Tuesday, 26 December 2006

Mobile gaming in Japan: A different world

From time to time I like to drop in on What Japan Thinks, a website that translates into English an enormous number of market research studies conducted in Japan. That's where I recently came across an astonishing survey conducted earlier this year on mobile game use in Japan.

In the US, game-playing on mobile phones is seen as a fairly popular activity, and I think the view in Europe is similar. But neither place holds a candle to Japan, if you can believe the survey. Here are some highlights:

More than 90% of the people surveyed play video games. That seems like an incredibly high figure, but the survey was conducted by InfoPlant, a reputable Japanese market research firm. The survey base was supposedly users of DoCoMo mobile phones, which sounds a little unconventional but is a fairly representative sample of the overall Japanese population. It's better than surveying PC useres, which is what's typically done in the US. PC usage rates are a lot lower in Japan than in the US, so surveying via mobile phone actually reaches a greater share of the population.

It's surprisingly hard to find directly comparable game-playing statistics for other countries, but the reports I could find implied lower levels of activity:

--A report from the Entertainment Software Association , a trade group, claims that 69% of US "heads of households" play video games.

--Back when I was at Palm, we had access to Forrester Research's excellent consumer tracking surveys. At that time (a couple of years ago), they said 32% of US households had videogame consoles, and 24% had handheld game systems.

--At Palm we also did our own surveys of consumer interest in mobile gaming. We found that about 13% of the population in the US and Europe were mobile entertainment enthusiasts -- people who were willing to pay extra to have an entertainment device with them when they were on the go. We never ran the survey in Japan, and now I wish we had.

The InfoPlant survey figure appears to indicate that there's a much higher percentage of gaming enthusiasts in Japan than we have in the US and Europe. That fits the stereotype of gaming in Japan, but I always question stereotypes like that unless they've been tested objectively.

At least three-quarters of the people surveyed play games on mobile devices.
Mobile phones are the devices most often used for game-playing, but about half of the respondents said they also own a dedicated mobile gaming device like a Gameboy (about double the ownership rate Forrester found in the US). Half of those users, a quarter of the Japanese population, said they use their game devices frequently.

Here's the breakdown of gaming device usage by sex (numbers total to more than 100 because many people play games on more than one type of device). Game usage on mobile phones and portables was a little more popular among women, while console gaming was more popular among men.

On what kind of machine do you usually play games?

Women prefer Nintendo.
There are some interesting differences between men and women in what brand of mobile gaming device they use. The women were a bit more likely to use Nintendo products, while the men were more likley to have Sony PSPs.

Select all the portable game machines you own.

In case you're wondering what a Wonder Swan is, it's a mobile game system sold by Bandai in Japan.

Most people use mobile game devices at home, not in transit.
This is a great example of why I distrust stereotypes. The stereotype of Japanese mobile gaming is that most people would do it on trains, while they slog through their commutes on those endless subways beneath Tokyo.

The survey confirmed that some people genuinely do use mobile games in transit, but the most common usage of a mobile game platform is at home. I guess the pattern would be to come home, stretch out on the futon, and play a little Pokemon:

Where do you usually play on your mobile device?

I wish we knew more about why people would use a mobile game system so heavily at home. Is the TV being used for other purposes? Or in a relatively small Japanese home, does the portable game system just fit in better?

Old folks dig the DS. The greatest surprise to me was a finding that Nintendo DS ownership is vastly higher among older people than young people. The chart below shows the percent of people in each age group who own Nintendo DS systems:

Percent of respondents in each age group who own a DS:

What Japan Thinks attributes this to Brain Age and other "brain training" games for the DS that are supposed to protect against mental decline as you age. Apparently this is driving vast usage of the DS by older Japanese people.

It's a fascinating difference from the US, where the DS is generally seen as a kids device, at least for now.

What it all means

As I noted earlier, without knowing more about the study's methodology, it's hard to say how much we should trust it. But even if some of the numbers are off by a bit, I think they teach a couple of good lessons:

Convergence doesn't necessarily destroy specialized products. Mobile gaming is heavily deployed on Japanese mobile phones, and yet standalone mobile game devices continue to sell well. Why? I think it's because the mobile consoles do things that the game-equipped phones can't. Convergence kills markets only when the converged product is a complete and affordable replacement for the dedicated one. That's very important to keep in mind when you read the forecasts saying things like, "cameraphones will destroy sales of digital cameras." That will happen only to the extent that cameraphones have all the same features as standalone digital cameras. If the camera vendors keep innovating, I think they can survive indefinitely.

Don't assume a market's boundaries are fixed. The standard assumption in the industry has been that mobile gaming is primarily a kids and young adults thing, with GameBoy + Pokemon being the prototypical example. Even the PSP, which shoots for a more mature audience than GameBoy, is still aimed at hardcore gamers. But Nintendo has been very up-front about aiming both the DS and the new Wii console at mainstream adults. That strategy has apparently been very successful for the DS in Japan, and you can read an update on Nintendo's Wii marketing plan, targeting soccer moms, here.

(I first started believing that Nintendo's Wii strategy might work when my wife abruptly told me she wanted one for this Christmas. She said it's a great way to get exercise if you don't want to go through the hassle of traveling to a tennis court. About half of her friends agree and also want Wiis. This from women who have never shown serious interest in a game console before, and who barely even know what an Xbox is. Remarkable.)

It's very common for tech companies to assume that the people who make up a market today will always be the core of the market in the future. But that's like driving a car by staring at the rear-view mirror; you can only see where you've been.

Looking ahead and growing a market is a lot harder to do, but it's one of the most effective ways to fight a larger competitor who's invading your turf. If the other guy has a volume or resource advantage, the worst thing you can do is stand still and let them spend you into the ground. Change the rules of the competition by innovating in unpredictable ways, or by growing the market in a new direction. That turns the biggest advantage of a large corporation, its scale, into a disadvantage. The larger a company is, the slower it reacts, and the more its internal politics will interfere. If you change the rules frequently enough, the big guys will never be able to get their cannons fully aimed at you.

That's what Nintendo is doing in its fight with Microsoft and Sony. There's no guarantee it'll work, but I admire Nintendo's vision and courage.

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