Can Sony's PlayStation 4 Save the Japanese Gaming Industry?

Source: PlayStation.com

The PlayStation 4 has debuted to an explosive start in North America and Europe. Sony's (NYSE: SNE  ) latest home console had reached 5.3 million units sold as of February 8 and it looks like all of the units allocated for the device's February 22 Japanese launch have already been spoken for. Selling out at launch does not mean that the platform will ultimately be a success in Sony's home territory, however. The collapse of mid-tier console games and the rise of mobile have effected Japan more than any other territory. Dedicated gaming hardware faces danger in the land of the rising sun.

The year of 2013 saw sales of the PlayStation 3 contract and the Wii U fail to find an audience. To make matters worse, the Japanese dedicated-handheld market is also in decline. Much of this has to do with the lackluster performance of Sony's PS Vita, but sales of the Nintendo  (NASDAQOTH: NTDOY  )  3DS were also down on the year. Can the PS4 deliver some much-needed fire to the Japanese gaming industry?

Capcom knows the score
If you need proof that Japan's traditional gaming industry is in trouble, just take a look at Capcom (NASDAQOTH: CCOEF  ) . If that name isn't familiar to you, this is the company behind series like "Street Fighter," "Mega Man," and "Resident Evil." Capcom's Monster Hunter 4 for the Nintendo 3DS was Japan's best-selling game in 2013. What will the company do with the substantial returns from this record-breaking handheld title? Open a new studio for mobile development, of course.

Source: e-capcom.com

Winner by default
While the future of the dedicated handheld market looks grim, consoles have been faring even worse in Japan. Sales of last-gen hardware have mostly petered out. The Wii U is a flop, and Microsoft's Xbox One stands very little chance of improving on the Xbox 360's meager presence in the territory. That leaves only the PlayStation 4 with a chance of making a significant splash and saving Japan's console market.

Getting a late start
Unfortunately for Sony, the response from Japanese developers to the PlayStation 4 has been tepid. Sony Computer Entertainment Japan and Asia President Hiroshi Kawano recently stated that the success of the PS4 in the West is causing Japanese developers to want to release games on the device. His otherwise optimistic comments highlight a problem that will substantially limit the system's success in Japan. There's just not much in the way of Japanese software in development for Sony's console.

Game development is a lengthy process, with most sizable releases taking at least two years to complete. If Japanese developers are just now considering the PlayStation 4 as a viable platform, it's going to be a long time before any recently started projects come to fruition. A lack of steady content that appeals to the territory will limit a console's momentum, as the Wii U has recently proved. Ports may be quick and easy, but they don't give most consumers a reason to rush out and purchase new hardware.

A stolen spotlight
To give you an idea of just how much the console gaming picture has changed in Japan, Grand Theft Auto 5 from Take-Two was the best-selling console game in 2013. This shows both the impressive crossover appeal of that series and the fact that Japanese developers have abandoned the console space. The PlayStation 4 will need to see impressive exclusive content if console gaming is to be revived in Japan.

Now and later
PlayStation 4 is launching later in Japan for two main reasons: First, Sony would have been unable to meet demand across three regions and second, there was a lack of shippable software that appealed to Japanese audiences. Sega has readied a PS4 version of the latest game in the popular "Yakuza" series and Capcom has rebooted "Strider". Other than these two titles, the launch lacks major games that have a Japanese bent.

Sony's PlayStation 4 will sell every unit manufactured for its launch window, but the right content will be needed to maintain healthy demand. Better-looking versions of games already available on the PlayStation 3 will be enough to court a portion of the hardcore-gaming crowd. As for the more mainstream audience, Sony has yet to reveal software that shows that the device is a must-have. The appeal of next-gen could be made more apparent with the release of Capcom's free to play adventure Deep Down, but, for now, most Japanese gamers will be playing the waiting game.

Source: officialplaystationmagazine.co/uk

The makings of a small victory
Sony's console competitors don't look like they're going to mount serious challenges in Japan. It's a foregone conclusion that the PS4 will be the region's best-selling new hardware, but that's not how Sony will measure its success. The PlayStation 4 has fixed many of the problems inherent to its predecessor, but a questionable lineup and lack of support from Japanese developers are obstacles to surpassing the last gen's sales and keeping the console market healthy.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 02, 2014, at 2:06 PM, bendriver wrote:

    The PS Vita has lack luster games for it. Most of the games you can get on the PS network store for the Vita are ports and remasters from the first playstation, ps2, and psp. There are a few good games that were designed for the Vita but have poor replay value or a lack of end game content. Pokemon for the DS atleast has a ton of replayability and plenty of things to do after you are done with the main story line. Same with zelda games...with having replayability. Also there a lack of sales and over priced games for the Vita on the playstation network store. There are games on PSN that were released on the same day the Vita was released and they are still asking for the same retail price they were years ago....

    As far as the hardware is concerned, the vita memory cards are still way too expensive. The 32 gig vita memory costs a little less than half of the system it self does. (32 gig memory is at $80)

  • Report this Comment On March 02, 2014, at 3:21 PM, AudieMurphy wrote:

    An irony for Sony is that by building it from a PC base makes it easier, quicker and cheaper to develop for by experienced PC guys, but again that's going to help US based developers that focus more on the platform.

  • Report this Comment On March 02, 2014, at 7:16 PM, JJ82 wrote:

    Not sure what the point of this article is, there is no actual information about the gaming industry in Japan other than newer SYSTEMS are not selling well. That is a sign of poor systems being made, not a sign of an industry in decline.

    The gaming industry itself is still booming there. And the reason the sales of the 3Ds is down is due to the massive quantities of it already in peoples hands. its one of the reasons why Monster Hunter 4 was one of the best selling games in history for a one year period this past year.

    The Japanese gaming industry does not need saving.

  • Report this Comment On March 02, 2014, at 7:27 PM, Toransu30 wrote:

    Maybe if they had somebody with insight write these articles they would also bring up the point that here in Japan we had a major earthquake and nuclear problem with over 20k killed and everybody worried about the economy. Considering those things I'd say sales are doing well.

  • Report this Comment On March 03, 2014, at 4:11 AM, doomrider7 wrote:

    "What will the company do with the substantial returns from this record-breaking handheld title? Open a new studio for mobile development, of course."

    Really? I mean REALLY? The very fact that Capcom was even CONSIDERING this has made them the ridiculed and hated stepchild in pretty much every gaming site and is seen as another in a long line of recent failures and stupid moves the company has done. The mobile market is where gaming goes to die. It's a market known for MASSIVE mediocrity with very few actual worthwhile games and such complete garbage notions like microtransactions. That this is somehow seen as good is just horrifically out of touch with what the gaming public wants and what will make things successful in the gaming sphere.

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