Report

PSA Gaming: eSports in Japan and its Potential Globally

Gaming: eSports in Japan
Nikkei eSports Article Underscores How Far Japan Has Slipped in eSports, but Also Highlights the Potential
Tags: Capcom (9697 JP), Bandai Namco (7832 JP), Square Enix (9684 JP), Alibaba (BABA US), Tencent (700 HK), Konami (9766 JP), Koei Tecmo (3635 JP), Nintendo (7974 JP), Sony (6758 JP), Microsoft (MSFT US), Nexon (3659 JP)
Just how big is the global eSports market?
PwC is quoted by the Nikkei in a lengthy article today as estimating that the global eSports market was worth US$326mil in 2016. While we think it was quite a bit higher (US$450mil), and NewZoo Research puts the figure even higher at US$490mil, what is apparent is that eSports is growing fast, and that Japan is a long way behind.
As the numbers in the article demonstrate, Japan is a long way behind.
1. Japan’s eSports market is put at US$6mil in 2016 by PwC – so just 2% of total.
2. Home-grown games are relatively unpopular: Japan’s top game, Street Fighter, is the 9th most watched game on Twitch with 10mil hours in 2017, which compares with League of Legends’ 270mil.
Underlyings
Alibaba Group Holding Ltd. Sponsored ADR

BANDAI NAMCO Holdings Inc.

Bandai Namco Holdings is a holding company engaged in the planning and execution of medium- and long-term business strategies for the Group. Co. operates in three business segments: toy and hobby, network entertainment, and visual and music production. Co.'s principal products include toys, candy toys, products for vending machines, cards, plastic model kits, apparel, sundries, stationery, home-use video game software, commercial-use video game machines, and prizes for amusement arcade machines, video products, video software and on-demand video distribution. Co. is also involved in the operation of amusement facilities, as well as the transportation and the real estate management services.

Capcom Co. Ltd.

Capcom is engaged in the development, manufacture and sales of video games, online games, mobile games and arcade games, as well as the operation of amusement arcades. Co.'s business segments are digital contents, amusement facility and amusement equipment. Co. is engaged in the planning, development, manufacture and sales of home video games, online games and mobile games including "Rockman," "Monster Hunter World" and "Dragons Dogma"; the operation of "Plaza Capcom" amusement facilities in Japan; and the development, production and distribution of arcade games for amusement facilities. Co. is also engaged in the licensing business of game characters and the real estate leasing business.

Koei Tecmo Holdings Co. Ltd.

Koei Tecmo Holdings is a holding company. Co., through its subsidiaries, operates in five business segments: entertainment, service provider, amusement facility operation, real estate, and others. Co. is engaged in the development and sale of game software for personal computers and home video game systems and software for online games and mobile phones; books, compact discs, digital versatile discs and goods; as well as liquid crystal display for pinball games and slot games. Co. is also involved in the collection of related royalty, the operation of amusement facilities, the real estate business and the venture capital business.

KONAMI HOLDINGS CORP

Konami Holdings is engaged in the development, publishing, marketing and distribution of video game software products globally for stationary consoles such as Sony PlayStation 2, PlayStation 3, Nintendo Wii, and Microsoft Xbox 360, and for portable consoles such as Sony PlayStation Portable, PlayStation Vita, Nintendo DS and Nintendo 3DS, as well as for use on personal computers. In addition, Co. plans, produces, operates and distributes entertainment content for mobile phone online games. Co. classifies its businesses into four segments: Digital Entertainment, Health & Fitness, Gaming & System, and Amusement.

Microsoft Corporation

Microsoft is a technology company. The company develops and supports software, services, devices, and solutions. The company provides an array of services, including cloud-based solutions as well as solution support and consulting services. The company also delivers relevant online advertising. The company's products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; and video games. The company also designs, manufactures, and sells devices, including personal computers, tablets, gaming and entertainment consoles, other devices, and related accessories.

NEXON Co. Ltd.

Nexon is engaged in the production, development and delivering on-line games. Along with its subsidiaries and affiliates, Co. provides PC online-games and mobile games in Japan, Korea, China, North America and Europe as well as Asian countries. Co.'s principal existing game titles include "MapleStory," "Sudden Attack," "Dungeon & Fighter," "Counter-Strike Online," and "EA SPORTS™ FIFA Online 3." Co. also offers services such as consulting related to PC online-game distribution, in-game advertising, and merchandising incidental to PC online business. As of Dec 31 2017, Co. has 26 consolidated subsidiaries and 14 affiliates.

Nintendo Co. Ltd.

Nintendo is mainly engaged in the development, manufacture, and sale of home-use game hardware/software and peripheral equipment as well as software under the name of "Nintendo DS," "Nintendo 3DS," "Game Boy," "Nintendo 64,"" Game Boy Advance," "Wii," "Nintendo GameCube," "Game Boy Color" and "e-Reader (trading card games)." Co.'s principal software trademarks include "Pokemon," "Super Mario Bros.," "The Legend of Zelda," "STARFOX64" and others. Co. also provides online games and repair services. In addition, Co. is involved in the manufacture and sale of Japanese playing cards called "Karuta," playing cards and board games, as well as the management of intellectual property rights.

Square Enix Holdings Co. Ltd.

Square Enix Holdings is a holding company that is mainly engaged in the entertainment industry. Co., through its subsidiaries, operates in four business segments. The Digital Entertainment business is engaged in the design, development, sale, licensed sale and operation of digital entertainment contents focusing on computer games. The Amusement segment is engaged in the operation of amusement facilities, the design, development, manufacture, sale and rental of amusement equipment. The Publishing segment is involved in the publication of comic magazines, books and game related books. The Rights Property segment is involved design, production, sale and grant of secondary works.

Provider
Pelham Smithers Associates Ltd
Pelham Smithers Associates Ltd

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries. 

The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012. 

Analysts
Pelham Smithers

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