Stagnating Japanese sales force new strategies

Three titans of the Japanese gaming industry are testing new strategies following weak financial report releases.

Three titans of the Japanese gaming industry, Square Enix, Konami and Sega, are grappling with the shifting global market and stagnating Japanese gaming market, which has seen a decline in recent months.

Owing partially to a cratering yen and rising inflation worldwide, the Japanese gaming market has slowed down significantly for several game companies. As Axios reports, in various investor reports released over the past few weeks, all three companies acknowledge that development costs have skyrocketed in recent years.

Square Enix is considering reaching out to external investors to fund future projects, which could lead to non-traditional investment firms having a partial say in how flagship franchises, such as Final Fantasy, are created.

The old modus operandi of Square Enix, that of owning the studios that develop its games, has “begun to produce side effects of a scale that we cannot ignore,” according to Yosuke Matsuda, company president of Square Enix. This is partially why Square Enix sold off most of its Western studios to Embracer group earlier in the year.

Final Fantasy The First Soldier was a mobile title that released last year, and is already slated to shut down due to underperforming. Picture: Square Enix

Konami had previously exited the game development sphere to focus on Japanese revenue streams, such as pachinko (gambling machines) and sports training facilities. However, they have returned, with recent re-releases of Castlevania and new entries in Silent Hill slated for next year.

Sega, on the other hand, is banking big with a “super game.” Promised to launch by the end of March 2026, this game aims to be “a game so revolutionary that it attracts far more active users than any of the group’s games to date,” according to Haruki Satomi, president of Sega. The company projects the estimated lifetime sales of the game to be around $1 billion AUD.

For many Japanese companies, mobile gaming had been a golden goose in terms of revenue — however, recent competition from Chinese developers has stemmed the flow of cash, forcing Japanese companies to adjust.

One company that hasn’t made any plans to adjust, however, is Capcom. With recent releases and a stream of new releases on the horizon, including entries for popular franchises like Monster Hunter and Resident Evil, the company has, so far, weathered the proverbial storm.

Written by Junior Miyai on behalf of GLHF.