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Japanese market share of western game market falls to 20%

Japanese market share of the Western game market has been reduced to 20 percent according to an analysis of the Japanese gaming industry by the CESA. The decline is significant as Japanese game development used to maintain a dominant position in the industry especially for home and portable console game development.

The speed of the decline is also noteworthy as the decline has become impossible to ignore during this generation of home consoles which are roughly 2 to 3 years old.

In October of last year, Square Enix president Yoichi Wada declared that Japan had "lost its position" as the leader in the video game industry. These claims are being backed by evidence which shows the market share for Western-developed titles in their own territories doubled between 2004 and 2007 while Japanese game market share has declined.

Although market share has declined, data summarized by Kotaku revealed the news is not all negative as revenue generated from Japanese game exports overall have increased by 43 percent year on year in 2006 and by 54.3 percent in 2007. The success is attributed primarily to the success of the Nintendo DS and Wii hardware.

According to a senior analyst at Nomura Finance, there are several causes for the decline in Japanese game development. He suggests RPG games which Japanese developers tend to focus are not as popular in the west. He also suggests the right to develop games in potentially lucrative areas such as sports or popular movie franchises is tightly controlled. 

Nomura also states since the successful launch of the Microsoft Xbox the quantity and size of the competition in the field of game development has increased significantly making it more difficult for Japanese game developers to maintain significant market share.

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larger market
By Moishe on 1/26/2009 9:04:08 AM , Rating: 4
The larger market that is open in the west and the fact that the popular consoles are not primarily Japanese are the biggest factor.
Games are a business and the largest pot of money is in non-Japanese style games. Due to competition in the market, the Japanese game developers need to branch out to doing western style games as well as Japanese style games.

RE: larger market
By Bateluer on 1/26/2009 9:16:09 AM , Rating: 2
Its also a more competitive environment. A title that sells well in Japan won't necessarily sell well in the US or Europe and vice versa.

There will still be plenty of quality titles coming out of Japanese studios in the foreseeable future, but its a global market. You need to have products that appeal to more people. This is a blessing and a curse though, as a lot of mass marketed titles are utter garbage but still still well because they target the lower common denominator.

RE: larger market
By MrBlastman on 1/26/2009 10:07:57 AM , Rating: 4
I would also begin to argue that the age of the median gaming demographic in the United States is growing older. Generally, a lot of Japanese games (at least the popular ones) seem to be targeted at either a younger age group or a culture that is different than ours. Don't get me wrong, I'm 33 and I still enjoy Japanese games (though to be fair, I've grown out of their RPG style, PC RPG's just offer so much more), I think they need to mix things up a bit.

How about another sequel to Thexder for starters, or Zeliard? That'd be a good place to start. ;)

RE: larger market
By StevoLincolnite on 1/26/2009 10:09:05 AM , Rating: 4
First thing is first though, they actually need to release some big block-buster Japanese RPG games for the Xbox 360, even if it is Ported from the PS3, see how things turn out with Final Fantasy I guess. (Would be nice if they released some for the PC to!)

RE: larger market
By afkrotch on 1/26/2009 11:03:00 AM , Rating: 1
There's actually quite a few J-RPGs for the 360. Problem. They never went to the states. The only ones that have suck beyond belief.

I think majority of your RPGs are going to go to the PS3, as Japanese pretty much didn't bother with the 360. Also your Japanophiles seemed to go PS3 also, or at least the ones who could afford too.

RE: larger market
By FITCamaro on 1/26/2009 12:22:42 PM , Rating: 2
Star Ocean 4 looks like it'll be pretty good.

RE: larger market
By Zapp Brannigan on 1/26/2009 12:53:16 PM , Rating: 3
Weirdly enough the 360 has more JRPG's out at the moment then the PS3. The only ones i can find on the ps3 are Eternal Sonata and Enchanted Arms, which are both out on the 360 as well. The 360 has The Last Remnant, Infinite Undiscovery, Tales Of Vesperia, Blue Dragon and Lost Odyssey.

That being said, none of those games are sequels to already established games, there isn't a suikoden or a final fantasy that would boost sales, as new franchises are hard to get going, especially in the increasing niche (apart from final fantasy) JRPG market.

RE: larger market
By WTFiSJuiCE on 1/26/2009 3:55:36 PM , Rating: 3
As far as 360 goes, you also forgot Spectral Force 3, which is a sequel, as well as Operation Darkness and Phantasy Star Universe.

Valkyria Chronicles is hands down the best RPG on the PS3 so I'm really not sure how you could miss it if you were looking for PS3 rpgs. IMO, I haven't seen a JRPG for this current generation of consoles that has been better.
I can only hope that White Knight Chronicles lives up to its hype despite the mediocre Famitsu rating it got (Although people have been saying that Famitsu was crazy for the rating they gave, so I dunno).

PS3 also has Disgaea 3 alongside Eternal Sonata and Enchanted Arms.

RE: larger market
By daar on 1/27/2009 1:11:35 AM , Rating: 3
Problem with JRPG's these days is they try too hard to be 'epic' without focusing on telling a good story, or have juvenile plots along with predictable characters who spout lines that get cornier with a new release. The designers also seem to have some strange fetish with long bastardized medieval Euro-names along with giving most characters some weirdo Japanese eye-surgery. Oh I miss the days of JRPGS like Earthbound, FF6, and Chrono Trigger....oh and the DQ series before 6...

RE: larger market
By eraidesigns on 1/27/2009 12:42:00 AM , Rating: 2
I am going to lay it all out for everyone since I live here in Japanland and have been following this issue closely as I made the mistake of buying a PS3 and got screwed.

Japanese society is all about forcing uniformity. Some of you may have heard the expression "the nail that stands up gets hammered down." Hence, change does not come easily to people and institutions here. Of course this does not work well with the competitive nature of international buisness. The only reason the economy here is not *yet* totally in the crapper is because cultural differences and massive government protections allow the domestic market to slump along in its backward, inefficient way.

As for games, the problem is that Japanese companies mostly refuse to change. Nintendo is the only really different company out there and they are only that way because Sony forced them into a bad position during the N64 vs Playstation era. They survived only through adaptation. Look at what happened to Sega! They refused to change and had to give up the hardware market all together. Moreover, the rest of the game companies are sticking to making the same old -and not even dressing it up! Here in Japan there is a dearth of new games and most of the ones that have come out look like ports from the PS2 days! They do not even take advantage of the new hardware! Also Japanese companies can be really tight-fisted and do not like ot offer much extra content or online funzy stuff which I think a lot of people in the US come to expect. (Look at the astounding success of XBOX live compared to the utter failure that is Sony's immitation.)

The other thing that is holding Japanese companies back is their reluctance to embrace the computer. Basically, most (maybe all) Japanese game companies think ONLY of the domestic market and selling their games abroad is an after-thought. Computers are still a foreign concept in Japan so the companies here do not make PC games. This is a huge market in the rest of the world which they are totally missing out on.

RE: larger market
By afkrotch on 1/27/2009 10:54:53 AM , Rating: 2
Huh? Exactly where do you live in Japan? I lived there for 2 years and there are a huge number Japanese games for PC. Usually just fighters, visual novels, or eroge. They don't go real high end with their PC games, cause majority of the Japanese go with consoles for their games.

Your Japanese public play games in arcades or on consoles. Wouldn't make much sense at all for them to pump a lot of money into PC games, when there's few using them for such.

I have a PS3 that I bought in Hamura, Tokyo. Not once have I felt that I got screwed. I also bought an Xbox 360 in Tokorozawa, Saitama. Felt a little screwed, mainly cause it broke and was stuck getting another one and another one after that.

Sega didn't die from refusing to change. They died out in the console market, cause they replaced their consoles too damn fast. Cause of that, developers refused to make games for their system. No point spending years to learn the in's and out's of a console, only to see it get replaced by another.

RE: larger market
By The0ne on 1/27/2009 1:06:06 AM , Rating: 2
It's not easily to "try" to design a game to suite another country's "taste." This is an obscure area and even if you have some sort of figures to use it's not going to help much. For the smaller development companies out there you're not going to have the resources or the money to even consider it.

I'm very grateful that the DS, PSP and Wii are still doing great. What this means is that these small companies can continue to crack out games and have more time to focus their efforts into making them into better games; not just by rushing and releasing crappy games as we've seen during the PS1 days.

Even without what I've just said, development cost has skyrocketed while many things stayed constant. Profits hasn't change much, salaries are still somewhat the same, etc. I would have to think these companies would have to come up with a solution that has not been looked into yet to be able to survive and provide. How things are done back then and their relative cost itsn't the same for today, it's worst.

As far as RPG's go, I'm not even going to start this topic again because "older" gamers seem to think the "turn-base" RPG's like Final Fantasy are sh*t while at the same time claiming they're number one fans of SE or the games themselves.

I always thought Japanese games declined since 3D
By bkslopper on 1/26/2009 11:19:56 AM , Rating: 2
I'd go back further than Xbox and say their decline began with the PS1. Before the PS1, the Japanese were almost untouchable and most of the best and original games came from there. PS1 is still Japanese made, but it opened the door to more Western developers with its cheap development costs and media.

Original games like Wipeout, Destruction Derby, Warhawk, and Twisted Metal were made by Western developers while the Japanese continued to shovel out sequels from their 80's heydays (Metal Gear Solid, Mario 64, Zelda 64, Mario Kart 64, Star Fox 64, FZero 64, etc.) I switched from being a Nintendo fan to a Sony fan overnight. Xbox accelerated the decline since the hotbed of Western gaming, the PC, now had an easy to port console.

I think the comparison between the 2 cultures can be summed up in a nutshell. Square Enix versus Bioware. Square RPG's are very polished, bland, and have little to no input from the player when it comes to dialogue. Bioware RPG's tend to think a bit more outside the box and let the player (GASP!) make a few choices in their character development, yet their games tend to have a lot of glitches.

I think in a perfect world, companies like Bioware would design games and have the perfectionist-obsessed Japanese toil with the game code to make it work.

By afkrotch on 1/26/2009 12:18:22 PM , Rating: 2
I just think it's cause less and less games are just making it to the western side of the world. Look at how many Western games don't make it to the East or how many Eastern games don't make it to the West.

It's due to the difference in the type of games we enjoy or they enjoy. I hate visual novel games. I don't know how the Japanese can ever play them. All you do is click next like...forever. Making maybe 10 actual choices in the game for different endings. It's like 99.9% story, 0.01% game.

By WTFiSJuiCE on 1/26/2009 5:02:58 PM , Rating: 2
Yeah visual novels are one of those genres where you either obsessively love them or hate them.

@bkslopper: While I don't think anyone would contest the fact of Nintendo shoveling out sequels of 80's IPs, equally I don't think anyone would argue that the majority of the West also shoveled those titles into their game collections so why change that if it isn't broken and it still isn't.

Concepts like Twisted Metal, wipeout, and Destruction Derby were original and fun, but by no means did they create a decline in Japanese dominance on the PS1. Western developers saw success as did Japanese low-budget developers. Square easily maintained it's dominance over the RPG market during the PS1 lifespan as other Japanese developers enjoyed success as well.

My favorite PS1 RPG? "Final Fantasy Tactics" (Yes I said it...not FF7, altho it was an excellent title)
Favorite PS1 Fighting Game? "Rival Schools" by Capcom
PS1 action-adventure game? "Castlevania: SoTN" by KCE Tokyo
PS1 Racing? "Gran Turismo 2" by Polyphony Digital
PS1 Platformer? Jumping Flash 2,by Exact/Crash Bandicoot 1 by Naughty Dog (score 1 for Japan and US there)
and lastly, PS1 Sports Game: Hot Shots Golf by Camelot Software Planning

Now if you had said PS2, I would be inclined to agree. It seems to me that this was the age where graphics really began to take precedent over other game aspects of quality. With this, it felt like there was a lack of willingness for people to try low-budget games and since we are in the West, There's a lot less risk to get low-budget western games out to shelves and have them not sell than it is with Japanese imports.

I've played Final Fantasy IV a minimum of 16 times, VI min. 10 times, Chrono Trigger min. 9 times, Seiken Densetsu min. 7 times, FFT 14 times, FM3 5 times, FF7 7 times, etc., the list goes on and on.
Gimme some HD 2D Sprites, good chars, an awesome storyline coupled w/ an unforgettable soundtrack and you guys can have your expensive 3D blockbusters.

I've been a Square fan since the late 80s...but it is true that the overall quality of many of their games have severely declined in the interest of pursuing graphics quality. I haven't been wow'd by a Square storyline since Final Fantasy Tactics, Front Mission 3, and Vagrant Story.

My best bud is an Xbox player and I've been a supporter of Sony since the PS1, we were both very interested in the Last Remnant since not only was it for both consoles, but for the PC as well. However, upon reading up on the game and watching videos of the gameplay, we both decided that we were not impressed at all. Since he refuses to play MMOs, its almost impossible to find an rpg to play together.

Yet another disappointment there.

RE: I always thought Japanese games declined since 3D
By daar on 1/27/2009 1:14:03 AM , Rating: 2
I hear ya man...although I'm still looking forward to SF3 and Tekken 6 for fighters :)

By afkrotch on 1/27/2009 11:18:44 AM , Rating: 2
I'm a big fan of Japanese fighters. Melty Blood, Guilty Gear, etc.

I'll probably try out the Arcana Hearts. Bought Fate/Tiger Colloseum, but it's not all that great of a game. Hella easy to beat all players. 3 hits in a row and the other fighter falls. As soon as they get up, hit them 3 more times. Repeat til you win.

Still have yet to get Soul Caliber 4. Battle Fantasia is complete crap.

By bkslopper on 1/27/2009 10:45:32 AM , Rating: 2
I'm merely pointing out that most of the innovation in gaming seems to come from the Western developers since 3D games took off. Back in the 2D 8-bit days, the japanese games were much more original and groundbreaking.

This is merely a generalization. You can find a few PS1 era japanese games that were pretty fresh. Resident Evil, Silent Hill, and Gran Turismo started out with promise, but have gotten VERY stale since then.

But overall, most the innovation in gaming has seemed to come from the West these days. It may just come down to the fact that alot of PC developers have been migrating their games to the consoles and typically the PC devs are the innovators.

By WTFiSJuiCE on 1/29/2009 5:12:58 PM , Rating: 2
so...what you're saying is you're blaming the Japanese developers for focusing more on rehashing titles by bringing out sequels instead of developing more new and innovative properties? Correct me if I have misunderstood that point but that is hilarious the way I understood it.

The Japanese developers developed games in the 8,16,32-bit+ eras and people loved them so they catered to those figures and made sequels in which people snatched those up in large numbers as well.
The US developers in majority didn't have such a luxury in comparison but when they did, ala Twisted Metal, they milked the hell out of the franchises.

Developers in Japan and in the West innovated when it was necessary and when something took off, they stayed with it and profited from it and they still do it today! You claim these franchises are stale but yet they are still selling, that just goes to show that the definition of stale, when applied to games varies, from person to person.

By inighthawki on 1/26/2009 5:19:43 PM , Rating: 3
while the Japanese continued to shovel out sequels from their 80's heydays (Metal Gear Solid, Mario 64, Zelda 64, Mario Kart 64, Star Fox 64, FZero 64, etc.)

You just listed a set of games most people would defend as some of the best games of the time. Your original point proves only that you have a very subjective opinion about the quality of games, not that they started making bad ones.

By bkslopper on 1/27/2009 11:24:45 AM , Rating: 2
Zelda 3 > Zelda 64.
Super Mario Kart > Mario Kart 64.
Super Mario World > Mario 64.
Fzero > Fzero 64.

The sequels had worse framerates, blurry visuals and loose controls. They ported from 2D to 3d and rehashed their old characters instead of finding new ones. This is THE prime reason I switched from Nintendo to Sony back in the day.

Similar thing happened with the PS2. The lack of online support pushed me towards the Xbox and PC. The success of the PS2 singlehandedly held back online gaming community for a whole console generation. I spent most my time on the other platforms that were (surprise, surprise) strongly supported by Western devs.

somebody setup up us the bomb
By Bubbacub on 1/26/2009 9:02:45 AM , Rating: 2
does this mean we won't get "all your base are belong to us" type games anymore?

RE: somebody setup up us the bomb
By nugundam93 on 1/26/2009 9:08:47 AM , Rating: 1
they gotta step up in making h-games (eroge). hahahaha.

RE: somebody setup up us the bomb
By afkrotch on 1/26/2009 11:11:57 AM , Rating: 2
Ya, really. Need to step up production of Sexy Beach 4.

RE: somebody setup up us the bomb
By Smartless on 1/26/2009 1:46:52 PM , Rating: 2
lol on the flip side, japanese animation popularity is up.

By Chocobollz on 1/29/2009 6:50:03 AM , Rating: 2
Or better yet, Biko 4! I want to chase that girl again and r*pe her! :D

what to do!?
By Dreifort on 1/26/2009 9:14:10 AM , Rating: 2
damn, no more dress-up games. >:(

RE: what to do!?
By amanojaku on 1/26/2009 9:47:34 AM , Rating: 2
Don't you mean dress DOWN games? Gals Panic comes to mind...

By Spectator on 1/26/2009 1:53:03 PM , Rating: 2
We have sony making deliberately custom hardware that takes years of programming effort to make the most of.

And SE making games like FFXI that again takes years to master.

Are we seeing a trend?

I personally would say. we in the west are to busy working to pay off the loans from eastern countries to invest years into thier distractions atm.

Perhaps they can try again in another 10 years. Im just glad the west is showing "slight" signs of learning.

Its seems so stupid to hand wealth away. then have to borrow from those you gave all your wealth to.

But Hell. "This is MY united states of whatever" :P

RE: Curious
By The0ne on 1/27/2009 1:13:51 AM , Rating: 2
With more complex technologies if you don't have the right tools to tone down the learning curve there's no escaping the fact that you will have to spend years on A project and hope for it's success. Only bigger companies can rely on this and only they have the money to do this.

Even years after release now their full potential hasn't been tapped, including the Wii and DS.

Number of games
By dagamer34 on 1/26/2009 11:28:40 AM , Rating: 1
It's not that Japanese games aren't selling as well, but Japanese developers aren't making as many games as they have before in previous generations. I mean, by this point, there were already TWO Final Fantasy games out in the states, a billion Capcom games, and even more Konami games. They're spending a shitload of time on graphics this generation than they have in the past.

RE: Number of games
By Crysalis99 on 1/26/2009 4:59:27 PM , Rating: 2
That's because alot of gamers today (I point at all of us westerners) are nothing but graphics whores. The Japanese too, even. Because if you will recall, what was the one thing that set Dragon Quest apart from Final Fantasy since the very first ones? Graphics.

While Dragon Quest is thier most beloved series, Final Fantasy approaches a very close tie with it. The battle animations in FF1 were far superior to anything DQ1 had to offer. And the trend continues to this day...

And you can bet your sweet ass that Japan is producing just as many games as before, its just 90% of them don't ever see this side of the planet. Ever. Alot of thier gaming culture is filled with Hentai related stuff, video gambling, dating sims, text based games etc etc etc.

Gaming has always been about the best graphics though, its just a matter of having the budget to do it...

My thoughts...
By Josh7289 on 1/26/2009 10:30:30 PM , Rating: 2
He suggests RPG games which Japanese developers tend to focus are not as popular in the west. He also suggests the right to develop games in potentially lucrative areas such as sports or popular movie franchises is tightly controlled.

It's not that RPGs are unpopular, but that there's just no originality or "spark" in them anymore. I'm a huge JRPG and Japanese-games-in-general fan, but I'm just not feeling like playing many of them anymore, because a lot of them just aren't fun.

Then again, it could simply be my changing tastes, and perhaps all of our tastes are changing at the same time, which would explain the declining market share of these games.

By kyleb2112 on 1/27/2009 7:07:48 PM , Rating: 2
It's almost as of people got sick of 20 minute long, unskippable cinematics. Crazy Westerners.

"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

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