It is now time for the fourth instalment of our Mobile Industry Exposed interview series, which has so far seen us talk with key mobile industry players from games market research firm Newzoo and mobile marketing platform Swrve, as well as attribution tracking and in-app analytics company adjust.
This week we spoke to Serkan Toto, the multilingual (he speaks 7 languages!) CEO and Founder of Tokyo-based Kantan Games, which helps companies make the best of the Japanese mobile games market.
Based in Tokyo since 2004, Serkan Toto is CEO of Kantan Games Inc., a game industry consultancy focused on the Japanese market. His clients include financial institutions, game makers, and large technology companies in the US, Japan and other parts of Asia.
Serkan is often seen speaking at web and mobile industry events in Asia and the US. He has been contributing from Japan to US-based TechCrunch, one of the world's biggest technology blog networks, between 2008 and 2012.
Serkan holds an MBA and a PhD in economics. His website can be found at www.serkantoto.com.
Read below for Serkan's insights on the World's most mature and most lucrative Asian market for games.
Thanks to Serkan for his time. You can now head to our own blog post on the Japanese mobile games market for more info. Stay tuned for the next Mobile Industry Exposed interview, which will be published in two weeks' time!
- How did you come to found Kantan Games, what’s your background and what were your motivations behind wanting to advise and support investors and mobile game publishers in Japan?Since I am based in Tokyo since 2004 and have been active in the local startup industry since around 2006, I have witnessed the rise of the Japanese mobile gaming industry from day one. The amount of inbound interest and demand for consulting and intelligence in the mobile gaming kept increasing and increasing from around 2008, when people outside Japan started to realize there is a new industry coming out of Japan: mobile social gaming.However, there has always been a big gap between the mobile gaming scene in Japan and the rest of the world, a gap that I am hoping to bridge with my work.Further down the line, in early 2013, I decided to formalize the business and incorporated my company in Tokyo. But the root of it all is actually that I am a hardcore gamer since the 1980s.
- Who are the main players in Japan in terms of platforms and publishers? The big platforms in Japan are the App Store and Google Play. In contrast to China, other Android stores don't play a role. The three big telcos have their own app distribution platforms, but they are highly curated and not open to everyone.In 2012, LINE opened its chat app to game developers. It's currently offering about 50 games.DeNA's Mobage and GREE are steadily declining in terms of popularity, both for users and game makers. One interesting point about Japan is that it still has a substantial mobile browser gaming market (both on smartphones and feature phones), the only one in the world actually. Here, DeNA and GREE still essentially form a duopoly, but the entire industry is clearly shifting to native apps. That segment is now much bigger than mobile browser gaming and continues to grow.In terms of publishers, GungHo Online, the company behind Puzzle & Dragons, is the clear market leader. Other big names in mobile include Colopl, CyberAgent, and of course video game makers like Konami, Sega, or Capcom.
- Have you noted any promising new startups in the mobile gaming space in Japan?The big boom of mobile gaming startups popping up everywhere in Japan has clearly ended. The space over here is in a stage of consolidation and extreme maturity, making it very hard for newcomers to get in and actually stand a chance.Alim, the company behind action RPG Brave Frontier, is probably the latest big startup that essentially came out of nowhere and landed a hit. It's now part of gumi, a large Tokyo-based publisher.
- What do you consider as the secret(s) behind the success of Puzzle & Dragons and other top grossing games?I truly believe the key factor in this respect is simply the quality of the game.No bad game can be successful and generate money on a long-term basis: these are all platitudes, but I think they are especially true in a country like Japan where users have been playing mobile games for well over 10 years and are known to be very demanding.I think another point is innovation. This is much easier said than done, but at launch, the three top games in Japan (Puzzle & Dragons, Monster Strike, and Quiz RPG) all introduced certain fresh game mechanics that players haven't seen before.Still, no game in the world can beat Puzzle & Dragons in terms of monetization in my opinion. Just one example: the pay-to-continue function was popularized by that game and is the top monetizing mechanic, according to the producer. It's now a standard in many other titles. Another monetization mechanic that a lot of Japanese companies have copied is the reward removal Puzzle & Dragons is executing brilliantly.
- What advice would you give to game publishers and advertisers entering the Japanese market?For game publishers, very few exceptions aside, Japan is one of the toughest markets to crack. Formulas for success that worked elsewhere probably won't here. There is a lot of money to be potentially lost but also to be made here.I would strongly advise to see Japan as a unique market and, by all means, not lump it together with other countries like China and Korea. There are similarities, but the key dynamics in these markets are very, very much different.Generally speaking, I would say that advertisers with specific solutions still have very good chances to succeed in Japan, if they can execute in the area of business development (first and foremost, finding good local personnel). The reason for that is that the mobile advertising space has been much, much slower in making the shift from the feature phone to the smartphone age. I would say that product- and tech-wise, mobile advertising on smartphones in Japan is clearly behind the American market, for instance.
- What can and should publishers and advertisers do to localize their games and advertising for Japan?I think the first step should be basic research to clear the question if the game or ad product actually fits with the Japanese market, how the competition looks like, if there's actually demand for it, etc. This is standard procedure for most companies but especially challenging in Japan, a market that is largely disconnected from the West and where even basic information in English about the mobile gaming space is often not available. And as mentioned above, taking stabs in the dark in Japan can be extremely costly, frustrating and time-consuming.If it's a go, game makers should take care of proper translation (a must even for simpler games, including app store description, screenshots, etc.), possibly localization (not necessary in all cases), and customer support if needed (in Japanese only).Getting on the LINE or telco platforms is very difficult, getting press is not easy, and chances are you are not Supercell or King, companies the Japanese knew before they entered the domestic market. In other words, another key point is the marketing budget. Exceptions aside, game makers will not be able to reach a wide audience in Japan without paid user acquisition, no matter how great or viral the game might be.
- In your opinion, the most exciting things happening in Japan’s mobile games market right now are…I would say it's the current influx of foreign games in Japan, the ongoing shift from feature phones to smartphones, the shift from browser-based mobile gaming to native apps, the shift of power from platform providers (DeNA, GREE) to content providers (GungHo, Colopl, Mixi), the dominance of Puzzle & Dragons (which currently holds 51% of the native app market for games in Japan, the rise of the once-dead local social network Mixi as the company behind action RPG Monster Strike, mid-sized mobile gaming companies starting to do TV ads, etc.
- What are your predictions in terms of market growth, trends and developments in Japan moving forward? I think the mobile gaming market in Japan is, also because it's the oldest, the most mature globally. Many of the recent games just have incredible production value: voice acting, soundtracks (some are now sold separate from the content), special title songs, connectivity to video games (Dragon Quest X players can get the game streamed to their Android phone and play together with users of the console version), tie-ins with popular IP, design provided by famous anime and manga studios, and other factors are getting more and more common. The smartphone gaming market in Japan is projected to grow to over US$8 billion in 2016, so I am not worried about the future of the industry in this country at all.