Although the market size continues to expand due to the demand for staying at home during the COVID-19 pandemic, the large-scale budgets and schedules have made it a high-risk market for game companies.
The present and future of consumer games
Consumer games refer to game-specific hardware and software such as the Nintendo Switch and PlayStation. In the past, consumer games were synonymous with games, but in recent years they seem to be losing their presence due to the momentum of smartphone games and PC games.
However, the consumer game market has continued to expand in size over the past 10 years, and has become even more powerful since the COVID-19 pandemic. Although it is not as flashy as the rise of smartphone games and PC games, it is a market that continues to expand steadily.
The domestic market size in 2023 is estimated to be 403.9 billion yen, up 7.8% from the previous year. Of these, dedicated hardware sales increased 27.5% year-on-year to 267.5 billion yen, with Nintendo Switch selling 4.06 million units and PlayStation 5 selling 2.59 million units, more than double the previous year.
Looking at software, the top 10 domestic sales rankings were all Nintendo Switch. Among them, "The Legend of Zelda: Tears of the Kingdom" was a huge hit with 1.92 million units sold, and "Super Mario Bros. Wonder" (1.54 million units) and "Pikmin 4" (1.11 million units) were also hits.
On the other hand, since the beginning of 2024, there have been no big hits like last year. As of July, "Final Fantasy VII Rebirth" (PlayStation 5) was ranked first in sales with 340,000 units, followed by "Momotaro Dentetsu World" and "Paper Mario RPG" (both Nintendo Switch) as new titles. Sales of new titles have decreased compared to last year, but this is unavoidable due to the nature of consumer games.
This is because the scale of consumer game development is expanding year by year, and the budgets and schedules are becoming enormous.
In the past, many titles were developed in about one to two years, but in recent years it has become common for it to take more than three years, and it is not uncommon for large-scale developments called AAA titles to take seven or eight years. As a result, there are almost no companies that can consistently release major titles every year, and AAA titles are released every few years.
Also, as mentioned earlier, development costs are rising year by year, and the development cost of Grand Theft Auto V, which has sold more than 180 million copies worldwide, was about 25 billion yen. Even if the budget is not as large as this, it is common to invest development costs in the billions of yen range.
For this reason, consumer game development by game companies is often in a cycle of repeating "one ball, one soul" every few years. As a result, many new works in recent years are sequels to existing series, because it is easier to predict sales and reduces risk by releasing sequels or derivative works of popular IPs rather than creating completely new IPs.
Also, with medium-budget software development becoming increasingly rare, the consumer game software market has become polarized: there are big-budget AAA titles made by game companies, and indie games made by individual developers. One example of a hit indie game would be "Watermelon Game," a Nintendo Switch software that recorded 6 million downloads last year. The game gained popularity through live gameplay streaming and other means, and quickly became a huge hit.
