Japanese gaming industry shifts to cost-cutting and AI to drive profits

The Japanese mobile gaming industry is undergoing significant structural reforms to maintain profitability despite stagnant revenue growth and market saturation. While 12 out of 13 major listed manufacturers reported operating profits, this trend is driven by aggressive cost-cutting rather than market expansion. Key strategies include workforce reductions, decreasing reliance on temporary staff, optimizing advertising expenditures, and implementing generative AI to automate production processes such as 2D illustration, translation, and quality assurance.

Additionally, companies are increasingly utilizing direct web-based payment systems to bypass the 30% platform fees charged by Apple and Google. For example, MIXI reported that web shop usage for ‘Monster Strike’ has exceeded 50%, significantly boosting margins.

On a corporate level, Arc System Works has achieved a turnaround, reporting a net profit of 115 million yen for the fiscal year ending May 2026, recovering from a previous net loss of 803 million yen.