Beneath the Glitz: Economic Anxiety and Industry Uncertainty at the Tokyo Game Show

Despite the increasing global presence of Japanese games, the Tokyo Game Show felt somewhat off, with major Japanese console and PC gaming companies showcasing relatively light lineups, mostly consisting of already released titles or games slated for release in the coming weeks and months. Sega's booth, for instance, featured Sonic Racing: Crossworlds and Like a Dragon 3: Kiwami, while Konami showcased the latest entry in the Momotaru Densetsu series and Silent Hill f, both of which had already been released by the time the show began. Level-5 was present, but their lineup was limited to Inazuma Eleven: Victory Road and Professor Layton and the New World of Steam, both of which had been showcased at the previous year's event. The lack of new titles from Japanese developers was notable, with the exception of Capcom, whose booth was the most popular due to the first domestic glance at their 2026 lineup, including Resident Evil: Requiem and Pragmata. To understand the reasoning behind the lack of new titles and the draw of fans to other exhibits, it's essential to look beyond the show floor. A visit to Akihabara, Japan's otaku capital, reveals a shift in the gaming landscape. Billboards that once promoted major upcoming anime and games now feature in-game events for ongoing free-to-play titles from East Asian studios. The central exit of Akihabara Station has been renamed after Yostar, the Shanghai-based developer and publisher of Azur Lane and Blue Archive. While the mobile free-to-play boom of the 2010s may have peaked, these games remain a dominant part of the Japanese gaming landscape. In-app purchases for mobile games reached $11 billion in 2024, according to Sensor Tower. The true spend on free-to-play games in Japan is likely higher, considering the growing trend of these titles finding an audience on console and PC alongside the minimal appetite for premium titles. Launching a successful new title against established favorites in the sector is increasingly difficult. Without brand recognition, developers need to find ways to get their game in front of as many people as possible. The Tokyo Game Show is a high-profile way to make an impression, but it's a risk, with booth costs ranging from 385,000 yen for a small booth to millions of yen for a large-scale booth. According to a preview of the 2025 CESA Video Game Industry Report, the Japanese games industry grew by 3.4% last year to 2,396 billion yen, mostly attributed to the mobile gaming market. The console market has shrunk from 395 billion yen to 383 billion yen since 2020, while the PC market has grown by over 100% in the same period. For every demographic between 5 and 60 years old, mobile player counts among Japanese players either remain in line with or exceed those on console. The most common primary or secondary platform for console or mobile players is the Nintendo Switch, but even the Nintendo DS and 3DS era of consoles is more popular than the PS4 and PS5. With a PS5 costing 80,000 yen compared to the 50,000 yen for a Switch 2, it's too pricey for many players. The big money is in mobile gaming, and getting a small slice of that pie can lead to big returns. The risk is worth taking. Every year at the Tokyo Game Show, alongside the typical lineup of major Japanese publishers and select international partners, a few free-to-play titles take to the show floor. By spending big on flashy booths with female models handing out fliers and freebies, they hope to generate word of mouth on their upcoming or already launched free-to-play games. This year, it felt overwhelming seeing how many of these booths littered the show floor. They filled the void left by a lack of eye-catching games from major studios. Instead, fans flocked to booths for Love and Deepspace, Infinity Nikki, Nikke, and more to take photos with their favorite characters, snag exclusive merchandise, and interact with other fans. Among the unreleased games vying for attention, lots of buzz centered around Ananta, the new free-to-play open-world action game developed by Naked Rain and published by NetEase. The game consistently enjoyed long lines throughout the event, with large backpacks designed after the game's main character ever present on the show floor. While online reactions noted the game's many similarities to popular titles from other studios, reaction from those playing the demo was relatively positive. Many relished the idea of enjoying these mechanics within a more appealing anime aesthetic tailored to the Asian and Japanese markets. Other free-to-play games enjoying long lines at the show included Smilegate's Miresi: Invisible Future and another NetEase title, Sword of Justice. There are other reasons these games are growing in the post-COVID Japanese market. Though the huge player numbers and overall market spend are eye-catching figures for studio executives, the spend per user on mobile games is significantly lower than those who are primarily console or PC players. High revenue is offset by high spenders, a point emphasized by a recent survey noting 18.8% of respondents admitted prioritizing gacha spending over essentials, including rent. While Japanese players are more willing to spend money on free-to-play games, there remains a significant portion of the Japanese player base for these games that engages with these titles without spending anything. With the trend for more high-budget free-to-play titles, these games offer cash-strapped players a chance to enjoy high-budget, flashy action and graphics without needing to buy a new device beyond the essential phone they already own. After decades of relative price and wage stagnation, inflation without similar increases in the average wage has left many Japanese people struggling to spend money on luxuries such as gaming. Coupled with the fact that the most successful free-to-play games enjoy a vast multimedia empire, these games offer a chance for players to embrace not just a game, but a lifestyle. Some who choose against in-game spending will instead spend money on merchandise centering their favorite characters, allowing people to show off their hobbies to friends without the initial high cost of entry. They can meet and participate in in-person activities that merge their hobbies with socializing. It's luxury on a budget – a chance to go out eating and do fun events with friends, without sacrificing other hobbies. In such a market, the key to success comes in encouraging the most intense players to part with their money, something that translates to more extreme public showcases. Sex sells, and a number of booths sought to attract the eyes of hardcore players with raunchy displays and fan service. Nikke's booth, for the second year running, offered a 'human gacha,' where players could simulate the roll for new characters in-game by pressing a button to reveal suggestive cosplayers in boxes reminiscent of the in-game character reward screen. Miresi: Invisible Future grabbed attention by showcasing the artistic vision of AD Kim Hyung-seop on a 5.5-meter LED cube, mostly resulting in the rather scantily clad main character's butt and chest jiggling endlessly for all to see. It felt demeaning, but if these can attract the players who will spend the excesses of money needed to pull these characters in-game and keep the game afloat, this will be viewed as a success regardless. In an attempt to earn maximum money and cut budgets in a time when game spending is tight, it should be no surprise that the same 2025 games industry report found that 51% of Japanese developers stated they are embracing generative AI in development. The rise of AI, the exploitative nature of the manner in which these free-to-play titles were being showcased, alongside the lack of major titles from Japanese publishers and developers, made this an uncomfortable Tokyo Game Show to visit. It's no secret that as the industry undergoes a post-COVID realignment of expectations, companies are slashing budgets and canceling games. While firms like Square Enix are publicly acknowledging the fact they are adjusting their approach to games development and canceling titles, the true scale of cancellations is likely to be far larger. Layoffs in Japan are not as prevalent as has been seen internationally, thus helping studios to retain institutional knowledge that is being lost elsewhere. However, it would be naive to pin this year's shift in balance on a temporary course correction rather than a decade-long trend of economic uncertainty, which has forced players to reconsider their spend on new games and instead find experiences within the rising free-to-play market. The popularity of free-to-play mobile titles has been easy to spot online and by glancing at the phones of people playing on the train. To ignore this trend would be to ignore the more existential concerns facing the future of gaming both inside and outside Japan. While respect for Japanese games and media is growing, it's hard not to view the Tokyo Game Show in 2025 as representing the anxieties of the industry and its players, rather than its virtues. The worries of developers about budgets and the need to scale back, the worries of players about how to afford new consoles and games, and how to keep enjoying a hobby they love. Solving these issues will require economic intervention that goes far beyond gaming.