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Native Mobile Games Dominate, but Monetisation Proves Elusive

Mobile gaming is decidedly on the up, with a number of console games makers switching their focus to this medium. The challenge, though, according to attendees at the Tokyo Game Show, is making money through supposedly free games.

Photo: Fruitful exposure: PlayStation targets its core audience.
Fruitful exposure: PlayStation targets its core audience.
Photo: Fruitful exposure: PlayStation targets its core audience.
Fruitful exposure: PlayStation targets its core audience.

Native mobile apps are increasingly taking over from web-browser based gaming, according to video games professionals at the Tokyo Game Show. As mobile games' graphics improve, the more traditional console and PC-based games makers are looking to fight back by offering a truly immersive user experience, although a viable virtual reality offering has yet to hit the market.

One the downside for mobile games producers, while such apps are becoming ever more popular, users still expect them for free. This has forced many games makers to look for more creative ways to turn a profit.

In terms of the event itself, there is still something of a question mark hanging over the Tokyo Game Show. Is it actually – as it claims to be – the Asian Hub event for the global games market? Or, more realistically, is it primarily just focussed on Japan? More fundamentally, with a number of major companies absent – Japan's Nintendo as always, as well as, this year, Microsoft – is the show actually still relevant, when there are so many other ways for companies in this sector to network and promote products?

One of the most noticeable changes between this year's event and the last, was the reduced size of the GREE pavilion. The Tokyo-based mobile gaming developer, with its traditional focus on browser games, had clearly opted for a much lower profile.

As well as its more low key approach, the company had also undergone something of a shift in focus. Explaining this new direction, Shunji Takayama, the company's Marketing Director, said: "As you may know, GREE worked with browser games and that was our of brand image. This year, however, we are focussing more specifically on our new native app games. Browser games were our forte until last year, but we are now shifting our people into native games."

GREE's decisive move into native apps is confirmation that browser-based gaming is now struggling to compete with the quality and speed, as well as the swipe and tilt features, offered by many native apps. As a result, its sharp decline is only expected to continue.

As with GREE, Cygames, a Tokyo-based game developer, started out producing browser games, but has now successfully migrated to the world of native apps. Thus has seen the company enjoy international success, most notably with Rage of Bahamut, a card battle game, originally accessed via a browser, but now a smart phone app. In 2012, the game topped both the iOS and Android charts in the US.

The company had an impressive presence at the show, including featuring a full-scale sailing ship on its stand. This formed part of the launch promotions for the English version of Granblue Fantasy, a role-playing video game sequel to Rage of Bahamut scheduled for release in March 2016.

According to Lesley Kyan, an Engineer and Data Analyst for Cygames, the company's strategy was to only launch into the international market once a game had proved successful in Japan. Kyan was also keen to emphasise the importance of the smartphone platform and the greater possibilities that native apps opened up. He said: "Up until recently, in the Japanese phone market, games were played through a phone's browser, so you'd go to a site and play through there.

"With our games on smart phones, though, we've been able to develop them to a level and a quality that goes well beyond what smartphones should be able to do."

Earlier this year, Cygames signed a major deal with DeNA, the Tokyo-headquartered owner of Mobage, the leading Japanese games portal and social network, which has around 30 million users. The size and impressive nature of Cygames' pavilion – as well as the fact that it was right next to the Sony pavilion – was a clear sign of its ambition, while also underlining the rivalry between phone and console/PC platforms.

The high quality of games now available on smart phones has also made it easier to launch games on different platforms. Highlighting this, Kyan said: "Most of our games are specifically for mobile phones, but our new division is also developing high quality games for the PS4 as well. This game was the first one we released through Google Chrome, so you can play it on your PC as well."

Photo: Cygames’ GranBlue promotion.
Cygames' GranBlue promotion.
Photo: Cygames’ GranBlue promotion.
Cygames' GranBlue promotion.
Photo: PlayStation VR: Now a reality.
PlayStation VR: Now a reality.
Photo: PlayStation VR: Now a reality.
PlayStation VR: Now a reality.

With the game quality gap between phones and consoles narrowing greatly, many were clearly wondering just what the future might hold. Will there be greater convergence or will consoles just up their game?

The key to this question, perhaps, lies in the development of virtual reality (VR). Sony has long been working towards creating its own VR system but, as yet, but it has not announced when it will launch a product. There were, however, clear signs that the company was gearing up for something big in the not too distant future. Formerly known as Project Morpheus, Sony's VR project has now been re-titled PlayStation VR, placing it clearly under the branding of the company's flagship product. To this end Sony has announced that, when the PlayStation VR is released, it will be priced as a new console.

Elsewhere, other console and PC games were trying to keep ahead of the smartphone by improving visual quality, scenarios, characterisation, and greatly expanding the size of their open-world game space. According to a representative of Tokyo-based Konami, its Metal Gear Vacation adventure game, launched at the show, has an open space 200 times more extensive than previously, allowing players to roam and keep playing endlessly beyond the missions.

One way in which console games still clearly score over phone games, however, is when it comes to monetisation. The better-known console games are well-established as brands, with fans happy to make add-on software purchases. Phone gaming, by contrast, has been obliged to adopt a variety of oblique and tangential monetisation strategies.

According to Kyan, Cygames strategy is to sell extras that enhance the gameplay experience, but that are not essential to winning them. He said: "All our games are free, but all feature a micro-transaction component in them. So, with GranBlue, for instance, you have your character and you can go along and collect other party members, as well as weapons and creatures that you can call on to aid your battles."

The micro-transaction system in the game is based on the popular Japanese gachapon vending machines, which dispense toys in plastic capsules. Explaining the system, Kyan said: "You pay us to get ten spins on the gacha to potentially get more powerful items and equipment. One thing we do make sure of, though, is that is not pay-to-win. Our philosophy is that if people enjoy our games, they will want to support us. We don't force them pay us money. It's completely customer focussed. We want people to enjoy our games, even if they're not paying us."

Over at GREE, Takayama said that monetisation was generally an afterthought, with the emphasis firmly on creating games that catch on. He said: "Most of our games are free-to-play. Monetisation models vary from game to game. We want to focus on great games first of all, and then create monetisation systems that fit well with them."

Traditionally, gaming has had something of a loner image, but there are now signs of a growing synergy with several kinds of social media opportunities emerging. Taking a lead in this was CyberZ, a Tokyo-headquartered advertising agency specialising in smartphone marketing. The show saw the company introducing OpenRec, a system that allows users to record themselves playing games on smart phones. They can edit the footage adding commentaries and music, before sharing them online.

YouTube is also keenly aware of the possibilities presented by the social aspects of gaming. As part of his keynote speech, Ryan Watt, the company's Head of Global Gaming Content, said that You Tube's gaming content was growing much faster than a number of its other sectors, such as music. This had inspired the company to launch a new online gaming portal and a live streaming service compatible with the PS4. According to some within the industry, this may be to compete with both Amazon's acquisition of Twitch.tv (a leading video platform and a community for gamers) and DeNA's Japanese-language Mobage service.

Photo: Tokyo Game Show: Asian Hub or Japan solo show?
Tokyo Game Show: Asian Hub or Japan solo show?
Photo: Tokyo Game Show: Asian Hub or Japan solo show?
Tokyo Game Show: Asian Hub or Japan solo show?

TGS 2015 was held from 17-20 September at Makuhari Messe. After a drop in attendance from 270,197 in 2013 to 251,832 last year, visitor figures were more robust this year at 268,446.

Marius Gombrich, Special Correspondent, Tokyo

Content provided by Picture: HKTDC Research
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