 10 annualoperatingandnetmargin Annual operating and net margin SONY mean operating margin 2.3 mean net margin 0.5 c2013EurotechnologyJapanKK www.eurotechnology.com
  • 51. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SONY COMPUTER ENTERTAINMENT
 SCE 128
  • 52. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015129
  • 53. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SONY COMPUTER ENTERTAINMENT/SCE FINANCIALS 132 •SCE (Sony Computer Entertainment) records revenues on the order of US$ 8-15 billion. •During the period FY1997-FY2014, SCE went through ups and downs ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 2000 2005 2010 2015 2020 0 500 1000 1500 2000 annualrevenue(YENBillion) US$ 5 Bill. US$ 10 Bill. US$ 15 Bill. Annual revenues of SONY-SCE/G&NS (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 54. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SEGA SAMMY HOLDINGS 134
  • 55. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015135 Sega Sammy Holdings Founded October 1, 2004 by merger of SEGA and Sammy. Founder Hajime Satomi (founder of Sammy) Headquarters Tokyo Stock Exchange TokyoTSE 6460 Consolidated sales YEN 396 Billion (US$ 4 Billion) (FY2011) Number of employees 6700 consolidated (September 2012) Major share holders Hajime Satomi (16.36%), Mellon Bank NATreaty Client Omnibus (6.8%) Major business areas games, arcades, pachinko, pachislot web https://www.segasammy.co.jp/
  • 56. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SEGA SAMMY HOLDINGS FINANCIALS 145 •Averaged over the period FY2004-FY2014, the mean operating margin is about 10%, while the mean net margin is just below 5% •There is a downward trend of margins, which indicates the necessity to adjust business models. ● ● ● ● ● ● ● ● ● ● ● ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 -10 0 10 20 30 annualoperatingmargin(%) Annual margins SegaSammy (%) operating margin net margin (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 57. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 BANDAI NAMCO HOLDINGS 152
  • 58. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 BANDAI NAMCO MARGINS • Bandai Namco’s margins are now recovering to 10% operating margin and 7% net margin • Average margins over the period FY2004-FY2014 are: • mean operating margin = 7.1% • mean net margin = 3.1% 162 ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 -10 0 10 20 annualoperatingmargin(%) Annual margins BandaiNamco (%) operating margin net margin (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 59. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 BANDAI NETWORKS AND NAMCO ON “GALAKE” I-MODE PHONES 163
  • 60. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KONAMI 167
  • 61. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 BEATMANIA 173 •Image on the left shows a Beatmania IIDX machine. •Play: on the screen of the game machine, notes fall downwards and when they cross a line, the player must press buttons, move the turntable etc in rhythm with the music. Every time the players touches the controls correctly and in tune, a sound is played completing missing parts of the song. •Beatmania has given the name BEMANI to the whole series of music games by Konami
  • 62. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KONAMI GAMING JAPAN KK (IN PREPARATION FOR JAPAN’S POTENTIAL CASINO LAW) 176
  • 63. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 HUDSON (ACQUIRED BY KONAMI) 179
  • 64. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015180 Hudson Hudson Soft Company Ltd March 1, 2012 merged with Hudson Digital Entertainment Founded May 18, 1973 in Sapporo, Hokkaido as amateur radio store Founder 工藤裕司 Headquarters Tokyo (integrated with Konami), previously Sapporo Stock Exchange TokyoTSE 4822 (from Dec 20, 2000 - March 29, 2011), delisted due to acquisition by Konami Consolidated sales YEN 14.3 Billion (US$ 144 Million) (FY 2011) Number of employees 433 consolidated (March 2011) Major share holders Konami (100%) Major business areas game software web http://www.hudson.co.jp http://www.konami-digital-entertainment.co.jp/
  • 65. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 TAKARATOMY 183
  • 66. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SQUARE ENIX 191
  • 67. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SQUARE ENIX 192
  • 68. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 TAITO (ACQUIRED BY SQUARE ENIX) 203
  • 69. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 CAPCOM 207
  • 70. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015208
  • 71. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KOEITECMO HOLDINGS 214
  • 72. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015215 KoeiTecmo Holdings English:Tecmo Koei Holdings Co Ltd Japanese: コーエーテクモホールディングス株式会社 Founded April 1, 2009 by the merger of Koei andTecmo short form: Koei-Tecmo (コーエーテクモ) Founder Headquarters Yokohama, Kanagawa Stock Exchange TSE 3635 Consolidated sales YEN 35.5 Billion (US$ 360 Million) (FY 2011, March 2012) Number of employees 1386 consolidated (March 31, 2012) Major share holders 株式会社光優 (KK Kouyu) (32.5%), 環境科学(株) 7.24% Major business areas game software web https://www.koeitecmo.co.jp/
  • 73. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KOEITECMO HOLDINGS FINANCIALS 216 •Koei-Tecmo Holdings revenues are steadily increasing, approximately doubled between FY2000 and FY2014. •Operating and net income are seeing ups and downs, with the exception of a temporary drop around FY2009-FY2010, and steady increase in recent years since 2010 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 0 10 20 30 40 50 annualrevenue(YENBillion) US$ 100 mill. US$ 200 mill. US$ 300 mill. US$ 400 mill. Annual revenues of TecmoKoei (c)2015EurotechnologyJapanKK www.eurotechnology.com ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 -5 0 5 10 15 annualoperating/netincome(YENBillion) 0 US$ 100 mill. US$ 50 Bill. Annual income TecmoKoei operating income net income (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 74. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KOEITECMO MARGINS 217 •KoeiTecmo Holdings’ margins are high- with a peak around 40% operating margin in FY2003- FY2004. •Even average operating margin for the period FY1999 - FY2014 is around 25%, while net margin is 18% on average over the same period. ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 0 10 20 30 40 50 annualoperatingmargin(%) Annual margins TecmoKoei (%) operating margin net margin (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 75. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KOEI 218
  • 76. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015219 Koei 光栄 = koei = honor, privilege, in the past: KOEY, now: KOEI Founded founded initially as software development dept. of Miyamoto Masafumi’s fathers electricity service company in October 1983 Founder ErikawaYouichi (襟川陽一) (pen name Shibuzawa Kou, シブサワ・コウ) Headquarters Tokyo Stock Exchange TSE 9654 (from November 16, 1994 - March 25, 2009) until merger intoTecmo Koei Holdings Consolidated sales YEN 20.2 Billion (US$ 204 million) (March 2009) Number of employees 1191 (March 31, 2008) Major share holders Tecmo-Koei Holdings (100%) Major business areas computer software and development tools, history simulation games, especially historic “Battle of three kingdoms” games (三國志) web www.koei.co.jp/
  • 77. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KOEI - HISTORY 220 Year History July 25, 2979 Founded byYoichi Erikawa and Keiko Erikawa close to Keio University campus in Hiyoshi/Yokohama. initial business: PC sales and production of business software Company name several explanations: (1) rearranged KEIO-University name KEIO-> KOEI, (2) pen names of authors: Kou Shibusawa and Eiji Fukuzawa are used as pen names of the founders/game authors 1983 Releases historic strategy game “Nobunaga’s ambition” set during Japan’s Sengoku period. Start of a series of games with historic content:“Romance of the three kingdoms”,“Uncharted waters” 1988 US subsidiary established 1994 Neoromance series “Angelique” Sept 2008 Talks to potentially acquireTECMO announced April 1, 2009 acquiresTECMO
  • 78. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 KOEI’S MAIN GAME SERIES 221 Series title numbers sold globally (as of 2007) number of titles in series Dynasty warriors 11.84 million Nobunaga’s ambition 7.8 million Romance of the three kingdoms 6.55 million Samurai warriors 4.28 million Winning post 3.81 million
  • 79. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 TECMO 222
  • 80. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015223 Tecmo Founded Sept 1964 as 帝国管財株式会社, for building maintenance July 31, 1967 (reestablished on March 15, 2010) Founder Yasuhiro Fukushima (福嶋 康博) Headquarters Tokyo Stock Exchange TSE 9650 (until delisting on March 26, 2009) Consolidated sales Number of employees 300 (March 31, 2008) Major share holders KoeiTecmo Games (100%) Major business areas game software web www.tecmo.co.jp/
  • 81. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 TECMO - HISTORY 224 Year History Sept 1964 Teikoku Kanzai KK, (帝国管財株式会社), for building maintenance, supplier of cleaning equipment July 31, 1967 April 1981 releases arcade video game “Pleiads” Jan 8, 1986 changed name toTECMO August 29, 2008 Square Enix offers friendly take over Sept 4, 2008 TECMO rejects Square Enix’ offer press reports thatTECMO is in discussions with KOEI about potential merger April 1, 2009 Merged with KOEI to form KOEI-TECMO Holdings
  • 82. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 TECMO’S MAIN GAME SERIES 225 Series title numbers sold globally (as of 2007) number of titles in series Dead or alive 7.5 million Ninja garden 5.5 million TECMO bowl 5 million Monster farm 4 million CaptainTsubasa 2.62 million Gallop racer 1.55 million Fatal Frame (Project zero) 1.35 million Dino Crisis 4.4 million 13
  • 83. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 JAPAN’S SMARTPHONE GAME COMPANIES 226
  • 84. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SMARTPHONE GAME COMPANIES 227 •Japan is the world’s No. 1 app market for smartphones by cash value (source:AppAnnie) •Global top-grossing app-company ranking: For iOS and Google-Play combined, in terms of downloads on a per company basis, Facebook, Google,Apple, Sungy Mobile, Cheetah Mobile, Baidu, Microsoft etc are top ranked. However, ranked by company cash revenue, the Japanese company LINE is ranked globally No. 1, and the Japanese companyVoltage is ranked No. 10 - thus there are two Japanese companies among the top 10 companies ranked by cash revenues (source:AppAnnie). •Global top-grossing app ranking:Again combining iOS and Google-Play, ranking Apps by revenues, there are 5 Japanese Apps among the top 10, these are: •LINE •LINE Play •LINE Manga •Dragon Quest by Square Enix •PocketColony by Cocone In the following section, we describe and analyze Japanese new smartphone game companies.This is a work in progress - please subscribe to this report and receive updates. To subscribe: http://store.esellerate.net/s.asp? s=STR0576176470&Cmd=BUY&SKURefnum=SKU85943952648
  • 85. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 LINE “the leading provider of sticker-based communications” invented stickers for chat apps resulting from the Tohoku disaster 2011 230
  • 86. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015231 LINE KK LINE Corporation Founded September 4, 2000 as Han Game Japan KK,August 28, 2003: changed to NHN Japan KK.April 1, 2013 changed to LINE KK. Founder founder CEO:Akira Morikawa current CEO:Takeshi Idezawa Headquarters Tokyo Stock Exchange - Consolidated sales YEN 86.3 Billion (US$ 689 million) (2014, ended Dec 31, 2014) Number of employees 790 (October 10, 2014) Major share holders Naver (S-Korea) Major business areas messaging, stamps, creators market, smartphone games, communications, phone services, payments, taxi app and more web http://linecorp.com/
  • 87. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 DENA (2432) “DELIGHT AND IMPACTTHE WORLD” 240
  • 88. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015241 DeNA “Delight and impact the world” Founded March 1999 Founder Tomoko Namba (南場智子) and Shogo Kawada (川田尚吾) Headquarters Tokyo Stock Exchange TSE 2432 (IPO: December 12, 2007) Consolidated sales YEN 142.4 Billion (US$ 1.14 Billion) (March 31, 2014) Number of employees 2108 (March 31, 2013) Major share holders Tomoko Namba (13.0%), SONY (11.7%), JapanTrustee Service (2.8%), Shogo Kawada (2.6%) Major business areas games, ecommerce, SNS, software, online services, online auctions web http://dena.com/
  • 89. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 DENA FINANCIALS 242 •DeNA showed very healthy growth for revenues and income until FY2011, when margins started to drop, followed by drops in income and revenues from FY2013. •The main reasons for these difficulties are increasing competition in the smartphone space, difficulties in transitioning from a platform business on traditional feature phones, and webbased games to smartphone games, and - common with many Japanese companies - difficulties in developing global business •recently Nintendo and DeNA announced a cooperation to create smartphone games based on Nintendo characters, including mutual investments. It remains to be seen how the Nintendo-DeNA will develop, and if this cooperation is successful, revenue and income growth for DeNA may resume. ● ● ● ● ● ● ● ● ● ● ● ● ● 2000 2005 2010 2015 2020 0 50 100 150 200 250 300 annualrevenue(YENBillion) US$ 0.5 Bill. US$ 1.0 Bill. US$ 1.5 Bill. US$ 2.0 Bill. Annual revenues of DeNA (c)2015EurotechnologyJapanKK www.eurotechnology.com ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 0 20 40 60 80 100 annualoperating/netincome(YENBillion) 0 US$ .2 Bill. US$ .4 Bill. US$ .6 Bill. DeNA: annual income operating income net income (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 90. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 DENA MARGINS 243 •DeNA operating margins were stable around 40%, while net margins are stable around 20% up until FY2011, when margins started to drop due to difficulties in globalizing the company, and difficulties in the transition to the smartphone space ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 -20 0 20 40 60annualoperatingmargin(%) Annual margins DeNA (%) operating margin net margin (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 91. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 GREE (3632) 244
  • 92. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015245
  • 93. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015246 GREE Founded December 7, 2004 Founder YoshikazuTanaka (田中良和 ) Headquarters Tokyo Stock Exchange TSE 3632 (IPO December 17, 2008) Consolidated sales YEN 152.2 Billion (US$ 1.54 Billion) (June 2013) Number of employees 2582 (June 2013) Major share holders YoshikazuTanaka (48.92%), State Street Bank andTrust Company (4.21%), KDDI (3.41%) Major business areas SNS, games, software, game platform web http://gree.jp
  • 94. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 GREE FINANCIALS 247 •GREE showed good growth until FY2012, but recently ran into problems which led to drops in revenues, and dropping income. •GREE tried to grow aggressively internationally, and invested in acquisitions in USA and opening branches in several countries outside Japan, however, some of these overseas business activities were not successful and lead to saturation of growth and dropping income. •In addition GREE changes business model from “platform-on-platform” to native games ● ● ● ● ● ● ● ● 2000 2005 2010 2015 2020 0 50 100 150 200 250 300 annualrevenue(YENBillion) US$ 0.5 Bill. US$ 1.0 Bill. US$ 1.5 Bill. US$ 2.0 Bill. Annual revenues of GREE (c)2015EurotechnologyJapanKK www.eurotechnology.com ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 0 20 40 60 80 100 annualoperating/netincome(YENBillion) 0 US$ .2 Bill. US$ .4 Bill. US$ .6 Bill. Annual operating and net income GREE operating income net income (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 95. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 GREE MARGINS:“PLATFORM ON PLATFORM” DOES NOT WORK 248 •GREE margins were high in the past - about 30% operating margin and 15% net margin in FY2012, however, margins are dropping indicating problems with GREE’s business model. •Net margin has dropped to essentially zero in FY2014. •GREE’s business model was essentially “platform on platform”, ie GREE created its own game platform on top of Japanese mobile operator’s platform, ie on top of i-Mode, EZweb, andYahoo- Mobile. However this model does not seem to be successful on top of global smartphone platforms Google/Android and iPhone, since both Android and iPhone have their own platforms.Therefore GREE seems to return to a business model of creating or acquiring original games instead of the platform business model.This change of strategy is reflected in saturating revenues and dropping margins. ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 0 10 20 30 40 50 60 70 annualoperatingmargin(%) Annual margins GREE (%) operating margin net margin (c)2015EurotechnologyJapanKK www.eurotechnology.com
  • 96. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 FOR COMPARISON 351
  • 97. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 EA AND ELECTRONIC ARTS JAPAN 352
  • 98. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ELECTRONIC ARTS IN JAPAN 353 •By market capitalization, EA is the world’s largest game software company, and EA’s market share in Japan is about 2%. •EA opened and closed offices in Japan several times… •EA’s sales in Japan were US$ 71 million for the year ending March 31, 2004, which corresponds to a market share of less than 2% of Japan’s US$ 4 billion game software market.We estimate that for 2007 EA sales in Japan dropped to around US$ 40 million •EA’s presentation focused on EA’s core properties/licences:“FIFA Soccer”, Starwars, and others. Currently biggest seller is SimCity for DS •Japan is EA’s largest market in Asia, and EA aims for US$1 billion sales in Asia by 2010 •On October 6, 2004 EA announced a videogame software studio in China
  • 99. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ELECTRONIC ARTS - HISTORY IN JAPAN 354 Year History 1989 Rejected Nintendo’s conditions (which would have involved agreeing not to provide the same games to Nintento’s competitors such as SEGA). Focused on SEGA platform (Genesis machine) 1990 Electronic Arts KK established (according to EA KK’s website) 1990 started development for Nintendo’s 8-bit machines (Super NES) (Nintendo had changed conditions, allowing to run games on competing platforms as well as Nintendo’s platforms) September 1992 Joint-Venture: Electronic ArtsVictor (Electronic Arts=65%,Victor=35%) http://en.wikipedia.org/wiki/Electronic_Arts_Victor Electronic ArtsVictor JointVenture dissolved, sold to Mervellous: http://en.wikipedia.org/wiki/Victor_Interactive_Software 1998 JointVenture with Square: Square Electronic Arts: Square=70%, Electronic Arts=30% 2003 Square merged with Enix, bought back EA’s 30% of Square-Electronic-Arts JV, and established Square Enix USA Inc. from approx. 2003 Electronic Arts KK becomes 100% subsidiary of EA and independent of Square (now Square Enix)
  • 100. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ELECTRONIC ARTS - RANKING IN JAPAN 355 Nintendo BandaiNamco ... Electronic Arts Rank 2007 1 2 ... 14 Rank 2006 1 2 ... 11 Games sold in Japan 2007 26.4 million 9.3 million 782,821 Number of titles offered 84 163 76 Estimated sales in Japan US$ 1.3 billion US$ 0.47 billion US$ 39 million Market share 34.8% 12.3% 1%
  • 101. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ELECTRONIC ARTS - SALES IN JAPAN BY PLATFORM 356 Title Platform Sales 2007 1 Simcity DS 193,826 2 Boku to Sim no machi Resourt ni genki o torimo douzou DS 51,642 3 Boku to Sim no machi Wii 40,924 4 Medal of honor vanguard PS2 31,956 5 Need for Speed Carbon PS2 30,919 6 Thema Park DS 23,908 7 Godfather PS2 22,936 8 Medal of honor heros PSP 22,489 9 NBA Live 08 PS2 19,967 10 Need for speed. Most wanted PS2 19,921
  • 102. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ELECTRONIC ARTS - SALES IN JAPAN BY PLATFORM 357 Platform Share of EA sales in Japan 1 DS 39.8% 2 PS2 24.9% 3 PS3 10.3% 4 PSP 10.1% 5 Wii 8.7%
  • 103. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ELECTRONIC ARTS (GLOBAL) FINANCIALS 358 •Electronic Arts globally achieves about US$ 4 billion in revenues, however income has been quite unstable, with losses around 2009. 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 0 100 200 300 400 500 600 annualrevenueYENBillion US$ 1 Bill. US$ 2 Bill. US$ 3 Bill. US$ 4 Bill. US$ 5 Bill. Annual revenues Electronic Arts c2013EurotechnologyJapanKK www.eurotechnology.com 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 150 100 50 0 50 100 150 annualoperatingnet incomeYENBillion US$ 1 Bill. US$ 0.5 Bill. 0 US$ 0.5 Bill. US$ 1 Bill. Annual operating and net income Electronic Arts mean operating annual income mean net annual income c2013EurotechnologyJapanKK www.eurotechnology.com
  • 104. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ELECTRONIC ARTS (GLOBAL) MARGINS 359 •Electronic Arts income and margins are quite unstable and have fluctuated between +30% and -25% over the period 2004-2012. •This Electronic Arts maybe thought of falling in a similar class as a movie studio, where particular games (or movies) can be either very successful, or creating losses. 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 30 20 10 0 10 20 30 annualoperatingmargin Annual operating and net margin Electronic Arts mean operating margin 0.45 mean net margin 1.2 c2013EurotechnologyJapanKK www.eurotechnology.com
  • 105. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 VIDEO GAME GENERATIONS AND HISTORY 360
  • 106. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 PACHINKO AND PACHISLOT 371
  • 107. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 RATING ORGANIZATIONS 377
  • 108. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 COMPUTER ENTERTAINMENT RATING ORGANIZATION - CERO 379
  • 109. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 ETHICS ORGANIZATION OF COMPUTER SOFTWARE - EOCS 383
  • 110. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 CASINO LAW OF JAPAN 386
  • 111. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SUMMARY 389
  • 112. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 SUMMARY: JAPAN’S GAME MAKERS AND MARKETS 390 •Japanese companies have created many of the global game genres, platforms and characters, and represent a US$ 50 billion industry sector, excluding pachinko. •Japanese companies have prominent position in the global “top grossing” rankings for iOS and Google-Play app-stores: the world’s No. 1 top-grossing company is Japanese (with Korean origin) - the company LINE. •With consumer focus shifting from dedicated game platforms such as Nintendo’s Wii or DS, Sony’s Playstation or Microsoft’s Xbox to applications or online games on smartphones, Japan’s traditional game companies are facing unprecedented disruption, and 25 new companies combined achieve about twice as high revenues than all top 9 traditional game companies combined. •Most established game companies, including Nintendo and SONY, see an erosion of business, while at the same time new a large number of new game industry startups are rapidly growing and filling the space vacated by traditional game companies. •This report presents a detailed overview of Japan’s traditional game sector, as well as an overview of some of the new emerging players in Japan’s game sector.
  • 113. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 EUROTECHNOLOGY JAPAN KK 391
  • 114. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 EUROTECHNOLOGY JAPAN KK FOUNDED: FEBRUARY 1997 INTOKYO 392 Services and products - focus areas are high-technology, telecommunications, software, middle-ware, environmental technology and medical equipment: - Market entry to Japan for European and US high-tech companies, turn-round, reshaping, planning and building of distribution networks - European business development and strategy for Japanese companies - M&A (European and US companies acquiring Japanese companies, Japanese companies acquiring or investing in Europe) - Turn-round preparations and management of foreign business in Japan - Market research and strategy - Due diligence of high-tech companies, environmental due-diligence - Advisory services for investment fund managers and investors in technology fields - we publish a series of market reports for about 10 years, which are purchased world-wide, distributed direct and via distribution partners: http://www.eurotechnology.com/store/
  • 115. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 EUROTECHNOLOGY JAPAN KK 393 - Leading high-technology business development boutique inTokyo, working globally - Founded in 1996/1997 - 14 years experience, relationships, cooperations and success record. - CEO works with Japan’s high-tech / telecom sector since 1984 - 27 years experience, resources, cooperations. - Wide network of cooperations in Governments, Embassies, trading companies, distributors, finance,VCs, traditional corporations, venture start-ups, industry associations - Experience: market-entry, restructuring, M&A, acquisitions, due-diligence Customers include: - More than 100 investment fund managers - Industrial customers: - NTT-Communications, SIEMENS, DeutscheTelekom, Cubic, Unaxis (now: Oerlikon), CITI Group, CLSA Asian Markets, Genscape, Google, IKEA, Isabellenhuette, Landis+Gyr, National Instruments, Swisscom,TechnoCom, - Government - NewYork Police Department, European Union,TEKES (Technology Research funding organization of the Government of Finland) Deep Japanese technology market knowledge - we publish a series of market reports for about 10 years, which are purchased world-wide.You can purchase our reports on Bloomberg: https://www.bmart.com/search?&nuts%5B %5D=WIRE%3AEUT, and via eSellerate: http://store.eSellerate.net/s.aspx?s=STR0576176470 and from http:// www.eurotechnology.com/store/
  • 116. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 GERHARD FASOL PROFILE: HTTP://WWW.FASOL.COM/PROFILE/ 394 - Worked successfully with Japan’s high-tech sector since 1984 - 27 years. Came first to Japan in 1984 to help build NTT’s first international R&D cooperation on semiconductor lasers - Entrepreneur inTokyo since 1996, Eurotechnology Japan KK worked with many large corporate groups (e.g. SIEMENS, NTT, DeutscheTelekom,Asahi Glass...), more than 100 investment fund managers - Assoc. Professor of Electrical Engineering atTokyo University. Record of Fasol-Laboratory atTokyo University: http:// www.fasol.com/tokyo_university/ - Elite “Sakigake” (Pioneer) R&D project on Spin-Electronics of Japanese Government Science andTechnology Agency.This work was evaluated by US National Science Foundation and US Department ofTrade: http://www.wtec.org/loyola/erato/ ch7_5.htm - Co-initiator of spin-electronics device research in Japan, one of the first to start work on spin-electronics in Japan in 1991 - Tenured Faculty member at Cavendish Laboratory/University of Cambridge. - Assoc. Professor of Electrical Engineering atTokyo University - PhD in Solid-State Physics (Cambridge University,Trinity College, UK) - Diplom-Physiker, Ruhr-University Bochum (Diplom-Thesis on Superconductivity) - Publication list (Books, patents and publications, several publications are specifially concerning electron-spin and spin- electronics): http://www.fasol.com/profile/publications.shtml - Languages: English, German (native), French, Japanese, and some Swedish
  • 117. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 GERHARD FASOL WITHTETSUZO MATSUMOTO, EXECVP OF SOFTBANK MOBILE CORPORATION 395
  • 118. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 “POST GALAPAGOS STUDY GROUP” 25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT” 396 see: http://www.eurotechnology.com/2013/10/07/galapagos/
  • 119. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 “POST GALAPAGOS STUDY GROUP” 25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT” 397 see: http://www.eurotechnology.com/2013/10/07/galapagos/
  • 120. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s game makers and markets (Version 30) June 21, 2015 CONTACT AND MORE INFORMATION 398 Contact •Gerhard Fasol PhD •Eurotechnology Japan KK,Tokyo, Japan •http://www.eurotechnology.com/ •Mobile +81-90-8594-6291 •fasol@eurotechnology.com •gfasol@gmail.com More information: •reports:http://www.eurotechnology.com/store/ •twitter: http://twitter.com/gfasol/ •website: http://www.eurotechnology.com/ •personal site: http://fasol.com