Japan emerged from COVID-19 as the third largest economy in the world according to Business Insider, and The International Monetary Fund expects Japan’s economic growth to accelerate faster this year than at any other time in the last 12 years. The growing economy in Japan is also promoting a prosperous mobile industry.
Smartphone usage in Japan is booming, with an estimated 85% of the population using a mobile device in 2022 - and this number is only growing, according to Statista. Based on data from the study, the number of smartphone users is projected to reach over 94% of the population, or 115.5 million users, by 2027. With much of the country currently relying on mobile devices and millions more to come, let’s dive into the current state of mobile Japan so you can tap into this valuable user base.
The Japanese mobile ecosystem in numbers
- In 2021, the telecommunications market size was valued at $119.8 billion (Global News Wire)
- Mobile game and app revenue reached $18.6 billion in 2021, the second highest in the world and up 18% from the previous year (Sensor Tower)
- The market size of mobile games is estimated at more than one trillion yen, or over 7.2 billion USD, and is projected to continue growing (Statista)
- Japan led in per capita spending in mobile apps and games on the App Store and Google Play Store in 2021, averaging $149 per user (Business of Apps)
- There are over 35,663 apps on the Google Play store from Japanese publishers (42 matters)
- Almost 97% of households own at least one mobile phone (Statista)
- Annual app downloads reached over 2.5 billion in 2021 (Business of Apps)
- Mobile device usage time in Japan tripled in the last decade, coming close to 106 minutes a day, per person (Statista)
- The number of Japanese mobile phone subscriptions surpassed the number of citizens in the country in 2020 (Statista)
Unique characteristics for a Japanese audience
Around 80% of the top grossing apps in Japan come from Japanese publishers according to 42matters, with the rest coming from foreign developers. To ensure cultural relevance, developers from outside of Japan often localize their apps. In fact, a study by AdColony reveals that localized content boosts install rates by 44%. To cater to the needs of Japanese users, there are a couple of characteristics to consider - the dominance of in-app purchases and the importance of Japanese-style creatives.
In-app purchases are the dominant monetization model
Users in Japan contribute more to the app economy through in-app purchases than users from any other country in the world. According to data from Sensor Tower, Japanese users spent an average of $214 per person on in-app purchases and in-app subscriptions from 2017 to 2021. This trend in consumer behavior presents an opportunity for IAP developers to optimize ROAS and scale in Japan.
Detailed visuals can grab users’ attention
Popular apps in Japan feature distinctly detailed and lifelike creatives. To engage a Japanese audience, Canva recommends designs that include brush strokes, floral patterns, and circle-shaped icons, all of which are tied to different symbols and emotions in Japanese culture. Kawaii, or “cute culture” is also highly popular and adds personality to the app’s visuals. Finally, while clean and sleek is king in western cultures, this isn’t the case in Japan. Collages and information-dense pages are popular and give designers the opportunity to pack visuals and text into small spaces. Visual appeal has always been important, but given the competitiveness of the market and quantity of ads available today, there has never been a better time to ramp up the quality of your app’s creatives.
Popular app genres
Gaming apps are the most profitable app category in Japan, earning almost $13.4 billion in revenue in 2021 according to Statista. According to Newzoo, role-playing games were the #1 most played on mobile devices in Japan in 2021, followed by puzzle games. In a study done by Meta in 2020, 48% of gamers in Japan reported that puzzle games helped them relieve stress, and 68% of them stated they would go back to playing a puzzle game even if they hadn’t opened it in the last month. This kind of stickiness shows promise for game advertisers looking to acquire Japanese users that will be valuable in the long-term.
A survey conducted by Statista highlighted manga, or comics, as another prominent app category. Statista found that in 2020 alone, manga apps collected over $195 million in revenue. The most popular apps for reading manga receive millions of downloads per year and reach two thirds of smartphone users between the ages of 15 and 19. Among high-school age females, the reach is up to 83%. For advertisers looking to get in front of a younger audience, manga offers a significant opportunity to do so.
In 2020, educational apps surged in popularity - time in educational apps increased by 85% according to Hatago Consulting. According to PR Newswire, the e-learning market in Japan generated $1 billion USD in revenue in 2021. Even as schools return to in-person learning, educational apps remain a fixture in classrooms. For example, Kyodo News reported that teachers are increasingly utilizing AI-assisted learning apps for subjects such as English and computer science.
Mobile phone carriers
NTT Docomo, KDDI Corporation, and SoftBank Corp. are the three largest mobile carriers in Japan. Global News Wire stated that NTT Docomo has 42.5% of mobile phone subscriptions in Japan, which translates to almost 83 million subscribers and 15.2 trillion yen in revenue in 2021. Since the beginning of 2022, NTT has been modernizing and upgrading its 5G network by using independent hardware and software combinations.
KDDI is the second largest carrier with 62.11 million subscribers, focused on improving network connectivity on remote islands and in the mountainous areas in Japan, according to Global News Wire. Throughout 2022, users in more remote areas will begin receiving broadband services and high speed internet. This rollout could help KDDI tap into a previously unreachable user base.
SoftBank Corp is the third largest carrier, serving around 45.6 million subscribers according to Global News Wire. Since collaborating with Nokia to roll out a shared radio access network in late 2021, they’ve been able to scale their 5G business efficiently.
Presence of ad agency culture in Japan
Spending on digital advertising in Japan has been increasing steadily since 2017 and is projected to reach $23 billion in 2022, according to Statista. Partnering with agencies that work with tier 1 channels like Google, Facebook, ironSource, and ironSource Aura gives advertisers the best shot at reaching the most users across multiple channels.
Low cost plans and SIM carriers have an increasingly large presence in Japan. With lower cost plans, users have flexibility to choose the services and data access they want, often with fewer contracts and fees. These features make them a useful middle ground for welcoming new users into the mobile economy. Low cost plans are offered by KDDI and NTT Docomo, as well as independent brands such as All and eMobile, which rely on the networks of larger carriers.
Now that TikTok has transformed the way people use social media, video ads are becoming more popular as a digital advertising strategy around the globe. In Japan, video ads generated almost $900 million in revenue in 2021, and are expected to generate even more in 2022 according to Statista. While video ads may not be feasible for smaller companies, creating content that can blend seamlessly into TikTok and other short video platforms like Instagram Reels can be an effective way to reach new users.
The Japanese mobile ecosystem is as vibrant as ever. It’s critical to stay in touch with the current developments, trends, and needs of consumers so that you can grab users’ attention and stay competitive in the dynamic environment.