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Japanese mobile market outgrows US three years in a row

RPGs account for 65% of mobile revenue in Japan, App Annie report shows

Mobile gaming revenue in Japan has grown by approximately 35% year on year, surpassing the US for three years in a row.

This growth is especially notable when considering that the US has nearly three times as many smartphone users than Japan.

The data comes from a joint report into the Japanese mobile market by App Annie and marketing agency Dentsu, which has revealed a number of interesting insights.

Perhaps the most relevant is the role played by loot boxes in successfully monetising RPGs above all other mobile apps.

According to the report, RPGs took almost 65% of mobile gaming revenue in Japan between July 2016 and June 2017. Report author Donny Kristianto noted that the share of revenue from RPGs was significantly higher than the amount of time spent in the apps, indicating "the genre's efficiency when monetising users in the Japanese market."

This is where loot boxes, otherwise known as the "gacha mechanic", comes into play with users purchasing in-game currency for a chance to unlock high value items.

"For many of the top RPG games in Japan, these in-game items were collectible cards, and games incorporating a collectible card battling mechanic were well-represented in the top games in Japan by revenue," said Kristianto.

Homegrown developers are by far the most dominant in the Japanese market, App Annie also revealed.

"Japan offers a lot of opportunity, but so far only a handful of international publishers have made significant headway there," said Kristianto. "Between July 2016 and June 2017, over 80% of gaming revenue in Japan was generated by publishers headquartered in Japan. In comparison, in the US only around 50% of revenue was generated by local companies."

The differences between Japan and the US are striking. In Japan, users access gaming apps twice as frequently, and spend twice as long on average in games. Additionally, Japanese users rank the highest for average number of sessions in games per user.

"These high levels of usage help drive the strong user monetisation we see in Japan, and they should also be considered when designing for Japanese gamers," Kristianto observed.

Ultimately all of this means that the Japanese mobile market is one of the largest and most lucrative in the world, but still a tough nut to crack for the West.

"For those who find success in this market, the rewards are considerable," said Kristianto. "Games continue to represent the majority of app store monetisation growth, which is forecast to more than double over the next four years. "

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