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Report: Japan's mobile game creators are losing out to China, South Korea

Japan has a sizable and still growing market for mobile games, but Japanese companies are turning away from mobile game development to pursue work in other industries.

Japan has a sizable and still growing market for mobile games, but Japanese companies are turning away from mobile game development to pursue work in other industries.

According to a recent story from Bloomberg, Japanese companies like Mixi and DeNA once dominated Japan’s mobile game scene thanks to games that hinge on ‘gatcha’ monetization, but are now being pushed out of mobile games as developers from China and South Korea swoop in with more innovative and profitable games.

Data from the story says that Japanese gacha games have generated at least $55 billion since 2007 from to the success of titles like Mixi’s Monster Strike and GungHo Online Entertainment’s Puzzle & Dragons. DeNA alone has generated $9.5 billion from gacha games, but Bloomberg says the company is now one of many moving resources into other industries.

The head of one such company, Mixi, says that pressure to change the gacha model itself is partially to blame for the fall in Japanese mobile game profitability. But analysts speaking to Bloomberg say that Japanese devs are struggling to innovate and follow up their own successful titles, leaving a gap for games from companies like NetEase and Netmarble to claim revenue in Japan.

Bloomberg says that the combined operating profit of the top seven mobile game publisher in Japan has fallen by 21 percent in the current fiscal year. Meanwhile, NetEase’s Knives Out tops mobile charts in Japan and earns as much as $65 million worldwide in a single month. The full story on Bloomberg offers more data on this shift, in addition to insight from analysts and executives. 

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