TOKYOJapan overtook the U.S. to become the world's No. 1 country in app store revenue, thanks to an explosion in growth of smartphone and tablet games.
Japanese consumers spent roughly 10% more than U.S. consumers did on all apps found on smartphones and tablets in October, according to app tracker App Annie. That amount is triple the spending in South Korea and six times that in Great Britain. Just a year ago, Japanese consumers spent 40% less than U.S. consumers.
The reversal reflects a shift from advanced feature phones to smartphones in Japan that pioneered mobile Internet systems. Japanese consumers have long been conditioned to buy digital content from train schedules to games to fancy emoticons on advanced feature phones. Japanese carrier NTT DoCoMo Inc. 9437.TO +0.24% introduced its mobile Internet service i-mode at the beginning of 1999, eight years before the first iPhone and nine years before the first Android-powered phone. In 2009, Japanese consumers were already spending more than ¥553 billion ($5.4 billion) on digital content. By 2012, that was up to ¥851 billion, according to the Mobile Content Forum.
"The adoption of smartphones is much faster than what we expected," said Peter Warman, chief executive at Amsterdam-based game data research firm Newzoo BV. "It's fueling further growth."
The main driver has been mobile games. Japanese consumers spent nearly four times as much as a year ago on gaming apps, App Annie said. That has lifted spending on Android-powered devices to quadruple in the year to October, App Annie said, making Japan the first place in the world where Google GOOG -0.68% Play spending has caught up to app spending on Apple's AAPL -0.74% iPhones and iPads, it said.
In August, Mr. Warman had forecast that Japan's total mobile game revenue would come to around 26% of an estimated $12.2 billion in global revenue, while North Americaalthough three times bigger in terms of the number of playerscomprised only 25%.
Mr. Warman's numbers on Japan now look conservative, he said, noting that revenues will likely be closer to $4 billion. Japan will likely remain the world's biggest mobile game market for at least another year, he said.
Unlike browser-based games, apps are easier to adapt for overseas markets, and Japan's wholehearted adoption of smartphones is lowering barriers between countries and gaming cultures. The willingness of consumers to spend on mobile contentand in particular on gamesis luring game makers from abroad. Developers from Supercell and King.com are at the gate, spending money on promotional gimmicks and advertisements to try to break in. Meanwhile, Japanese developers are trying to sell their games abroad.
Many Japanese companies now eye partnerships with local game developers to combine overseas tastes with Japanese know-how. Gree Inc., 3632.TO -5.49% a pioneer in social games with its popular "Fishing Star" game in 2007, last year bought U.S.-based "Modern War" mobile game developer Funzio for $210 million to build games for Western audiences. Line Corp. is looking to expand partnerships around the world. It recently partnered with PT Kreon Mobile, a subsidiary of Indonesia's largest online game publisher, PT Kreon.
Jun Otsuka, Line's global business manager, said he meets with developers around the world at clips of 30 minutes each, to find the right fit.
In the end, the only real advantage that Japan has abroad may be a devotion to service.
"We are part of the service industry," Mr. Otsuka said. "Users are buying the total experience. You can't sell something and then walk away."
