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Any mobile game enthusiast knows just how cut-throat the platform can be. Every month, dozens of gacha games on Android and iOS announce their shutdowns, with even seemingly successful games getting the axe without warning. Apparently, according to a new report from Japanese research firm Teikoku Databank, Japan’s mobile and gacha industry might just be approaching its breaking point.
The firm reported that a total of 10 bankruptcies involving sumaho geemu (smartphone game) operators were ‘confirmed’ between January and July 2026. While that might not sound like much, it already ‘greatly exceeds’ 2025’s cumulative total of just three companies going under. It’s also on track to surpass the previous record of 12 cases way back in 2015. And with four months still left in the year, things could definitely get worse.
The report opens with, “Looking at the 29 bankruptcies of smartphone game operators that occurred within the past five years, very small businesses with capital of under ¥10 million (around $63,000) accounted for 15 cases, or 51.7%. There have also been bankruptcies of small-scale businesses after losing contracts from major game companies withdrawing from development, among other factors.”
A big part of the problem seems to be attributed to rising development and operating costs, as the mobile market shifted from lightweight browser-based social games toward the more sophisticated ‘native apps’ around 2015. “Nevertheless, as the complexity of game content changes to 3D graphics and full voice acting, with added chronic game creator shortage, initial development costs often balloon to the scale of several hundred million yen,” the report writes. It also adds that demand for post-release updates like characters and events, while seen as necessary to compete, put a massive maintenance burden on companies.
A couple of years ago, visual novel developer Visual Arts (via AUTOMATON) candidly revealed that it cost around $13,600 just to keep its now-defunct Itsuwari no Alice gacha game running every month, with $7,600 going toward cloud server fees. It showcased how expensive it is to keep a niche mobile game alive, let alone ones with a much higher number of active players. Teikoku Databank’s report also cited that Japanese social media erupted when Ambition, developer of Bungo Stray Dogs: Tales of the Lost, announced the game’s end-of-service just one day before filing for bankruptcy. The situation quickly became a hot mess as players were left with unused paid items and no refunds for their microtransaction payments.
“Competition has also intensified with long-running mega-hit titles, titles from established IP, and overseas companies from countries like China and South Korea that have abundant financial resources and high development capabilities,” added the report.
Our weekly report of Top 10 gacha game charts also illustrates this issue. Japan may have pioneered social games — and paved the way for gacha regulations into the mainstream — but the influence of Chinese and Korean games on its home turf can no longer be ignored. Often, Wuthering Waves, Honkai: Star Rail, and NIKKE dominate not only the global top-grossing charts but Japan’s domestic market as well. Even highly popular Japanese-made games like Fate/Grand Order or Umamusume have to fight tooth and nail just to stay in its own Top 10 chart.
Perhaps mirroring Western companies’ obsession with live-service games, all of this begs the same question. Why keep gambling millions on mobile gacha games when even releases tied to popular and established IPs aren’t guaranteed to survive? For more stories on the games industry, keep an eye on GameObserver.
It's crazy how they didn't ban gambling. Their economy is already in the shitter, having a massive amount of wealth siphoned by North Korean pachinko and South Korean/Chinese gacha probably doesn't help.
Even as a social relief valve it's worse than alcohol and tobacco, since those at least can help you get laid.
It's crazy how they didn't ban gambling. Their economy is already in the shitter, having a massive amount of wealth siphoned by North Korean pachinko and South Korean/Chinese gacha probably doesn't help.
Even as a social relief valve it's worse than alcohol and tobacco, since those at least can help you get laid.
South Korea bans gambling, but people use VPNs to dodge the bans, just like they do with their porn ban. I'm surprised they didn't try a flatout lootbox ban like Belgium and the Netherlands did, but that would probably kill off their gaming industry, since both the Chinese and Koreans love Pay-to-Win in video games.
The Japanese "gacha game industry" is not a monolith. It spans the range of big wealthy companies like Square Enix (Octopath CoTC, Final Fantasy gachas), Type-Moon (Fate/Grand Order), and CyGames (Granblue Fantasy). These companies rake in billions and can afford to hire teams of top tier artists and programmers. And then you have very small teams of poor Japanese devs who struggle to pay their bills, use AI generation because they cannot afford to pay good artists, etc. It is these bottom groups that are falling out of the market because consumers are going to the titles with higher production values, much like how low budget JRPG and VN devs were killed off during the 2000s and 2010s. The poorest of the survivors were able to cling to gachas because big fishes hadn't entered that market yet.
And damn, Yo-Kai Watch really fell off so hard that they need to collab with lowest common denominator shit. And is Rent-A-Girlfriend a Japanese example of a media abomination that refuses to die?
Is Japan's extremely anal copyright laws to the point that it would make Concordverse and other wokeshit games actually more popular, because you can actually watch gameplay of them (and then close out the stream at your own time), and you don't have to waste your money buying those games? And has one of those woke games actually tried to capitalize on the said Japanese copyright laws, by including the "livestream our game at anytime" in marketing, like how Cities Skylines had the "play offline" advertising tagline in response to SimCity 2013 being an always-online game?
It's absolutely insane since Another Eden was actually an extremely generous gacha before this. For example, there was no such thing as a limited character banner; every character is added to the general pool.
They are getting greedier by selling outfits for pay currency only. They do not have the audience to do something that stupid.
And damn, Yo-Kai Watch really fell off so hard that they need to collab with lowest common denominator shit. And is Rent-A-Girlfriend a Japanese example of a media abomination that refuses to die?
I'm going to be honest and say I don't care much about NTE. From what i've seen the game tries to present itself as GTA but anime, which to me seems like generic UE asset flip chinkslop.
I started playing Trickal, fun game full of retards. It's actually pretty generous since I have most of the meta characters.
Anyways they made a banner to choose a character to roll, I burn like 150 rolls not getting the character and end up sparking. Immediately after that I use some free pull ticket I had and get that same character.
It's not even a regular rare character, it's the bullshit special rare type.
After GAME FREAK put out shitty ass games like Little Town Hero and Beast of Reincarnation, in an attempt to diversify off of just Pokémon games, their next project is yet another Gacha Game that doesn't stand out:
Their previous Gacha Game attempt was PANDOLAND, which EoS'd in March:
Azur Lane had to issue a hotfix when Chinese players discovered an AI watermark in one of the new paid skins:
And I still wonder why Western Woke game companies like Insomniac haven't tried to trash talk Gacha Games for these controversies. Imagine if they put an ad campaign for Wolverine, and say it's MADE BY REAL PEOPLE, NOT AI, and show this as an example of how AI leads to only gooner shit.
Or would such ad campaign only lead to Wolverine getting ridiculed even more?
And somehow, the worst racing game ever in Test Drive Unlimited Solar Crown outlasted that pathetic Gacha attempt by GAME FREAK, despite Nacon being insolvent. So who's the worst developer after all between KT Racing and GF?
So will the Japanese find a way to take back the Gacha industry if the CCP decides to ban Gacha Games in the future, as they have shown their hand with the Snowbreak shitshow? Or will the Japanese still stay stagnant and do nothing, and which country would take over the Gacha industry as a result?
The reason Chinese Gacha games are successful globally is because the Chinese domestic mobile game audience happens to share a lot in common with the global/western audience. In both markets, there is a huge player population that uses their phone as their only gaming device. For this audience there is a demand for free to play games with AAA production value because they don’t have the means to play “real” games.
The domestic Japanese mobile game audience are mostly salarymen looking for something simple to play/read on their commute, that’s why JP/JP-oriented gachas tend to be visual novels with minimalist gameplay. If you look at the revenue charts, Hoyo games still do well in Japan, but are frequently rivaled by JP gachas that cost a tiny fraction of a Hoyo game’s budget to develop/maintain. Trying to chase Mihoyo’s tail necessarily means prioritizing the global/CN playerbase over the domestic JP one, and I doubt that’s something they would ever do.
And I still wonder why Western Woke game companies like Insomniac haven't tried to trash talk Gacha Games for these controversies. Imagine if they put an ad campaign for Wolverine, and say it's MADE BY REAL PEOPLE, NOT AI, and show this as an example of how AI leads to only gooner shit.
I wouldn't be surprised if Troon/pajeet devs are 100% vibe coding their games while arguing that it's okay because AI is only bad when it's done for art (even if that art is based on other people's work when artists redraw it).
The reason Chinese Gacha games are successful globally is because the Chinese domestic mobile game audience happens to share a lot in common with the global/western audience. In both markets, there is a huge player population that uses their phone as their only gaming device. For this audience there is a demand for free to play games with AAA production value because they don’t have the means to play “real” games.
The domestic Japanese mobile game audience are mostly salarymen looking for something simple to play/read on their commute, that’s why JP/JP-oriented gachas tend to be visual novels with minimalist gameplay. If you look at the revenue charts, Hoyo games still do well in Japan, but are frequently rivaled by JP gachas that cost a tiny fraction of a Hoyo game’s budget to develop/maintain. Trying to chase Mihoyo’s tail necessarily means prioritizing the global/CN playerbase over the domestic JP one, and I doubt that’s something they would ever do.
It's more than even the Chinese realized that being greedy fucks that give abysmal pull rates and non existent art, makes sane people not want to play your games. Until Genshin, Jap games were PNG games with no pity.
