93%

Japanese population that uses the Internet

68%

Japanese population that uses LINE, the most popular messaging app

2,56

Number of apps downloaded in Japan in 2021 (in billions)

GROWTH OF THE E-HEALTH SEGMENT IN THE MOBILE APP MARKET IN JAPAN (PROGNOSIS, 13% CAGR)

Market overview

Report on the challenges on opportunities for the European SMEs on the Mobile App Market in Japan


Japan is well known as a pioneer in creating a mobile phone culture, with the world’s first camera phone released in 1999. Today more than 93% of Japanese population uses the Internet, with more than 900,000 people doing it for the first time in 2020. Most of Japanese people access the Internet with their smartphones, followed by PCs and tablets, and in 2021 downloaded as many as 2.56 billion apps.

iPhones dominate the market with more than 69% share – which makes for the App Store with its Android counterpart, Google Play, the tool that accommodates the majority of user base in Japan.

Despite the high numbers of Internet users, Japan still struggles with relatively low levels of digitalization – Authors of the report ‘Japan Tech – Thematic Research’ published in September 2021 note that Japan remains “a rigidly conservative, risk-averse, hierarchical society”. Dependence on fax machines, physical copies of the printed documents and in-person meetings influence the mobile app market. Less than 6% of the citizens use mobile apps in the governmental offices.

Major trends

What are the major trends of the Mobile App Market in Japan?


    • Global trends indicate a lasting turn to e-commerce, with year-to-year statistics showing a growing number of Japanese people spending more and more online, which is a promising trend for the app developers in Europe,
    • Japan continues to be 2nd in the world in terms of spending on mobile games, following the United States,
    • 73% of Japanese apps are mobile apps and 27% are games,
    • 83% – average monthly active reach of LINE, the most popular messaging app in Japan, in 2020, followed by YouTube, Google App, Google Maps and Gmail,
    • eHealth Apps segment in Japan is projected to reach 50.5 million euro in 2022, and continue to grow by 13.68% CAGR every year until it reaches market volume of 74 million euro by 2025.

Changes in the IT, software, IoT and mobile markets are supported by the Japanese government, which implements several long term strategies to automate, smarten up and quicken the technological expansion of the country, with the ‘Society 5.0’ being a prime example of the vision of the future. All of those are prompting the ICT solutions that deal with life sciences, welfare, disaster prevention, automatization of telework, translation etc., which offers several opportunities for the European developers. Struggling with declining birth-rates, Japanese government hopes to see structural changes thanks to its special focus on hydrogen, automatization, smart cities, future transportation solutions, many of which will be brought to its citizens via the IoT technology, often utilizing apps to manage the data.

Another particular characteristic of the Japanese mobile app market is the dominance of large players that offer all-in-one platforms and extensive customer service. A prime example of an app that matches Japanese expectations is LINE, the most popular messaging app used by over 68% of Japanese population. Although it started as a mobile messaging app, it evolved into a do-it-all platform offering news, banking and healthcare services. Line, a consolidated subsidiary of Korea-based Naver and SoftBank Corp., merged with Yahoo! Japan in 2021 and announced extensive investments in the AI engines in the near future. LINE is expanding its services and investments steadily and has partnered with the city of Fukuoka to integrate smart city solutions.

Market drivers

According to the governmental ‘2020 White Paper on Information and Communication in Japan’, Japanese digital transformation will be led by the following factors:

  • Rise of 5G – relatively lagging and relying on the ongoing infrastructure projects,
  • Structural Telecommunications market changes – amped up by the digitalization, automatization and governmental strategies,
  • Aging society and declining birthrates – that creates opportunities for the automatization, IoT, health and wellbeing services, but also influences customer choices, often very suspicious and reluctant to digitalize their life more. Japan is often called the only ‘superaged’ society in the world, with more than 25% of its population aged 65 or more, and with an average life expectancy estimated at 84 years old,
  • Covid-19 global pandemic – that has brough a permanent shift in consumer buying behaviour online and brought thousands of people online to keep in touch, get news and track the numbers of cases.

Content of the report

To help the European developers navigate the exciting opportunities and cultural challenges of the market, East Analytics published a report in cooperation with the EU-Japan Centre for Industrial Cooperation.

The contents of the report:

  • Market analysis, including domestic app developers, drivers, cultural and social factors of growth,
  • General outline of the consumer preferences,
  • Main platforms and their key technologies – iOS and App Store and Android and Google Play, with relevant coding languages,
  • Market breakdown by segments – including Gaming, Music&Entertainment, Health&Fitness, Social Media and E-commerce, outlining major trends and key numbers,
  • Relevant regulations and list of organizations offering support,
  • Main challenges and opportunities, including a list of trade fairs,
  • Set of practical recommendations, including some cultural insights.

The report and the recording of the webinar explaining its content can be found on the EU Business in Japan website –  ‘About Japan’ webinar series 192: Digital Apps Market in Japan‘.

CHALLENGES AND OPPORTUNITIES

SZANSE

  • Structural and governmental changes amping up the digitalization, automatization and IoT solutions,
  • The size of the market, in which 93% of Japanese users connect to the Internet,
  • Japan is 2nd in the world in terms of mobile gaming spending.
ZAGROŻENIA

  • The market is dominated by the large players like LINE and Rakuten, which offer all-in-one platforms – LINE offers 55 corresponding apps,
  • The cultural difficulties, including the language barrier, which makes localization a must,
  • Relatiely low level of digitalization of the Japanese society,
  • Aging society that makes for a risk-averse customer base.
Do you have any questions about the Mobile App Market in Japan?