Chuo University Speech(Nov 25th, 2011)
"The Structural Transformation of the Game Industry"


Another element is the social aspect, which you will find on slide 16. This is the social graph. How do we make use of this? My interpretation of game is that it is inherently a form of communication with rules, so the social aspect in my view is an integral part of the game. Right now, we are still in a transition, but ultimately, I believe that all the game will incorporate the social element in the game. It will not be limited to a single genre of social games, because games are social to begin with, just like playing sports or chess. It's communication based on rules.

In addition to the game element, social games have a viral marketing dimension. This already existed in the market, but underwent a big boom with the diffusion of SNS such as Facebook. It's important to note that they switched their function from being complementary to the mass media to becoming the mainstream. Massive exposure with TV commercials means nothing if none of your friends were commenting about that game. Zynga takes this point seriously. Gree and DeNA are growing on the strength of their social element by being a network game. So the drivers are different even though these companies are categorized in the same social game genre.

So what's next for the ecosystem?


Earlier, I said that the market is still in transition. Let’s have a look on slide 17. I don’t believe it will be a horizontally integrated market. You will find many books about horizontally integrated strategy or Platform Strategy when you walk in a bookstore, but these are obsolete, and probably are not feasible. In building a business model, one must decide on “what” will be the linchpin that will integrate the different layers of the market. This is critical, and unfortunately we don’t know what it would be, and neither do our peers. The market has a substantial size, where innovation is constantly happening, with powerful industry transformation and replacement of the main player as the ecosystem evolves into a new stage. It truly is a dynamic industry, and it is extremely interesting now. We are now in midst of a battle royal, where everyone has the chance to be the top. This is the trend of the game industry.

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