The Evolution of Gaming Culture in Japan: From Arcades to Mobile Gaming

Japan is synonymous with gaming culture. Its video gaming giants, including SEGA, Sony and Nintendo are household names across the world.

The characters of Japanese video games, such as Mario, Sonic the Hedgehog, and Pikachu are massive global successes. Their reach extends far outside the games they appear in, inspiring movie franchises, merchandise, and even theme parks. From humble beginnings, Japan’s gaming scene is now legendary.

After World War II, Japan had a period of strong economic growth. Individuals had extra cash to splurge on entertainment activities outside their modest homes, including at arcades.

In the 1930s, long before the rise of video games, pinball machines dominated arcades. In the 1960s, more sophisticated electro-mechanical games replaced these. These EM games were more skill-based than chance-based, a key change in gaming trends. Technology was advancing quickly and innovations within the gaming world occurred frequently.

Part of the game’s success stemmed from Taito’s innovation. Space Invaders was available as an upright arcade game, but also as a table-type arcade game, ideal for cafes so people could dine and play at the same time. This helped create a culture of gaming as a social activity within Japan.

Not long after, Namco launched Pac-Man in 1980 as an antidote to the war-inspired games that prevailed at that time. Originally called Puck-Man in Japanese, it featured cute and colorful characters designed to appeal to women as well as men, vastly expanding market reach.

US-based company Atari launched the first arcade game, Computer Space, in 1971, and then continued to launch Pong. The US helped start the video game industry, but Japan made them popular and gave them their unique style.

In 1978, Japan had its first global video game hit with Taito’s Space Invaders, a shoot ’em up inspired by US titles. Still considered one of the most influential games of all time, its simple, pixelated aliens are still popular today.

As video gaming gained popularity, the race was on to create the first home console. Epoch, a Japanese company, succeeded in releasing the first in 1975, with TV Tennis Electrotennis. Several months later, Atari released Home Pong in the US.

US-based Atari soon licensed Space Invaders in 1980 and sold more than a million copies, quadrupling their sales. (as documented by the 2001 book, The Ultimate History of Video Games Revisited by Steven L. Kent). However, this growth wasn’t sustainable and video games’ Golden Era ended between 1983 to 1985. Console market saturation, increasing accessibility of personal computers, and subpar quality of many games contribute to this decline.

The recession hit US makers hardest, where revenue fell from a peak of $3.2 billion in 1983 to $100 million by 1985, almost 97%. (according to a 2015 Fortune Magazine article, “Mario, the World’s Most Famous Video-Game Character, Is 30 Years Old” by Chris Morris). This crash gave Japan the opportunity to become the industry’s new driving force.

In 1983, industry giants SEGA and Nintendo pitted their SG-1000 and Famicom consoles against each other in a battle for market share. During this contest, Nintendo released the Game Boy in 1989, allowing it to conquer the handheld console market. At the same time, SEGA’s Mega Drive (aka Genesis) became a huge international success, beating Nintendo to the punch for 16-bit technology. This marked the fourth generation of video games, and the beginning of the so-called Console Wars.

The stiff competition and constant innovation between SEGA and Nintendo spurned on rapid advancements in the industry, shaping the trajectory of video games up to the modern day. These early pioneers laid the foundation for globally recognized franchises like Super Mario, Pokémon, and Sonic the Hedgehog, which have become cultural touchstones.

As Blake J. Harris, a video game expert and author of Console Wars observes, “Without the contributions of Japan, we wouldn’t have a video game industry. Or, at least, not one that resembles what we have today in any way.”

Japan’s iconic contributions to video game culture have ensured it remains the heart of the industry. Its history continues to inspire gamers and developers alike. In turn, investment continues to flow into the industry, allowing for experimentation and large-scale projects, such as movie franchises, merchandise and even theme parks. These developments create a multi-dimensional experience for fans and ensure Japan remains top-of-mind for gaming advancements.

Japan has left its mark on video gaming, and conversely, gaming has left an indelible mark on Japanese culture. Gaming fans make the pilgrimage to Japan to visit Akihabara, Tokyo’s electric town, Super Nintendo World at Universal Studios Japan in Osaka, and the Capcom, Nintendo, and Pokémon centres at Parco in Shibuya.

In the country, there are many themed cafes and esports parks. One example is Red Tokyo Tower. These places offer virtual reality, augmented reality, and mixed reality games.

Gaming in Japan wields significant economic influence, contributing substantially to the national economy. Statista projects that revenue in the video games market of Japan will reach USD28bn in 2024. Major companies like Nintendo, Sony, and Capcom play pivotal roles, driving innovation and generating substantial revenue through their globally recognized franchises. These companies not only bolster domestic employment but also attract international investment and tourism.

Additionally, Japan’s gaming culture has become a prominent global export, influencing trends and shaping consumer preferences worldwide. Through a combination of technological prowess, creative talent, and strategic marketing, Japan’s gaming industry continues to thrive.

In 2024, the largest segment of the video games market in Japan is now mobile gaming, according to Statista. In the 1990s, when mobile phones first started to gain mainstream popularity, Snake, a preloaded game on Nokia phones became successful.

Japan then took the lead in 1999, with the introduction of i-mode, a payment system that allowed users to purchase games with their mobile phones. This gave developers a way to monetize their games and subsequently become more innovative in their designs.

The rest of the world caught up by the early 2000s, when it became possible for game apps to be downloaded. This accessibility to a huge library of mobile games at your fingertips, without the need to pay for consoles or PCs, has broadened the market for games, effectively democratising gaming.

To capitalise on this vast audience, game makers have found new ways to monetize. For example, the game Puzzle & Dragons, developed by Japan’s GungHo, has in-game currencies that users purchase to extend their daily gameplay hours.

Mobile gaming in Japan is a huge market, projected to reach USD16.77bn in 2024 and a 31.1 percent market penetration by 2027. (according to Statista.) Another key trend is the growth of esports tournaments. SEGA has taken advantage of this phenomenon with its esports parks Red Tokyo Tower and Joypolis, which leverage Japan’s advanced technology and gaming expertise.

Japan’s robust technological infrastructure and widespread internet access provide a solid foundation for the gaming industry to thrive. One of the latest Japanese gaming trends is companies developing cutting-edge VR and AR gaming experiences. This trend attracts local gamers and also garners international attention, as VR and AR gaming continues to evolve and improve.

Another key trend is the evolution of role-playing games (RPGs) and strategy games, which have a dedicated and passionate fan base in Japan. Japan’s earliest RPG was Koei’s Underground Exploration, released in 1982. This trend can be traced to the emergence of esports teams, organizations and infrastructure. Streaming platforms have also contributed to the growth of esports, allowing gamers to watch players and teams compete in real-time.

 The gaming landscape in Japan is poised for further evolution, driven by several key trends. The rise of mobile gaming is expected to continue, with projected growth in revenue and user penetration, fueled by innovations in game design and monetization strategies. The emergence of esports tournaments and dedicated gaming parks underscores Japan’s commitment to fostering gaming culture and capitalizing on its expertise. Japanese gaming companies continue to spearhead advancements in VR and AR gaming experiences, promising immersive and innovative gameplay.

As Japan continues to lead in gaming innovation, its economic impact and global influence in the industry are set to strengthen in the years ahead.