DKN Research Newsletter from Japan & Asia - Social Network Games - No More Socializing

There is a popular social network game that many of us may not know exists.  Annual revenues from this market have grown from a few million dollars to over three billion dollars in just five years.  It is a now a main topic of discussion in Japanese business circles because of its phenomenal growth rate.  There are very few segments within the Japanese electronics industry that are flourishing; in fact, many companies are barely hanging on as they try to weather the economic slowdown.  Conversely, revenue predictions for this social network games are expected to be well over ten billion dollars in the next few years.

Most gamers refer to any type of online game that is played through social networks 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 social network 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.  There are currently over 50 companies that provide game services through the internet in Japan. 

It is free to participate in these games; 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.  Smart phones 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 add up to a very expensive past time once the player has logged on many hours.  A song from iTunes costs only $1.29, but once you have purchased 2000 songs over a period of time, it adds up to $2580.00.  One newspaper reported a middle school student racked up over ten thousand dollars in few weeks using their 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 on line 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 our younger generation?
 
Dominique K. Numakura