Video games in Japan

• 1. Introduction

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  Video games in Japan occupy a unique position in global culture: a country that began by importing American arcade machines and ended up shaping what the entire world plays. In 1978, a single game called Space Invaders caused such a frenzy across Japan that an urban legend blamed it for draining the nation's supply of 100-yen coins. By 1990, Nintendo had surpassed Toyota as Japan's most successful corporation. How did a nation of playing card makers and coin-operated arcade distributors become the most influential force in video gaming? The answer stretches from a submarine simulator in 1966 to the iPhone commuters of the present day, and touches on everything from robot-fighting children's games to turn-based moral alignment systems. The thread running through it all is a particular Japanese instinct: to take an imported idea, strip it down, and rebuild it into something deeper.

• 2. The Arcade Foundations

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  Sega introduced an electro-mechanical submarine simulator called Periscope in 1966, using lights and plastic waves to simulate sinking ships. It became an instant success across Japan, Europe, and North America, and in North America it was the first arcade game to charge a quarter per play, a price point that would define the industry for years. Sega followed with gun games using rear-image projection, including a 1969 light-gun game called Duck Hunt that printed the player's score on a ticket and offered volume-controllable sound.

  Taito and Namco were among the earliest Japanese companies to distribute American arcade games before developing their own. Their homegrown titles began introducing genuine innovations. Taito's Speed Race and Gun Fight, both released in 1975, performed well in Japan and in re-licensed versions in the United States. Gun Fight, when Midway Games released it in the US, became the first arcade game to use a microprocessor rather than discrete electronic components.

  Sega's Heavyweight Champ, released in 1976, was the first video game to feature fist fighting. The first stealth games followed a few years later: Hiroshi Suzuki's Manbiki Shounen in 1979 and Manbiki Shoujo in 1980, alongside Taito's Lupin III and Sega's 005 in 1980 and 1981 respectively. These were not refinements of American games; they were new genres being invented from scratch.

  The real breakthrough came in 1978 with Taito's Space Invaders, designed by Nishikado. Aliens replaced human enemies after Taito had moral concerns about depicting the killing of humans. The game set in space because the available technology only permitted a black background, and the aliens were inspired by H.G. Wells's The War of the Worlds because the developers could not render the movement of aircraft. It was the first video game to save the player's score and popularize the concept of achieving a high score. The urban legend about the 100-yen coin shortage, while it does not hold up to scrutiny, speaks to how completely the game captured Japan's attention.

• 3. The Famicom Gamble

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  Namco's Galaxian in 1979 introduced multi-colored animated sprites and a new visual language for arcade games. SNK's Ozma Wars, released the same year, was the first action game to feature a supply of energy resembling a life bar, a mechanic now found in the majority of modern action games. By 1981, the arcade video game industry as a whole was worth $8 billion, with Japanese arcade titles like Ms. Pac-Man selling over 115,000 hardware units and Donkey Kong selling over 60,000.

  The 1983 video game crash in North America, known in Japan as the "Atari Shock," hit Japanese developers as more of a surprise than a catastrophe. Nintendo had been building toward a cartridge-based home console called the Famicom, designed by Masayuki Uemura. The Famicom launched on the 15th of July 1983, alongside ports of Donkey Kong, Donkey Kong Jr. and Popeye. An early bad chip set caused the initial release to crash; Nintendo recalled the product and reissued it with a new motherboard.

  The recovery was swift. By the end of 1984, the Famicom was the best-selling game console in Japan. By mid-1986-19% of Japanese households owned one, a figure that grew to one-third by mid-1988. In June 1989, Nintendo of America's vice president of marketing Peter Main reported that the Famicom was present in 37% of Japan's households. By the end of its run, over 60 million NES units had been sold worldwide.

  Nintendo also restructured the relationship between console makers and game publishers. By restricting developers from releasing software without licensed approval, Nintendo raised average game quality and shifted public perception of video games away from a passing fad. In 1986, Nintendo president Hiroshi Yamauchi cited Atari's collapse as a cautionary tale: the market had been flooded with rubbish games because third-party developers had too much freedom. Nintendo's "Seal of Quality" became the industry's first formal quality gatekeeping mechanism.

• 4. The JRPG Invention

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  Dragon Quest arrived in early 1986, published by Enix after Yuji Horii and his team at Chunsoft spent a year building it. Horii's explicit goal was to make a role-playing game that could be enjoyed by people with no prior experience of the genre, no knowledge of Dungeons and Dragons, and no patience for hundreds of hours of rote combat. The game placed a greater emphasis on storytelling and emotional involvement than previous computer RPGs, including a coming-of-age narrative, a damsel-in-distress storyline, an incremental spell system, and anime-style art by Akira Toriyama with a classical score by Koichi Sugiyama.

  The game became so popular in Japan that local municipalities had to impose restrictions on where and when it could be sold. From that foundation, multiple Japanese publishers began releasing RPG franchises: Final Fantasy, Persona, Tales, Pokémon, The Legend of Zelda, Ys, Kingdom Hearts, and many others. Western media coined the term "JRPG" because Japanese-developed RPGs had distinct characteristics that set them apart. Where Western RPGs tended toward open worlds and real-time combat inspired by fantasy and science-fiction literature, JRPGs favored linear stories, turn-based combat derived from D&D, and fully developed companion characters with defined personalities and relationships.

  Final Fantasy IV, released in 1991, introduced the Active Time Battle system developed by Hiroyuki Ito, where time-keeping does not stop during combat. Enemies can attack or be attacked at any time, injecting urgency into what had previously been a leisurely strategic exercise. Dragon Quest V in 1992 went further still: it was the first known video game to feature a playable pregnancy and introduced a monster-collecting mechanic where captured enemies could join the party and gain experience levels, a design that would later influence Pokemon, Digimon, and Dokapon.

• 5. Genres Born in Japan

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  Data East's Karate Champ in 1984 established and popularized the one-on-one fighting game genre, going on to influence Konami's Yie Ar Kung-Fu the following year. Capcom's Street Fighter in 1987 introduced special moves that could only be discovered by experimenting with the controls. Street Fighter II in 1991 set the conventions the genre still follows and allowed players to compete against each other. That release caused a major resurgence in arcades to a level of popularity not seen since the days of Pac-Man, and triggered a wave of fighting games including Fatal Fury: King of Fighters by SNK in 1992, Virtua Fighter by Sega in 1993, and The King of Fighters by SNK running from 1994 to 2005.

  The survival horror genre traces directly to Capcom's Sweet Home for the NES, which introduced a modern Japanese horror theme. Sweet Home then served as the main inspiration for Capcom's Resident Evil in 1996, which coined the term "survival horror" and defined the genre formally.

  The real-time strategy genre has a documented Japanese lineage. Bokosuka Wars in 1983 is considered an early prototype. TechnoSoft's Herzog in 1988 is regarded as a precursor, leading to Herzog Zwei for the Sega Mega Drive in 1989, which is the earliest example of a game with a feature set that falls under the contemporary definition of modern real-time strategy.

  Bullet hell games emerged in the early 1990s as a response to the rising popularity of 3D games. Toaplan's Batsugun in 1993 provided the prototypical template, and Cave, formed by former Toaplan employees including Batsugun's main creator Tsuneki Ikeda after Toaplan collapsed, invented the type fully with DonPachi in 1995. The Touhou Project series, which spans 27 games as of 2018, was listed in the Guinness World Records in October 2010 as the most prolific fan-made shooter series.

• 6. Arcade Culture and Mobile Shift

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  Akihabara Electric Town in Tokyo stands as the most visible nexus of what Japanese culture calls otaku culture, an identity that overlaps heavily with video gaming. Arcade culture has remained part of that world long after arcades declined globally. As of 2009, out of Japan's $20 billion gaming market, $6 billion came from arcades, making arcades the largest single sector, ahead of home console games at $3.5 billion and mobile games at $2 billion.

  Sega held 60% of the arcade market share in 2006 after considerable withdrawal by companies including Capcom. Despite record revenues for Japanese arcade companies during parts of this period, the broader trajectory was declining: the arcade industry shrank from roughly ¥702.9 billion in 2007 to ¥504.3 billion in 2010, with further decline to an estimated ¥470 billion in 2013. Former rivals Konami, Taito, Bandai Namco Entertainment, and Sega eventually began working together to sustain the sector.

  Mobile overtook arcades by a different route. Japanese commuters taking long daily train and bus rides found smartphones a natural fit. By 2013, mobile games were generating $5.1 billion in Japan, more than traditional console games in the country. The mobile market became defined by gacha games, named after the toy vending machines found across Japan. Players spend in-game currency, which can be purchased with real money, to receive random characters or items. The rarest characters are the most desired, creating a structure that encourages repeated spending. In 2015, mobile game publishers in Japan had more than twice the ordinary income rate of console game publishers.

  Notable Japanese gacha games include iDOLM@STER, Granblue Fantasy, Fate/Grand Order, and Umamusume: Pretty Derby. By 2018, Japan's game market had an estimated 67.6 million players.

• 7. Decline, Reflection, and Return

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  In 2002, the Japanese video game industry made up about 50% of the global market. By 2010, that share had fallen to around 10%. At the 2010 Tokyo Game Show, Capcom producer Keiji Inafune stated that "Everyone's making awful games - Japan is at least five years behind" and that "Japan is isolated in the gaming world. If something doesn't change, we're doomed." Square Enix chief executive Yoichi Wada said in 2009 that the Japanese game industry had become "almost xenophobic."

  The factors cited included long development times, slow release schedules, a lack of third-party game engines, and an insularity that made Japanese games less appealing to global audiences. Western games, meanwhile, rarely performed well in Japanese markets due to differing consumer expectations for escapism. Microsoft struggled to establish either the Xbox or Xbox 360 in Japan, unable to compete against Sony and Nintendo.

  FromSoftware offered one model for a way forward. The studio released Demon's Souls in 2009 for the PlayStation 3, earning international exposure. Dark Souls followed in 2011. Dark Souls II arrived in March 2014, and Dark Souls III in 2016. Bloodborne in 2015 and Elden Ring in 2022 received critical acclaim and strong sales, and Dark Souls and Bloodborne have since been cited by many publications as among the greatest games of all time. The FromSoftware lineage traces to King's Field, their first game and a PlayStation launch title in 1994, called the brainchild of company founder Naotoshi Zin.

  Since 2016, Japanese video games have been experiencing a broader resurgence. In 2016, the global success of Pokemon Go helped Pokemon Sun and Moon set sales records. Final Fantasy XV sold millions. In 2022, Japan ranked as the third largest video game market in the world after the United States and China, with Shigeru Miyamoto holding the distinction of being the only game developer to receive Japan's highest civilian honor for artists, the Person of Cultural Merit, known in Japanese as bunka koroshya.