In Japan, PC-based games are very much in the minority when compared to console-based games. Hard-to-use keyboard-and-mouse-based controls, the necessity of specialized technical knowledge, the hassle of installations, etc… On the other hand, it’s quite understandable that home gaming consoles would be the more popular product, as they have specialized controllers that are easy to use and need only to be inserted into the console, which is true for the software as well.

But according to the PC Gaming Alliance, the global PC gaming market grew 20% in 2010 to a worth of a staggering $16.2 billion. With most of the growth coming from China, Japan – the former gaming stronghold – is starting to vanish. What are the reasons the PC still sells well as a gaming platform in the West and other parts in the East?

PC gaming in Japan – The past and today

In order to understand the why, it is necessary to have a short look into the gaming history of Japan. The golden age of PC gaming can be dated between the late 1970s to the mid 1990s, when various video games in Japan were published thanks to the open hardware of NEC and other hardware developers. Up to 1982, when NEC introduced a 6-bit computer that could display kanji, Western PC’s always had an edge in software production. These difficulties in display resolution became a key difference between Japanese and Western computers, and had a significant impact on game design and developed genres, something that can still be found today.

The turning point however came in 1983, when Nintendo released the Famicom (known as the Nintendo Entertainment System, or NES, in the West). Since that day consoles were considered to be cheaper systems but with terrific graphics and great games offered at low prices, a cost-performance that PCs could not compete with. So Japanese turned en masse to consoles and developed a perception that “PCs are for work, and game consoles are for games”. This still remains today. The boom of consoles however wasn’t fueled by hardware but ‘killer apps’, games that made people say ‘I absolutely have to play that game!’, such as Super Mario Brothers or Dragon Quest.

However, contrary to consoles, that are “capture the moments” of technology, the PC is ever evolving, and never stands still. There are simple updates all the time, and it wasn’t long before the PC was able to deliver games with even prettier graphics than the Famicom. In this era, many famous PC games were created, and the PC existed as an obvious piece of hardware for playing games.

The end of the golden age of Japanese PC gaming came with the spillover of Windows 95, the first operating system that provided both English and Japanese software. Game developers now were faced with the choice either to continue with a western computer platform, or switch to the larger and more lucrative console market. Most developers chose the change, only a handful stayed on the PC, creating content unsuitable for consoles such as games with adult content and military strategy games which require huge databases for gaming. There they remain to this day.

PC gaming in the West – current developments

The term “PC gaming in the West” can be very misleading. When having a look on market growth you can see that besides mature game markets as the U.S., U.K. or Germany and especially China carries a big part of the growth with 4.8 billion USD in 2010.

The reason for this growth is that many Western companies have partnered with local companies, either to localize or distribute their games. The main problem the video game industry faces in China is in controlling piracy. Due to that publishers were forced to develop new revenue models, which lead to a big shift towards online formats of video games. Video gamers are very much concentrated on blockbuster titles.

For gamers, participation is becoming more about the experience than the game itself. This trend towards community is one reason why World of Warcraft became the most played PC game in China. Moreover, just as in Japan, social gaming via mobile phones is becoming more and more popular. Hence, gamers in Japan are slowly changing focus, moving away from the more expensive console gaming applications to the trendy and now more popular online games.

The growth in the PC market of other “Western” countries carries a different handwriting: the increasing ease of digital distribution offering new payment methods.

By cutting retail through direct downloads, the profit margin becomes more interesting not only for publishers, but for developers as well, since they are given the possibility to publish games themselves, something that is especially taken advantage of by indie developers in the West. Steam, the major platform for the digital distribution of PC games with an estimated market share of 70%, notes more than 1,300 video games and over 30 million active users. Similar platforms for the digital distribution of PC games can be found in Japan as well, but unlike in the West where digital revenue on the PC game platform will very likely lead to more investments developers and gamers do not seem to have recognized the convenience of this distribution model.

Another reason for increasing the relevance of the PC as a gaming platform in the U.S. and Europe is that a lot of casual and social gaming like on Facebook takes place on the PC – unlike in Japan. Western players do see the PC as a universal tool, not only for work but for personal use as well. Most casual gamers play free browser-based or flash-based games online. Publishers have adapted to that and have developed revenue models through sponsorship, micro-transactions or on-site or in-game advertising which mostly rely on traffic.

The increasing polish and sophistication to be found in this PC casual game space attracts even more and more console gamers, and the success of this business model challenges traditional game makers. Moreover companies like Zynga, makers of Farmville, put out products for a relatively small amount of money, and wait to see if players accept the game or not. So while console developers possibly spend millions of dollars in development without guarantee of success, casual game developers churn out games like crazy and experiment with them in the market. And users seem to appreciate the high number of available titles.

The future of PC games in Japan

Even today chances of a PC gaming revival in Japan are pretty low. The PC’s role in Japanese homes is diminishing, as its functions with a comparable performance are replaced by smart phones or tablets, advanced Internet-connected game consoles, and digital video recorders with terabytes of memory, which mostly are available for even lower prices. However, there still are some chances.

One of them is the creation of a new business model in Japan. Similar to the overseas example, there is potential for creating a distinction with home consoles by moving away from the original model of packaged sales, towards a sales model adapted to the needs of users and developers. If a new business model and new entertainment style, similar to those used in mobile games right now, the PC market should be able become more active in Japan as well.

One other necessity would be “Killer Apps”. There are plenty of excellent market-leading PC games with many ardent fans around the world, such as “Starcraft” and “The Witcher”. The game fans that enjoy these games are few in number, but they do exist in Japan. However, even though all these games have the potential to become “Killer Apps”, they have yet to see a Japanese localization of good quality.

It is this restriction in accessibility that is the biggest hurdle for PC games in Japan. If things go on the way they are now, Japanese PC games have to focus on a very restricted group of players, which will only lead to a road with even less exits. If the quality titles get proper localizations and become more widely available, Japanese PC games will surely find a way out of their difficulties.