Mobile Location Based Games to See Massive Growth in Japan

Shirotsuku (Castle Builder) Screenshot

Location based services (LBS) garnered quite a bit of attention last year with new services like Foursquare and Gowalla battling over market share in America. While the hype over these services has lessened, LBS growth in Japan has not. Seed Planning, a market research and consulting firm, has published a report projecting market growth for mobile LBS in Japan. The research company estimates a 340 percent increase between 2010 and 2015.

The LBS market accounted for 43 billion yen (560 million USD) in 2010 and is expected to expand to 147 billion yen (1.9 billion USD) by 2015. That growth, while substantial is not too surprising. Increase in LBS demand is roughly in line with anticipated smartphone adoption over the next few years. However, a closer look shows that the market isn’t growing simply due to an increase in smartphone users.

GPS functionality was introduced to Japanese feature phones in 2007. Location based services such as navigation predate the smartphone and the several year head start allowed the LBS market in Japan to grow to tens of billions of yen. In other words, new smartphone users were already potential LBS users and its not the change in handset which will drive growth. Future LBS market growth will instead be attributed to the popularity of smartphone specific services and LBS innovation. This can be seen when assessing Seed Planning’s category breakdown of the market.

Category Breakdown of Location Based Services Market Growth

Although growth of the LBS market will be more or less proportional to smartphone usage, the growth of specific service types (e.g. navigation, games, etc.) is not. Some types of LBS are expected to see massive growth compared to other types. For example, the market for navigation is expected to not quite double by 2015 while the market for location based games is expected to increase many times over.

The major growth categories, as can be seen in the graph, are location information and location games. Location information is a crowded category filled with major players such as Yahoo and Sony. However, location based games currently see far less competition within its category (competition within mobile games in general is a different issue). Current LBS game companies are typically much younger and smaller. Colopl, a company I previously wrote about, is one example of a LBS game that’s popularity is growing. Other LBS games include Shirotsuku (Castle Builder) and iButterfly Plus.

Seed Planning’s full report can be purchased on through their website although its content is written in Japanese.

[Image credit: Shirostuku]