There is a long, long list of mobile game companies from the “West” (mainly North America and Europe) that tried but failed entering the Japanese market via a local subsidiary over the last 10-15 years.
The list of companies that left include powerhouses such as King, Rovio, Zynga (the most unfortunate case of them all), Playtika or Playfish/EA.
Again, I specifically mean a full-blown market entry here, with a Japanese office, locally hired staff etc.
Chinese and Korean Game Companies Have A “Secret” Advantage In Japan
What these Western studios have in common is a structural disadvantage when compared to counterparts from China and Korea, two countries boasting a significantly higher number of successes on mobile in Japan.
That disadvantage is that they cannot tap into the large populations of Chinese or Korean people in Japan and the many, many Japanese nationals of Chinese or Korean heritage – at least not that easily.
In 2017, it was estimated that over 970,000 ethnic Chinese were registered in Japan.
In 2019, year they were around 825,000 ethnic Koreans registered in Japan (total population of 125 million).
By comparison, there were only 55,000 Americans registered in Japan as of 2020, while the UK was the biggest country from Europe with around 17,000 people.
Recruitment Is Critical In Talent-Starved Japan
In other words, Chinese and Korean game companies have a much, much bigger pool of local candidates to recruit from in Japan: potential employees who are familiar with their business culture, language and other factors – and who are either living in Japan, been born and raised here or are even actual Japanese nationals.
Sure, Chinese and Korean studios also benefit from a cultural, geographical, and even linguistic proximity to Japan when compared to their Western competitors.
But I believe that these advantages are well known and common sense, whereas the “human factor” and the critical leverage in terms of recruitment of local talent is not: this leverage extends from college graduates in Japan with a Chinese or Korean background (naturally constituting the highest number of all among all foreign groups) all the way to the most senior roles.
Needless to say, the phenomenon not only applies to gaming but to all sorts of industries.
Within gaming, the Chinese or Korean game companies in question can leverage their advantage even without making a full-blown entry into Japan with a local office but also by i.e. hiring individuals to take care of user acquisition, community management or social media marketing remotely or freelance.
And looking back at my almost 15 years working in the Japanese gaming industry, the companies indeed make heavy use of this critical advantage in business reality.
The result is that Chinese and Korean game developers have been the most successful foreign players on mobile in Japan for years, now constantly occupying a significant part of the top grossing rankings in the country.
