How to grow your video game in Japan: 2021 edition

How to grow your video game in Japan: 2021 edition

July 27, 2021
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In today’s fiercely competitive video game landscape, game developers and studios that understand the nuances of each market have the strongest opportunity to grow globally. That’s why we’re dedicated to helping you more effectively grow your game in Japan, one of the world’s biggest and most desirable video game markets.

With information and analysis from Xsolla’s in-house global gaming experts, we’ll help you understand:

  • Why Japan is essential to your global growth strategy 
  • Which payment methods give you the strongest opportunity
  • Japanese regulations that can impact your business
  • Limitations placed on game content
  • Next steps

Why Japan is essential to your global growth strategy

You don’t have to dig deep into video game history to see that Japan has had a huge influence on the industry. Through big names like Sega, Nintendo, and PlayStation, Japan shaped the market and helped bring “home video games” mainstream. Today, video games are still a big part of Japanese culture.

Japan by the numbers

Gaming habits during the COVID-19 pandemic

While many sectors suffered significant losses during the COVID-19 pandemic, some experienced unprecedented spikes in revenue propelled by digital sales — and among the most notable of them is gaming. On the whole, 75% of Japanese gamers played more games during the pandemic than in March 2020.

For a deeper dive into how the COVID-19 pandemic affected the Japanese video game market, pick up our free ebook.

You may not realize that credit cards and PayPal only reach around two-thirds of the potential Japanese audience. In a country of over 75 million gamers, that’s meaningful — but to access as many gamers as possible, it’s important to also support local payment methods that Japanese gamers already trust and use as part of their everyday habits.

Cash-based payments

As much as 20% of the Japanese ecommerce market uses Konbini, a cash-based payment system that allows shoppers to make purchases that they pay for later at ATMs or convenience stores (also called konbini [コンビニ]). Konbini is available at over 50,000 locations, including major convenience store chains like 7-Eleven, Lawson, Ministop, and Family Mart, Sunkus, Circle K, and Daily YamazakiMart.

Konbini has approximately 20 million users — amounting to a 20% market share — and boasts a 0% fraud rate. As compared to other Japanese cash-based payment methods, it has a markedly lower rate for its transaction fees. And convenience stores are also deeply integrated into everyday Japanese life, as the proximity and long hours complement many citizens’ busy and often unpredictable schedules.

Webmoney

Webmoney is an online payment method, similar to a debit card or prepaid card, that’s distributed physically and digitally in Japan. Based on an analysis of transaction data, Webmoney has the highest conversion rate of all Japanese payment methods.

Even more importantly — Webmoney delivers twice as many transactions as credit cards for some games. That means you have the potential to dramatically increase your revenue simply by enabling it.

Direct mobile carrier payments

In direct carrier billing, mobile accounts are used as digital wallets, where purchases are charged directly to a user’s mobile carrier account and confirmed by the user via their smartphone. It’s such a convenient system that it’s globally popular despite fees that can run as high as 60% — but the fees are much lower in Japan.

Japanese mobile carriers set limits on spending based on various criteria like age and credit history. The limit is 100,000 JPY for the top three major carriers — Docomo, KDDI, and Softbank, with 40%, 35%, and 25% market share, respectively.

The carriers’ high conversion rate, combined with safe and reliable transactions — carriers perform their own Know Your Customer (KYC) checks on users — makes this a no-brainer payment method for game developers.

Japanese regulations that can impact your business

Much like local payment methods, it’s important to be aware of key laws in Japan that regulate taxes, external communications, and how your game and its store are set up — specifically:

  • The Payment Services Act, which requires that any unused virtual currency balance that equals or exceeds 10 million JPY must be reported to the tax authorities or expire within six months
  • Japan’s Consumption Tax, a 10% tax on companies doing business in Japan without a physical presence, including online video games
  • Specified Commercial Transactions Law (SCTL), a law designed to protect Japanese consumers from unfair commercial transactions such as unsolicited commercial emails
  • Know Your Customer (KYC), which requires that games, websites, and services are publicly available in Japanese and that transactions are available in the local currency

For a full account of how to navigate these regulations, pick up our free ebook.

Limitations placed on game content

Another major consideration for your game is Japan’s regulations centered around content. Japan is strict about the level of violence that can be included in online video games, and local payment service providers may refuse to work with games they deem too violent.

To make things more complicated, the parameters that determine what is considered acceptable varies across local payment service providers. For example, Twitch was rejected by KDDI, while accepted by Docomo and Softbank. It may be difficult to plan with this kind of ambiguity, but it’s important to understand the limitations.

Next steps

There are complexities to building a global audience, but the Japanese video game market has a lot to offer for developers and publishers willing to learn about and abide by its intricacies.

It also helps to have a guide — and as your trusted partner, Xsolla can deliver everything you need to level the playing field and improve your odds of success in Japan, including:

  • Access to local alternative payment methods, so you can reach more gamers throughout the region no matter how they choose to pay
  • The games industry’s #1 fraud protection
  • 100% PCI DSS compliance on every transaction
  • Handling of all licensing, publishing, and local requirements
  • Knowledge of and adherence to local sales taxes, laws, and regulations
  • Market and legal expertise, with constant analysis and reevaluation
  • Payouts in one convenient financial stream
  • Hands-off financial institution liability and risk transfer

We also enable localized in-game store and website interfaces in over 20 languages — including Japanese — and provide a page that games can link to (https://xsolla.com/sctl) to meet the SCTL customer support requirement.

If you’re not an Xsolla partner, contact us at business@xsolla.com to learn about how we can help you successfully access the Japanese video game market and build an audience.

If you’re currently an Xsolla partner, contact your account manager and set up a time to discuss how we can help you turn Japan into a cornerstone of your global growth strategy.

In today’s fiercely competitive video game landscape, game developers and studios that understand the nuances of each market have the strongest opportunity to grow globally. That’s why we’re dedicated to helping you more effectively grow your game in Japan, one of the world’s biggest and most desirable video game markets.

With information and analysis from Xsolla’s in-house global gaming experts, we’ll help you understand:

  • Why Japan is essential to your global growth strategy 
  • Which payment methods give you the strongest opportunity
  • Japanese regulations that can impact your business
  • Limitations placed on game content
  • Next steps

Why Japan is essential to your global growth strategy

You don’t have to dig deep into video game history to see that Japan has had a huge influence on the industry. Through big names like Sega, Nintendo, and PlayStation, Japan shaped the market and helped bring “home video games” mainstream. Today, video games are still a big part of Japanese culture.

Japan by the numbers

Gaming habits during the COVID-19 pandemic

While many sectors suffered significant losses during the COVID-19 pandemic, some experienced unprecedented spikes in revenue propelled by digital sales — and among the most notable of them is gaming. On the whole, 75% of Japanese gamers played more games during the pandemic than in March 2020.

For a deeper dive into how the COVID-19 pandemic affected the Japanese video game market, pick up our free ebook.

You may not realize that credit cards and PayPal only reach around two-thirds of the potential Japanese audience. In a country of over 75 million gamers, that’s meaningful — but to access as many gamers as possible, it’s important to also support local payment methods that Japanese gamers already trust and use as part of their everyday habits.

Cash-based payments

As much as 20% of the Japanese ecommerce market uses Konbini, a cash-based payment system that allows shoppers to make purchases that they pay for later at ATMs or convenience stores (also called konbini [コンビニ]). Konbini is available at over 50,000 locations, including major convenience store chains like 7-Eleven, Lawson, Ministop, and Family Mart, Sunkus, Circle K, and Daily YamazakiMart.

Konbini has approximately 20 million users — amounting to a 20% market share — and boasts a 0% fraud rate. As compared to other Japanese cash-based payment methods, it has a markedly lower rate for its transaction fees. And convenience stores are also deeply integrated into everyday Japanese life, as the proximity and long hours complement many citizens’ busy and often unpredictable schedules.

Webmoney

Webmoney is an online payment method, similar to a debit card or prepaid card, that’s distributed physically and digitally in Japan. Based on an analysis of transaction data, Webmoney has the highest conversion rate of all Japanese payment methods.

Even more importantly — Webmoney delivers twice as many transactions as credit cards for some games. That means you have the potential to dramatically increase your revenue simply by enabling it.

Direct mobile carrier payments

In direct carrier billing, mobile accounts are used as digital wallets, where purchases are charged directly to a user’s mobile carrier account and confirmed by the user via their smartphone. It’s such a convenient system that it’s globally popular despite fees that can run as high as 60% — but the fees are much lower in Japan.

Japanese mobile carriers set limits on spending based on various criteria like age and credit history. The limit is 100,000 JPY for the top three major carriers — Docomo, KDDI, and Softbank, with 40%, 35%, and 25% market share, respectively.

The carriers’ high conversion rate, combined with safe and reliable transactions — carriers perform their own Know Your Customer (KYC) checks on users — makes this a no-brainer payment method for game developers.

Japanese regulations that can impact your business

Much like local payment methods, it’s important to be aware of key laws in Japan that regulate taxes, external communications, and how your game and its store are set up — specifically:

  • The Payment Services Act, which requires that any unused virtual currency balance that equals or exceeds 10 million JPY must be reported to the tax authorities or expire within six months
  • Japan’s Consumption Tax, a 10% tax on companies doing business in Japan without a physical presence, including online video games
  • Specified Commercial Transactions Law (SCTL), a law designed to protect Japanese consumers from unfair commercial transactions such as unsolicited commercial emails
  • Know Your Customer (KYC), which requires that games, websites, and services are publicly available in Japanese and that transactions are available in the local currency

For a full account of how to navigate these regulations, pick up our free ebook.

Limitations placed on game content

Another major consideration for your game is Japan’s regulations centered around content. Japan is strict about the level of violence that can be included in online video games, and local payment service providers may refuse to work with games they deem too violent.

To make things more complicated, the parameters that determine what is considered acceptable varies across local payment service providers. For example, Twitch was rejected by KDDI, while accepted by Docomo and Softbank. It may be difficult to plan with this kind of ambiguity, but it’s important to understand the limitations.

Next steps

There are complexities to building a global audience, but the Japanese video game market has a lot to offer for developers and publishers willing to learn about and abide by its intricacies.

It also helps to have a guide — and as your trusted partner, Xsolla can deliver everything you need to level the playing field and improve your odds of success in Japan, including:

  • Access to local alternative payment methods, so you can reach more gamers throughout the region no matter how they choose to pay
  • The games industry’s #1 fraud protection
  • 100% PCI DSS compliance on every transaction
  • Handling of all licensing, publishing, and local requirements
  • Knowledge of and adherence to local sales taxes, laws, and regulations
  • Market and legal expertise, with constant analysis and reevaluation
  • Payouts in one convenient financial stream
  • Hands-off financial institution liability and risk transfer

We also enable localized in-game store and website interfaces in over 20 languages — including Japanese — and provide a page that games can link to (https://xsolla.com/sctl) to meet the SCTL customer support requirement.

If you’re not an Xsolla partner, contact us at business@xsolla.com to learn about how we can help you successfully access the Japanese video game market and build an audience.

If you’re currently an Xsolla partner, contact your account manager and set up a time to discuss how we can help you turn Japan into a cornerstone of your global growth strategy.

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