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Is still Japan the king of video games?

Mexican businessman Carlos Slim has recently been ranked by Forbes magazine as the richest person in the world. In Japan the richest person is Hiroshi Yamauchi, the ex-president of Nintendo, who transformed a small company dedicated to the hanafuda (traditional Japanese card game) card-making business into the biggest video game empire in the world.

At the end of the 80’s and during the 90’s Japanese companies like Sega, Nintendo, Capcom or Sony conquered the planet with their video games reaching a market share of more than 50% of the global market. Japan was the factory of dreams of millions of children around the world. According to a poll carried out in 1995 among children of more than 100 countries, Mario was the most recognized fiction character in the world, even more than Mickey Mouse.

Nowadays Japan is still a video game giant but has lost a lot of the strength that once had. Japanese video game companies have gone from controlling 50% of the global market to just controlling the 20%. The two main causes of this change are the arrival of powerful mobile devices developed by American and European companies, like for example the iPhone, able to run video games of similar or even better quality than that of games developed exclusively for portable gaming machines like the PSP or the Nintendo DSi; and on the other hand the success of Microsoft Xbox and its successor, the Xbox 360, becoming the first two successful video game consoles developed outside of Japan.

The Japanese home market is really important for the video game industry. In terms of sales Japan is usually considered as a “continent” along with United States and Europe. In 1993 the consumption of video games in Japan was so high that with a third of the population of United States more games were sold in Japan than in United States. In 2010 Japan is still a big consumer, mostly of turn-based RPGs like Dragon Quest or Final Fantasy, but in United States eight times more video games are sold, what supposes a radical change from the outlook of a decade ago. Satoru Iwata, the current president of Nintendo, announced in a press conference that the lifestyle of Japanese people is more and more “occupied” and that the people has less and less time to play. Satoru Iwata said that Nintendo is taking measures to create entertainment that can adapt to these new needs of the market but at the same time innovate in new ways like they did with the Wii. In the digital world where borders between television, computer, music player and cellphone are more and more diffuse, it is more and more easy and cheap to compete globally with software products, the rules are changing and Japanese software and hardware developers are having a hard time keeping their status as kings of the video games.

During the year 2009 the video game industry was not only in crisis in Japan, but all over the world. What will happen in 2010? Will the big Japanese companies regain market share with the arrival of the eight generation of video game consoles or they will keep on loosing market against the Android and the iPhone?

Article originally published in the Spanish newspaper El País.

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