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Japan Mobile Gaming Bubble….The beginning of the end or change?

Gung ho Entertainment, the makers of the successful game Puzzles & Dragons reported their second consecutive mark down in revenue projection, these are the few indication of how the Smartphone market which was experiencing exponential market growth for the past 4 years has possibly reached full market growth / Saturation point and the Japan market is expected to be in consolidation.

Gungho reported on December 15, 2015 period sales of 154.3 billion yen ($1.3 Billion USD) which is a year to year decrease of 10.8%, with operating income of 434 Billion Yen ($3.7 Billion USD) which is down 30% from the previous year.

Due to the success of Puzzles & Dragons Gunghos revenue grew 18 fold, where at one point Gungho’s market capitalization exceed the gaming giant Nintendo but now with its growth slowdown, the Japan market looks at the Gungho’s downtrend as a depiction of the entire smartphone gaming market.

Cyber – Z a subsidiary of the Cyber Agent family reported that although the Japan Smartphone market will probably expand for 2016, it also apparent that too many competitors have entered this space to create a market where without a major hit title its complicated for Gungho to experience revenue growth. It seems that they have started focusing on global growth strategy and other titles, in attempts to capture new markets.

Also to be noted was in August 2, 2015, Taizo Son Chairman has decided to step down as a Board member for Gungho, due to personal reasons which was an initial shock to the company but also probably lays down the narrative of the consolidation mode he sees in the mobile gaming market.

2016 will probably be the year of the ad networks and publishers and what plays out will be interesting as the mobile gaming market is going to shift in a huge way and the successful dev companies that can pivot effectively can possibly find new revenue streams.

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