Estimated reading time: 4 minutes

EPTE Newsletter from Japan: Social Network Games Flourish

Annual revenues from games found on social networks have grown from a few million dollars to over $3 billion in just five years. It is a now a main topic of discussion in Japanese business circles because of its phenomenal growth rate. Very few segments in the Japanese electronics industry are flourishing; in fact, many companies are barely hanging on as they try to weather the economic slowdown. Conversely, revenue predictions for social network games are expected to be well over $10 billion in the next few years.

Most gamers refer to any type of online game that is played through a social network as a social network game. (Lil) Green Patch, Happy Farm, Farm Town, YoVille, and Mob Wars were some of the first successful games of this genre. FrontierVille, CityVille, Gardens of Time, and The Sims Social are more recent examples of very popular games. These online games feature multiplayer action and asynchronous game play mechanics. They are most often implemented as browser games, but can also be implemented on other platforms such as mobile devices. Over 50 companies currently provide game services through the Internet in Japan. 

Participation is free; however, players are highly encouraged to purchase powerful items to compete against other players. The games are very exciting for young people and most have a hard time ending a game. It is a double-edged sword that these games can be played on any mobile device. This means our younger generation can play anywhere, anytime…while they are eating, walking, or trying do to homework. Smartphones have definitely accelerated the growth for social network games. This may be a contributing factor for the success of the iPhone 5, which boasts of quicker speeds and improved displays.

Social networking does have its drawbacks. It is very addicting and once a game is started, a player has difficulty in exiting the game. A youngster may intend to play a quick game; however, a game can turn into hours of sitting and staring at a screen--the only part of their body receiving a workout is their fingers and thumbs. School and work are no longer a priority. Another drawback to the addicted player is the amount of money spent on the games and accessories. Each item by itself is not expensive, but the total of all items adds up to a very expensive hobby once the player has logged on for many hours. A song from iTunes costs only $1.29, but once you have purchased 2,000 songs over a period of time, it adds up to $2,580. A newspaper  recently reported that a middle school student racked up over $10,000 in few weeks using a parent’s credit card. One college professor, who is an expert in the IT field, is making a case for government regulations. His argument is that these social network games are addictive to our young people and providers continue to exploit their desires to play online games.

Many Japanese game providers are planning to launch more social network games to overseas markets that include the U.S., Europe, and China. These social network games will generate more business for the electronics industry, but at what cost to the younger generation?

Dominique K. NumakuraDKN Research, www.dknresearch.com

*To see the back numbers of the newsletter, click here.

Headlines of the Week1. DIC Global (Major supplier of specialty chemicals in Japan) 9/5The supplier has developed a new heat resistant hardner, “EXB-9000 SERIES,” for epoxy resins. The product features phosphorous instead of halogen molecules. 2. Mitsubishi Materials (Major chemical company in Japan) 9/10The company has received R&D funding from the government for the recycling technology of rare earth elements from used motors.3. Chipbond (Major semiconductor assembling firm in Taiwan) 9/13The firm's manufacturing capacity will be tight beginning in September, as it has received a large order for LCD driver ICs from Renesas in Japan.4. TPK (Major supplier of touch screen in Taiwan) 9/13The supplier has begun delivery of 7” panels for Amazon’s Kindle Fire HD. It plans to ship 400,000 to 500,000 units in October.5. Hitachi Chemical (Major supplier of electronic materials in Japan) 9/13The supplier has agreed to an R&D alliance with IME in Singapore for ultra thin wafer processing technologies used in 2.5/3D packaging.6. Rohm (Major device manufacturer in Japan) 9/18The manufacturer has co-developed a tiny fuel cell battery for smart phones with Kyoto University using calcium hydride. It has a capacity of 5Wh.7. Panasonic (Major electronics company in Japan) 9/20The company has developed a new image sensor, “Smart FSI,” with 13 million pixels. The size of one pixel is 1.25 micron square. Volume production will begin in December.8. Hitachi (Major electric and electronics company in Japan) 9/24The company has co-developed a new data storage technology on quartz substrates with Kyoto University. The technology features a higher memory density than traditional CD.9. Sharp (Major electronics company in Japan) 9/25The company has developed a new transparent photovoltaic cell module, “NA-B095AA,” which eliminates metal frames for window use.10. Kyocera (Major electronics company in Japan) 9/25The company has commercialized a new FFC connector series, “6823,” with 0.4 mm pitch and 0.62 mm height for high density flexible circuit terminations.11. Yamaichi Electronics (Packaging device manufacturer in Japan) 10/1The manufacturer has terminated its solar energy business due to slow deman.Job cuts are expected.

Recent Articles from DKN Research

To view the complete list of DKN Research articles, click here.