Mobile gaming in Japan: A different world

From time to time I like to drop in on What Japan Thinks, a website that translates into English an enormous number of market research studies conducted in Japan. That's where I recently came across an astonishing survey conducted earlier this year on mobile game use in Japan.

In the US, game-playing on mobile phones is seen as a fairly popular activity, and I think the view in Europe is similar. But neither place holds a candle to Japan, if you can believe the survey. Here are some highlights:

More than 90% of the people surveyed play video games. That seems like an incredibly high figure, but the survey was conducted by InfoPlant, a reputable Japanese market research firm. The survey base was supposedly users of DoCoMo mobile phones, which sounds a little unconventional but is a fairly representative sample of the overall Japanese population. It's better than surveying PC useres, which is what's typically done in the US. PC usage rates are a lot lower in Japan than in the US, so surveying via mobile phone actually reaches a greater share of the population.

It's surprisingly hard to find directly comparable game-playing statistics for other countries, but the reports I could find implied lower levels of activity:

--A report from the Entertainment Software Association , a trade group, claims that 69% of US "heads of households" play video games.

--Back when I was at Palm, we had access to Forrester Research's excellent consumer tracking surveys. At that time (a couple of years ago), they said 32% of US households had videogame consoles, and 24% had handheld game systems.

--At Palm we also did our own surveys of consumer interest in mobile gaming. We found that about 13% of the population in the US and Europe were mobile entertainment enthusiasts -- people who were willing to pay extra to have an entertainment device with them when they were on the go. We never ran the survey in Japan, and now I wish we had.

The InfoPlant survey figure appears to indicate that there's a much higher percentage of gaming enthusiasts in Japan than we have in the US and Europe. That fits the stereotype of gaming in Japan, but I always question stereotypes like that unless they've been tested objectively.

At least three-quarters of the people surveyed play games on mobile devices.
Mobile phones are the devices most often used for game-playing, but about half of the respondents said they also own a dedicated mobile gaming device like a Gameboy (about double the ownership rate Forrester found in the US). Half of those users, a quarter of the Japanese population, said they use their game devices frequently.

Here's the breakdown of gaming device usage by sex (numbers total to more than 100 because many people play games on more than one type of device). Game usage on mobile phones and portables was a little more popular among women, while console gaming was more popular among men.

On what kind of machine do you usually play games?

Women prefer Nintendo.
There are some interesting differences between men and women in what brand of mobile gaming device they use. The women were a bit more likely to use Nintendo products, while the men were more likley to have Sony PSPs.

Select all the portable game machines you own.

In case you're wondering what a Wonder Swan is, it's a mobile game system sold by Bandai in Japan.

Most people use mobile game devices at home, not in transit.
This is a great example of why I distrust stereotypes. The stereotype of Japanese mobile gaming is that most people would do it on trains, while they slog through their commutes on those endless subways beneath Tokyo.

The survey confirmed that some people genuinely do use mobile games in transit, but the most common usage of a mobile game platform is at home. I guess the pattern would be to come home, stretch out on the futon, and play a little Pokemon:

Where do you usually play on your mobile device?

I wish we knew more about why people would use a mobile game system so heavily at home. Is the TV being used for other purposes? Or in a relatively small Japanese home, does the portable game system just fit in better?

Old folks dig the DS. The greatest surprise to me was a finding that Nintendo DS ownership is vastly higher among older people than young people. The chart below shows the percent of people in each age group who own Nintendo DS systems:

Percent of respondents in each age group who own a DS:

What Japan Thinks attributes this to Brain Age and other "brain training" games for the DS that are supposed to protect against mental decline as you age. Apparently this is driving vast usage of the DS by older Japanese people.

It's a fascinating difference from the US, where the DS is generally seen as a kids device, at least for now.

What it all means

As I noted earlier, without knowing more about the study's methodology, it's hard to say how much we should trust it. But even if some of the numbers are off by a bit, I think they teach a couple of good lessons:

Convergence doesn't necessarily destroy specialized products. Mobile gaming is heavily deployed on Japanese mobile phones, and yet standalone mobile game devices continue to sell well. Why? I think it's because the mobile consoles do things that the game-equipped phones can't. Convergence kills markets only when the converged product is a complete and affordable replacement for the dedicated one. That's very important to keep in mind when you read the forecasts saying things like, "cameraphones will destroy sales of digital cameras." That will happen only to the extent that cameraphones have all the same features as standalone digital cameras. If the camera vendors keep innovating, I think they can survive indefinitely.

Don't assume a market's boundaries are fixed. The standard assumption in the industry has been that mobile gaming is primarily a kids and young adults thing, with GameBoy + Pokemon being the prototypical example. Even the PSP, which shoots for a more mature audience than GameBoy, is still aimed at hardcore gamers. But Nintendo has been very up-front about aiming both the DS and the new Wii console at mainstream adults. That strategy has apparently been very successful for the DS in Japan, and you can read an update on Nintendo's Wii marketing plan, targeting soccer moms, here.

(I first started believing that Nintendo's Wii strategy might work when my wife abruptly told me she wanted one for this Christmas. She said it's a great way to get exercise if you don't want to go through the hassle of traveling to a tennis court. About half of her friends agree and also want Wiis. This from women who have never shown serious interest in a game console before, and who barely even know what an Xbox is. Remarkable.)

It's very common for tech companies to assume that the people who make up a market today will always be the core of the market in the future. But that's like driving a car by staring at the rear-view mirror; you can only see where you've been.

Looking ahead and growing a market is a lot harder to do, but it's one of the most effective ways to fight a larger competitor who's invading your turf. If the other guy has a volume or resource advantage, the worst thing you can do is stand still and let them spend you into the ground. Change the rules of the competition by innovating in unpredictable ways, or by growing the market in a new direction. That turns the biggest advantage of a large corporation, its scale, into a disadvantage. The larger a company is, the slower it reacts, and the more its internal politics will interfere. If you change the rules frequently enough, the big guys will never be able to get their cannons fully aimed at you.

That's what Nintendo is doing in its fight with Microsoft and Sony. There's no guarantee it'll work, but I admire Nintendo's vision and courage.


Anonymous said...

Interesting posting. But do you think the mobile handset software game developers are making money? I'm under the impression that sales aren't going very well. What will it take (and how long!) for masses of people to start wanting software for their mobile phones? It seems to be taking a long time...

maceyr said...

I think that you have to keep in mind the difference in culture between Japan and US. In Japan, space is limited, well at least those who live in big cities like Tokyo or other similar ones.

With that in mind, a TV may likely be shared amongst the family, which would mean that one member who wishes to play TV games would interfere with another member of the household who wishes to watch TV.

The cell phone is so popular because it offers them much more than just a communication device and since practically everyone carries one, it's not surprising that they adopt that so readily in Japan. I was visiting Japan in mid March this year and everyone on the JR Train was doing something on their cell phone, either texting or playing games. Similar thing happening in Hong Kong.

But in the US, we have a lot more space to have all those different TV sets all over the house so it's more likely we aren't going to buy a portable gaming console or handheld for that reason.

I really have to think it's a lot to do with culture and space, or lack thereof. But that's my personal opinion. Great article as usual.

Ken Y-N said...

Hi Michael,

Thanks for the very nice write-up and analysis of my recent translation! I'll add a link back from my site after the New Year, once my traffic picks up again after the holidays.

That's the sort of article I wish I had the time (and ability!) to write up myself.


Michael Mace said...

Good comments, folks. Thanks!

Anonymous wrote:

>>do you think the mobile handset software game developers are making money?

I think it's hard to generalize. I don't have any contact with most of the mobile apps companies in Asia, so I can't say how any of them are doing.

In the US and Europe, I would split the mobile game companies into three camps. One group is a set of companies that have learned how to work very closely with the operators to produce and promote games. Many of the games they create are tied to movies or other easily promoted properties. These game companies work closely with the operators to build the game into a promotion being created by the operator.

So, for example, a game might be tied to the opening of a major movie. The game has some elements of the movie, and it's featured by the operator on the day the movie opens. The operator's promotion gets included in the marketing campaign run by the movie's distributor. Riding the publicity wave of the movie, the game gets a lot of downloads.

The companies doing this sort of work seem to be doing okay.

The second group of developers works in the PC apps model -- they want to create original apps and sell them separately, through third party distribution. Life seems to be pretty hard for most of these companies.

The third group doesn't create apps for mobile phones at all. They produce apps for the mobile consoles, like the GameBoy. The financial model for these game developers is tricky, as they have to give a lot of their profits to the console owner in order to get the right to create games for that console. It's a completely controlled ecosystem, managed by the console company to extract as much revenue as possible from the game developers. Despite the nasty-sounding economics, some of these developers seem to do okay.

May wrote:

>>a TV may likely be shared amongst the family, which would mean that one member who wishes to play TV games would interfere with another member of the household who wishes to watch TV.

That sounds like a very reasonable explanation. If anyone from Japan wants to comment, please speak up. I'd love to get educated.

And thanks for dropping by, Ken. You run a great site, and I've been distressed to read that you're not getting as much traffic as you'd like. Please keep up the great work -- you're providing a valuable resource.

Chip VA said...

I think you need to revisit your reading of the charts. I quote form your post:
"The greatest surprise to me was a finding that Nintendo DS ownership is vastly higher among older people than young people."

Perhaps you need to re-read the chart since it clearly says "Percentage of Respondents." Perhaps the obvious fact that the number of older respondents who would fill out a mobile gaming survey would actually have a mobile gaming platform should explan these "surprising" numbers? I would hazard a guess that if the entire population of Japan were factored in, the percentage of older games would be much lower. Remeber the cardinal rule: "There are lies, damn lies and statistics." :) Be sure you are drawing the proper conclusions from the data supplied.

Marsha said...

Maybe women like the smaller HW because it takes up less room at home yet fits in a purse. I'd be interested to find out if the women who think Wii is cool also like DDR.

Great post, Mike...

Michael Mace said...

Thanks for the comment, Chip.

Without knowing more about the methodology of the study, it's impossible to say for sure whether there was any bias in it. I'm relying in part on InfoPlant's reputation; I checked out their website and it looks like they know what they're doing.

The DS chart showed percent of total respondents in each age group who said they had a DS system. So about 25% of the under-20 respondents said they had one, and over 40% of the over-50s.

I don't think older people who have a gaming devices would be more likely to respond to a survey than younger people. We do a ton of primary market research at Rubicon, and the usual problem isn't different response rates by age, it's that technophiles in general are more likely to respond to a survey request.

So if there's any bias in the survey, it's likely to be that it overstates actual game use in all age groups.

I think the age-tied usage difference in the DS is real. I have less confidence in the absolute percentage of gamers in the Japanese population; that's where I am trusting InfoPlant to do its job properly.

Michael Mace said...

Marsha, good question about Dance Dance Revolution. I haven't ever seen any statistics on who likes it. I would have thought it'd attract mostly women (because it's dancing), but you see a lot of guys using it in the arcades.

Please speak up, folks, if you know of any good stats on that.

Among my wife and her friends, the most attractive thing about the Wii seems to be the tennis game...

Fred said...

Whenever you deal with the Japanese, you must keep in mind that there are two personas involved. The first is the "pulic persona" and the second is the "private persona." As such, the lack of use of portable games on buses and subwys makes perfect sense. In that culture, the use of games in a public place is offending the sensibilities of the cultural public persona. However, no such restrictions exist in a private environment. As an expert consultant in Class 3 Gaming and in Oriental, I must deal with these matters in every design of Class 3 Gaming Facilities catering to an Oriental Clientele. Fred