Japan and South Korea’s Games Market Faces a 2.3% Decline in 2025

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According to a new industry forecast, the East Asia video game market, which includes Japan and South Korea, is expected to shrink slightly in 2025.

Niko Partners, a firm known for analyzing game markets across Asia, projects a 2.3% decline in East Asia’s games revenue this year. The estimate comes from its East Asia Market Model and Five-Year Forecast report, published on July 29 and highlighted by GamesIndustry.biz.

After generating $29.1 billion in revenue in 2024 — already a 3.1% year-over-year dip — the market is expected to slide further to $28.5 billion in 2025.

The report attributes the projected downturn to macroeconomic factors, including weakened local currencies compared to the U.S. dollar and broader global trade challenges that are dampening consumer spending in the region.

However, this isn’t expected to be a long-term slump. Niko Partners forecasts a rebound starting in 2026, with the East Asia market potentially reaching $30.3 billion by 2029. That would represent a modest compound annual growth rate (CAGR) of 0.8% over five years.

Despite the temporary dip in revenue, the number of gamers in the region is expected to rise. The report estimates that East Asia’s gaming population will grow by 1.3% in 2025 to 98.5 million people, eventually hitting 101.7 million by 2029.

The report also sheds light on gamer behavior and spending trends. In Japan, the average revenue per user (ARPU) is projected at $21.82, while South Korea is forecasted to hit $30.77 — the highest among all Asian markets surveyed.

Viewing habits show a vibrant gaming culture in both nations. Nearly 47% of Japanese gamers and about 38% of Korean gamers regularly watch livestreams or gaming-related video content, highlighting the growing influence of platforms like YouTube and Twitch in shaping gaming communities.

On the content side, RPGs continue to dominate player preferences across both markets. However, there’s a distinct split in style: Korean players are more into multiplayer online RPGs, while Japanese gamers remain loyal to single-player experiences. This long-standing trend has persisted throughout the eight years Niko Partners has tracked these markets.

The study also dives into localization challenges, especially in South Korea. Many Korean gamers are reportedly critical of cultural and linguistic issues in games, citing stereotypical portrayals (46.9%), inaccurate depictions (43.2%), and poor translations (41.3%) as top concerns. Meanwhile, Japanese players show a strong preference for anime and manga-inspired art styles, with 67.8% favoring that aesthetic in their games.

When it comes to in-game spending, the primary motivation across East Asia is to enhance enjoyment (51%), followed by faster leveling (30%). These findings indicate that players are more willing to spend money if it boosts their overall experience or speeds up progression.

While 2025 may present a temporary slowdown for East Asia’s game industry, the underlying trends suggest a resilient market with opportunities for long-term growth — especially if developers pay closer attention to cultural preferences and improve localization quality.