South Korea Seems Well Positioned to Make Waves in Japanese Domestic Gaming Market
Opportunity Knocks
The Japanese gaming industry is having a rough time, with the likes of SquareEnix, Konami, and Sega producing fewer hits, releasing more rehashes, and making grander claims as the years go on. Diehard fans remain, but average consumers are left with dwindling options, signaling an opportunity for a foreign actor to come into the domestic market and disrupt legacy developers.
Speculation is easy enough, and we’re not here to insist that one player or another has the upper hand, but a brief look into the recent historical developments in Japan’s gaming industry suggests that there are a few regions with an upper hand, and one to pay attention to is South Korea.
Just Across the Pond
For example, South Korean publisher NXC, the holding company behind the popular Japanese games developer Nexon, has long been present in the Japanese gaming market. Over the years, they have seen varying levels of success with direct releases such as MapleStory, Mabinogi, and Dungeon Fighter Online. Through Nexon, NXC has invested in other Japanese studios, including Gamepot and XFLAG (notably with Monster Strike).
In 2021, another Korean developer, Pearl Abyss, also made waves in the competition for Japanese gaming market share with their supposed Pokemon Killer, DokeV. Upon release of the official trailer, gamers across the world were enamored with the outstanding graphics married with what appeared to be the evolution of Pokemon’s tried-and-true gameplay formula that they had been waiting for.
Much of the information regarding the project has remained sealed behind closed doors and without a release date since the trailer dropper, so this is by no means a done deal.
Arrested Development
In 2022, Square Enix has once again issued statements that don’t reflect the will of the masses, this time regarding blockchain, with President Yosuke Matsuda commenting that he believes "blockchain entertainment" will "play a key part of [SE's] strategy for future growth." Regardless of opinion on blockchain gaming, the fact is Japan has fallen off of the Web3 development train and doesn’t even have the resources to pursue this mission, if true.
But you know who does? That’s right, South Korea. We’ll avoid naming any specific organizations in the notoriously hairy crypto space in order to not associate ourselves with any of them, but do a quick search of Web3 development in South Korea and you’ll see there’s a lot of activity there at the intersection of blockchain and gaming.
And then there’s Japan’s quintessential chat application, LINE, which is co-owned by 2 parent companies: Japan domestic SoftBank, and South Korea’s Naver. Considering all of the puzzle pieces above, this seems to be a real match made in heaven, with Japan’s own Miracle Son, Softbank, presiding over distribution possibilities for Naver’s gaming offerings, there might be something to think about.
Fortune Favors the Brave
Japan is single-handedly responsible for the birth and upbringing of the international game industry. With the notable exception of the First-Person Shooter (via Wolfenstein 3-D, iD Software, 1992), the vast majority of gaming’s greats call Japan home. However, as a result of Japan’s post-bubble years, the last decade or so has seen an increasing lack of innovation, new titles, and attractive IP, which, coupled with Japan's deceivingly low-tech environment, is creating hurdles that the domestic industry is having difficulty tackling.
Despite the domestic Japanese market still being one of the most lucrative in the world, the above presents a conundrum: there’s still growing domestic demand, but domestic industry can’t keep pace with it. Thus, there exists opportunity for international developers to fill the void growing in the Japanese market.
South Korea is one of the better situated players in the global game, but not the only. Stay tuned for subsequent stories on this very enticing issue!