• July 26, 2014

Smartphones dominant force in game industry

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Posted: Thursday, July 11, 2013 4:30 am | Updated: 9:57 am, Thu Jul 11, 2013.

TOKYO — As smartphones become more common, games for the multifunctional devices have turned into a hot commodity, with some logging huge download numbers and game makers for traditional cell phones shifting course toward what seems to be the future of gaming.

Perhaps the best-known smartphone game is Puzzle & Dragons, released in February 2012 by Tokyo-based GungHo Online Entertainment Inc. Domestically, the game was downloaded more than 16 million times as of this month.

GungHo logged a consolidated operating profit of $18.9 billion in the final quarter of fiscal 2012, a whopping 75 times more than in the same period last year. The firm’s stock also surged, and at one point in May, bypassed industry giant Nintendo Co. in terms of market capitalization.

Smartphone games, which do not require a special console like regular video game systems, can be played casually whenever the gamer has a break, like on the train to work or during lunch.

Another difference with traditional video games is the maker’s ability to analyze usage data, update the game’s design at any time or regulate when players encounter enemies.

According to industry magazine Enterbrain, the domestic video game market in 2012 was worth $9.6 billion. Online sales accounted for $5 billion of this figure, a 35.5 percent rise from the year before, indicating that half the market is Internet-based and dominated by smartphone games.

“Google and Apple (which run sites that sell smartphone applications) have realized how profitable video games are, so they will probably add more game apps this year,” said Atsuo Nakayama, a consultant who specializes in the video game industry at Deloitte Tohmatsu Consulting Co.

The market for social games, which enable players to face off against each other or team up to topple enemies, has been mainly geared toward traditional cellphones. But DeNA Co. and other makers are hurrying to establish themselves in the smartphone market.

Developing games for overseas markets can also be lucrative. DeNA’s February 2012 release of an English version of Rage of Bahamut, developed by Cynagames Inc., hit No. 1 in total sales in both Google and Apple Inc.’s app stores. The firm has had other successes in foreign markets, and hopes to make half of its $4.1 billion sales target for fiscal 2014 abroad.

Gree Inc. — known as the maker of Tsuri Star (fishing star), the first social game for traditional cellphones — was faced with a declining market for traditional cellphones in the latter half of fiscal 2012.

The firm decided on a strategy of “selection and concentration” that includes accelerating its move toward smartphone games, investing in new games mainly for the North American market and phasing out unprofitable games.

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