Five things we’ve learned about Japan’s games industry, plus how GTA 6

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In This Edition,

• Japan’s games industry

• Valor Mortis’ goes low on price

• Nex Playground scores $150 million

• Plus, news from Blizzard, Sega and Team17

Hello from Tokyo!

This week, The Game Business is in Japan for Tokyo Game Show.

And to kick things off, our guest this week is analyst Dr Serkan Toto, who gives us a detailed overview on the successes and challenges facing the Japanese games market in 2026.

It’s not all about Japan, however. Our other guest is Blake Rochkind, the head of mid-tier publisher Lyrical Games, who joins us to discuss (amongst other things) the “agonizing” decision around pricing its promising new IP Valor Mortis, which launches next month.

Plus, we have all the big news from the last seven days.

You can watch or listen to the whole thing above. Or check out our highlights below.

Enjoy!

Five things we learned about the Japanese game market from Dr Serkan Toto

Ahead of Tokyo Game Show, we invited Japanese games analyst Dr Serkan Toto to come on our Show and discuss all things Japan.

The full chat is worth a listen, as we dive into the impact of Chinese-made games on the Japanese market, the dominance of Nintendo, the rise of PC, the Japanese game media and we also talk about Hideo Kojima’s partnership with Xbox.

But here are the five things I felt was particularly noteworthy:

1. Six out of the eight big Japanese game companies are at an all-time high

In contrast to the West, Japanese video game console businesses are in a strong position, with many of the companies actively hiring.

“If you look at the top eight - Sony and Nintendo, and then the six big software ones - apart from Square Enix and Sega, six out of the ten are either near their all-time highs or very near their all-time highs. The Japanese console game industry, not so much the mobile industry, is doing exceptionally well.”

2. Chinese mobile studios have unseated Japanese teams

China is having an outsized impact on Japan’s mobile game dev scene, with Chinese-made smartphone titles dominating the charts.

“It has become one of these stereotypical red ocean markets for local mobile game makers,” said Toto. “The addressable market is not really growing that quickly anymore. The Japanese mobile gaming providers that we have, and there’s a couple, are increasingly threatened, or you can say overtaken, by especially Chinese smartphone studios that have come here guns blazing. They take no prisoners. They not only generate downloads, but they also capture a lot of the revenue market share.”

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3. Tencent and NetEase’s exits are a case of ‘we told you so’

Chinese games giants Tencent and NetEase invested heavily in the Japan games scene, even funding independent studios from famous game makers like Hiroyuki Kobayashi (Resident Evil) and Toshihiro Nagoshi (Yakuza). But as quickly as they moved in, these organizations pulled the plug.

“It’s China speed, right? It’s not only when they go in, it’s also when they get out,” said Toto.

He added: “But it didn’t ultimately shake the Japanese game industry. A lot of people are saying, ‘Well, we told you so’. These companies are foreigners. They don’t really understand the Japanese process of game making, and what really drives the creators here.”

Toto added that the games that Tencent and NetEase invested in simply weren’t successful.

4. PC is becoming a stronger force in Japan

Japan is big on console and mobile, while PC is a relatively small part of the market. However, that is changing.

“As of last year,PC has captured about 12.5% of the entire market,” Toto shared. “And in 2019, that number was 5%. It’s not unbelievably exploding, but it’s pretty sizable. PC is now a respected game platform in Japan. Whereas before, even the big companies like Capcom and Sega looked at the PC as a bit of a gaijin gamer platform that is not really relevant in Japan. That tide has turned.

“One trigger was the pandemic. There was the non-availability of the PlayStation 5 during that time. So, if people wanted to play high-fidelity games, they either had to continue to use their PlayStation 4, or start using gaming PCs instead. Another reason is PUBG became really big several years ago in Japan, and the PC was the first platform that particular game was available on.

“And a lot of the Japanese game companies in recent years, such as Capcom, started seeing the potential of the PC platform. And now you have a lot more Japanese games on PC, which wasn’t the case in 2017 and 2018. That’s motivated local users.”

5. Nintendo saved the Japanese console industry

I asked Dr Serkan Toto about Nintendo’s dominant position in Japan, and whether anyone can potentially challenge it. And he noted that there would be no console business without Nintendo.

“Nintendo has had an iron grip on the Japanese console market since 2017 when the Switch 1 came out,” he said.

“I would phrase it a little differently. I would say that if Nintendo produced another flop like the Wii U, and if the Switch wasn’t the super hit it turned out to be, the Japanese console market would have been completely eliminated. I think that even more people would have turned to smartphones, and maybe even PC. Nintendo not only completely dominates the console segment here in Japan with 70% market share for all gaming content, but they also saved it.”

Check out our full chat with Dr Serkan Toto in today’s The Game Business Show.

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Valor Mortis gets $40 price point due to the ‘craziest fall in games history’

Upcoming first-person Souls-like Valor Mortis will cost $40, The Game Business can reveal.

The new IP is the first title from publisher Lyrical Games, and is developed by Ghostrunner dev One More Level. It’s performing well in pre-release metrics, with nearly a million wishlists and generating strong buzz since its Gamescom 2025 reveal.

Nevertheless, the publisher is trying to navigate a hectic release schedule, with the looming shadow of GTA 6 causing big titles to cluster together in September and October. Lyrical has already delayed Valor Mortis from September 24 to October 13 due to competition from Control: Resonant and Silent Hill: Townfall, and this has influenced the pricing decision, too.

“This is something we’ve really agonized over,” said Lyrical Games boss Blake Rochkind. “My biggest concern was that it would send the wrong message about the game. But this decision is made out of confidence.

“We find ourselves as one of the only new IPs launching in what is objectively the craziest fall in the history of this business. Not only do you have GTA looming large in November, now you have the Zelda remake, Control coming out in a couple of weeks, Silent Hill: Townfall, Phantom Blade Zero, Gears of War, Call of Duty... By virtue of the development schedule, the cards we’ve been dealt is that we are one of the only new IPs launching this fall.

“We are pretty confident in Valor Mortis. But ultimately, the worst thing we could do is not push our chips in and say, ‘We want this to be a game that you can pick up alongside these other great games.’

“A developer I spoke to recently had a lot of success with a game priced at $30, which would probably be $40 today. One thing they said that really stuck with me is: ‘We never regretted being an ‘and’ game. We never regretted pricing our game as something that you can pick up alongside other games.’ Going with this price point will help us be an ‘and’ game.”

Valor Mortis will also launch into Xbox Game Pass, but this had no impact on the pricing, insisted Rochkind.

“Game Pass has reached a maturity point in this business where there are ‘Game Pass gamers’ - people who play games on Game Pass and were unlikely to buy the game day and date anyway. We’re happy to be on Game Pass, and I’m not really concerned about cannibalization. For every game that is ‘cannibalized’ by Game Pass, another game gets amazing word-of-mouth because of it. Clair Obscur launched on Game Pass.”

Lyrical specialises in ‘mid-tier’ titles with budgets of around $10 million. And it’s looking for games that can offer unique twists in a proven area. Valor Mortis is in the popular souls-like genre, but mixes it up with a first-person perspective and Napoleonic setting.

“[Souls-like fatigue] is a concern, and that’s one of the reasons not to do just another Souls-like,” he said. “The worst thing any publisher or developer could do is be safe. Candidly, the vast majority of the pitches we see are fairly safe. We’re looking for that combination of talent, risk, excitement, and innovation when we sign a game. What keeps me up the most at night is not finding enough games we believe can break through the noise.”

Nex Playground secures $150 million for global roll-out

Nex Playground has secured $150 million in its latest Series E investment round.

The funding is designed to bolster its global expansion and ensure stronger inventory over the Holiday. The camera-based console is currently available in the US, Canada, UK and Ireland, with a German release coming this year, and Japan and Korea planned for 2027.

Speaking to The Game Business, Nex CEO David Lee said: “We enter every international market with love and respect. That means investing in localization, local IP, local music, local developers and local teams. Most importantly, it means listening closely to local customers so we can keep making the product better at serving the needs of their families.”

Meanwhile, Nex has named former Niantic CFO Jeff Shouger as its CFO. He will also join the Nex Board, alongside game industry veteran Bing Gordon.

The Series E funding is co-led by Baillie Gifford and BAI Capital, with participation from NBA Investments, Logitech, the Raine Group and Medici Capital, in addition to a new credit facility with JPMorgan.

Meanwhile…

• Sega has signed a deal with Netflix for movies and TV shows based on Crazy Taxi, Stranger Than Heaven, and Sonic the Hedgehog. The first project will be based on Crazy Taxi, with Dan Gregor and Doug Mand (2025 Naked Gun) on scripting duties.

• Blizzard made a series of announcements during Blizzcon. It announced Diablo 5 for 2029, an open world StarCraft shooter for 2030, and a new World of Warcraft variant called World of Warcraft Forever, which will run alongside Classic and the vanilla game, and is due November 4. The firm is also partnering with Netflix on a Diablo animated series.

• Team17 parent Everplay reported half year revenue of £66.9 million (six months ending June 30), an 8% drop over the year before. Profit is down 29% to £23.9 million. However, owner Everplay expects strong full-year results, due to impressive sales of Bulkhead’s Wardogs and Expression Games’ Hell Let Loose: Vietnam. Everplay has also increased its stake in Bulkhead as Wardogs hits two million sales.

• Valve’s Steam Frame VR headsets will come in two variants. The cheaper 256GB model will cost $1,059, while the 1TB model comes in at $1,299.

• Roblox says that creators will soon be able to publish their games on mobile, PC, and console as standalone apps. It’s part of the Roblox Everywhere initiative.

• Moss developer Polyarc Games will close down after 12 years.

• The GTA 6 Extended Look on Netflix generated over 100,000 sign-ups to the service in the US, according to Ampere.

• Nintendolife and Push Square publisher Hookshot has launched Steam Hype, which is a new PC-focused media outlet. The UK-based company also operates Pure Xbox and retro brand Time Extension.

That’s it! We’ll be back next week with more big interviews and analysis. Until then, thank you for reading.