Japanese Gaming Market Suffers Tough 2014

If there's one thing that's been on my mind the last couple of days, it's an article that was put out by Japanese video game news website, Famitsu, detailing the decline in software and hardware sales for 2014 to the lowest point in since the early 90s.

As you can easily see from the graph above, the Japanese video game market has indeed seen a decline in video game sales over the past few years.

2006 and 2007 were two huge years for the domestic video games market in Japan. Sales in those years were bolstered by strong receptions from the then newly-released Nintendo DS, PlayStation Portable, as well as Wii and Playstation 3 systems. Then as we all know, because of the global financial crisis, the video game market took a hit and has since been on the decline (though, the global recession wasn't the only reason the game market shrunk).

I'm going to attempt now to make sense of the meager 2014 that the Japanese video games market saw. The easiest and perhaps most obvious explanation of the decline in software/hardware sales is the rise of mobile gaming. Gaming on devices such as smartphones has rapidly expanded in the past few years and it's easy to see why. Playing video games that are relatively cheap on a device you already own makes a lot of sense. Why go out and purchase a separate system that primarily plays games when you already have one? Yes, I know that the most enriching experiences are more likely to be found on dedicated gaming consoles, but that doesn't eliminate the cheap and convenient option that mobile gaming brings.

2014 was also a bit of a struggle for the newer consoles. Although the PS4 released last year, it was met with mixed reviews due to a lack of blockbuster titles and post-release server issues for multiple games. Wii U did manage to get a bump in sales, largely from installments in the Smash Brothers and Mario Kart franchises. Xbox, which has traditionally struggled in Japan, failed to gain traction with its new system in 2014.

In Japan, software really drives hardware. So far into this console cycle, there has been a lack of software developed by Japanese companies, a stark contrast to the previous console generations. This represents a shift towards the west as the focus of early development. I've said in earlier posts that although this strategy hurts the Japanese game market, it's seen as a necessary evil because Japan has been locked down by the Japanese giants Nintendo and Sony. These two companies instead compete with each other elsewhere (Europe and the U.S.).

The first few years really set the tone for what's possible in the course of the life cycle of video game consoles, but I don't think that 2015 will follow the recent trend of a decline in sales.Where's my evidence? Well, call it intuition. Seeing as this year has big titles lined up, including a new Zelda game, Persona 5, Metal Gear Solid 5, The Witcher 3, The Order 1886, and so on, I think that we may be seeing titles capable of moving units in Japan (especially the first three I mentioned). Game sales could further grow in 2016 with the release of Final Fantasy XV (first quarter 2016?) and Kingdom Hearts 3 (late 2016).

In summary, yes, 2014 was a bad year for gaming in Japan, the worst in quite some time. However, I am optimistic that 2015 will be different because blockbuster games developed for the Japanese market are nearing release!