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

Console gaming faces a steep decline in Japan. Can Sony's latest system rejuvenate this ailing market?

Mar 1, 2014 at 11:00AM

Screen Shot


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.

Screen Shot


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.



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.

You know cable's going away
But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Take-Two Interactive. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers