Can Love Save Mobile Gaming?
A discussion on how anime games' unconventional formula revolutionized mobile gaming forever.
Anime style mobile games have skyrocketed into global prominence in recent years, with many independent studios and incumbents alike releasing massive hits one after another. Impressively, the category has seemingly defied the broader mobile slowdown that’s gobbled up many respectable titles and left many VCs wondering whether mobile is still “investable” as a category.
The stats are certainly eye-opening (source: Sensor Tower):
Anime mobile games made up approximately 20% of all mobile gaming revenue in 2022, and generates $1bn+ net revenue per month today.
Revenue per download of ~$15, which is ~5x compared to non-anime games
Median anime game makes ~$11M net revenue (filtering out noise)
To unilaterally hail anime as the modern day savior of mobile gaming based on these stats would be irresponsible, but I believe it would be imprudent to discount its stunningly rapid growth and pass it off as a random fad. As a consumer, I’ve long been entranced by anime games, but as an investor I wanted to dig deeper and figure out exactly how these games have come to capture the hearts (and wallets) of so many players around the world.
Unfortunately, much of the public discourse in the West surrounding this topic has been at the surface level, often inundated with wild oversimplifications or disingenuous stereotypes. To truly understand this trend, I believe we must go all the way back to the genesis of anime itself, and understand its nuanced evolution over the years.
Fasten your seatbelts because this is going to be one hell of a ride :)
A deep rooted culture
First of all, what exactly do people mean when they refer to anime today? Is it a genre? Perhaps a specific aesthetic? Or a type of art form?
Crunchyroll’s Chief Content Officer, Asa Suehira, gave the following response:
“Anime is not a genre, but a medium and a lifestyle.”
Interestingly, what Asa outlines above is actually the definition of a culture. Just like how hip hop culture has breakdancing, graffiti, and rap, modern anime has its own unique cultural elements such as:
A distinct visual language
Cosplay and conventions
Waifus / Husbandos and Moe
Big bad robots / mecha
Religions
Various means of self-expression and identity association
Over time, these cultural elements found their primary expression in 3 forms of content: animation, comics, and games. As such, the term “ACG” was born, serving to encapsulate the cultural and economic interlinkage between these 3 mediums. Therefore, when people refer to “anime style” today, they are really alluding to the underlying components of ACG culture.
But how and when did ACG culture start to take shape?
As you may expect, Japan is the birthplace of ACG, and most of modern ACG culture stems from these early roots.
Prior to the 1960s, Japanese manga and anime were predominantly shaped by Western influences. For instance, the popular science fiction series Astro Boy drew inspiration from Disney's renowned Pinocchio. Similarly, mystery series Lupin III found its creative roots in the captivating exploits of Arsène Lupin, a fictional and debonair gentleman thief conceived by the distinguished French novelist Maurice Leblanc.
It wasn’t until the late 70s and early 80s that Japanese manga and anime began to diverge from the West, incorporating distinct features such as large eyes and crazy / colorful hair (I’m looking at you, Yugi). Cultural cornerstones like mecha also came into being during this period (e.g. Gundam, Macross). Moreover, several bold creators started to experiment with more complex and nuanced narratives (tailored for a more mature audience), as well as genres that challenged social norms at the time (e.g. BL / Boys Love).
Building on the success of the 80s, the 90s saw the rise of two very important people – Hayao Miyazaki (founded Studio Ghibli) and Hideaki Anno (directed Neon Genesis Evangelion). The massive success of Evangelion would lay the foundation for the character focused design approach that’s prevalent in ACG games today (we’ll come back to this important point later).
The 2000s marked a pivotal inflection point for manga / anime, and saw the meteoric rise of 2 highly influential trends – Shonen and Moe. The growth of Shonen (content that targets the young male audience) was fueled by the adaptation of numerous beloved manga series into anime (e.g. Naruto, Inuyasha, FMA, Death Note). This laid the groundwork for a deeper integration between manga and anime over time, with manga serving as an important pipeline to anime (à la storyboards for Hollywood films).
In parallel, the Moe boom spearheaded by Kyoto Animation reverberated throughout the entire Japanese entertainment industry, leaving an indelible impact that still permeates every aspect of ACG culture today. Moe, characterized by intense affectionate emotions, revolutionized character design in ACG. Having relied mostly on intricate narratives in the past, creators suddenly discovered the powerful appeal of characters whose sole purpose was to elicit immediate and strong feelings of affection. K-On and Lucky Star were perhaps the prime examples of IP that embodied Moe design — simple slice-of-life narratives depicting cute girls engaged in cute, wholesome activities. The results were staggering to say the least (K-On basically swept every major award during its year of release).
During that time, the ACG ecosystem had fully solidified itself as a distinct fandom and subculture, though it was still largely confined to Asia. It wasn’t until the 2010s that ACG began to push its way into Western society, marking a significant shift. The current era is best characterized by rapid democratization and proliferation, driven in large part by streaming platforms (Crunchyroll, Netflix), better localization, and the virtuous cross-pollination of ideas with the West. This decade also saw the emergence of innovative new genres like isekai (e.g. Sword Art Online, Log Horizon), and mainstream / global hits like Demon Slayer (first time in the history of cinema that a non Hollywood production topped the annual worldwide box office).
Upon deeper reflection, it becomes evident that ACG didn’t just “suddenly blow up.” It’s in fact the culmination of decades of bold experimentation, skilled craftsmanship, and conscious nurturing of the community. Owing to its rich history, ACG has become an incredibly powerful “niche” culture, and you would be hard pressed to find a more unique, passionate and dedicated community on planet earth.
Gaming's newest trailblazer
We’ve discussed the evolution of manga and anime — but what about games? Where do they fit into this picture?
As it turns out, gaming was the perfect puzzle piece to complete the ACG trifecta, blending a deeply immersive engagement medium with a felicitously lucrative monetization lever (gacha). This was truly a match made in heaven.
What exactly made ACG games so special and allowed it to fully capitalize on the gacha monetization model? A few things stand out to me when looking at the top games:
Willingness to take risk and embrace potentially controversial or non-obvious themes
Girls as X / anthropomorphism (e.g. Arknights, Azur Lane, Uma Musume)
Gender bending (e.g. Honkai Impact, Fate Grand Order)
Militarized girls (e.g. Girls Frontline, Goddess of Victory: Nikke, Blue Archive)
Clever use of dating sim elements across different genres (e.g. Princess Connect)
Strikingly appealing characters
Deliberately designed to be appealing, by invoking as many emotions as possible, as quickly as possible (through minimalistic facial features, exaggerated proportions, vibrant colors, and stimulating expressions / poses)
Characters are given immediately identifiable traits which create a strong first impression (e.g. Hu Tao’s eyes)
Extreme attention to detail — everything is deliberate and nothing is random (after all, how do you expect me to love the character if you didn’t design it with love in the first place?)
Memorable art direction that’s coherent with the world design
Established cultural archetypes (e.g. tsundere) coupled with a sense of mystery (breeds “what if” discussions among fans)
Character synergies (i.e. to create the content network effect that I wrote about in my previous post)
Expansible setting and a story that supports the characters (not the other way around)
Setting that’s easy to explain and relatable, but with a twist (e.g. Fate universe, Genshin and Star Rail’s many distinct regions / planets)
Practically demands emotional attachment (e.g. dark post apocalyptic setting that reinforces your desire to “protect” these characters)
Story gives the player a clear reason to love the characters
Most are single player focused… (yes, I am aware VCs hate this because many are subscribed to the almighty “network effect” of multiplayer games)
The single player live service model has proven to be highly scalable and profitable when combined with gacha monetization
F2P + gacha is the perfect demand tiering mechanism to capture the value of player love for these characters. ACG games are able to monetize deeply as a result (close to $20 per download, going as high as $200+) and don’t require a big player base to succeed. It turns out that both eastern and western players enjoy spending money on collecting characters they care about and love.
By now, it should be abundantly clear that ACG’s “character is everything” approach stands out compared to every other category of games. Contrary to conventional wisdom in game development, character design should always be the #1 priority when it comes to ACG, even if you have to sacrifice some world building or gameplay elements.
The invisible forces powering ACG games
The emphasis on characters in ACG games is derived from a culture that has long prioritized the significance of compelling character development. Remember the Moe boom that I mentioned earlier? Or perhaps Asuka / Rei’s ascendance to god tier status due to Evangelion? The list goes on and on, perhaps tracing back to as early as 1978 with Lum from Urusei Yatsura (i.e. the first “waifu”).
With this character-first approach, ACG games naturally enjoy the many benefits of having a fanatic community.
Less reliance on traditional UA channels — the ACG community will snuff out your game, no matter how obscure. As a result, having a big cash pile as an incumbent publisher imparts less of an advantage in this space (otherwise giants like NetEase or Tencent would’ve bought their way to multiple ACG hits already).
Doujin / fan creations that sometimes even surpass those of the original developer
Intense debates and discussions about these characters (e.g. who is your favorite waifu?)
Furthermore, a multitude of underlying tailwinds are also propelling ACG culture’s rapid growth more broadly:
Generational shift in consumption patterns (only 6% of Gen Z don’t know what anime is1)
People are increasingly more lonely (10 more hours per week spent alone compared to a decade ago2)
XR merging the physical and digital to amplify character immersion
Global expansion (the U.S. doubled its ACG mobile revenue share to ~10% since 2017)
GenAI (ACG filters)
When you take into consideration all these structural advantages, it’s hard to NOT believe that ACG games are becoming a real force to be reckoned with in the global market. Like it or not, ACG is undoubtedly forging a new path in mobile and shedding light to a market that has been hampered post IDFA.
Final thoughts
If you couldn’t tell already, I’m incredibly bullish on ACG games (and content in general). It’s a space that has long been neglected (and even persecuted) by the West, so I’m frankly thrilled to see it finally get the love it deserves on a global scale (thank you Mihoyo!). As a kid who grew up in Taiwan and had to part with some of this passion when I came to the States, it certainly warms my heart that these interests are becoming more widely recognized. Maybe I’ll share a picture of my ACG collection if this post gets enough views…
In all seriousness, I’m very excited to see how this space unfolds in the future, and I hope to continue supporting / backing the brave founders building the next generation of ACG content!
Thanks again for reading! I plan to dive into more detail on this topic in future posts as well, so if you are interested please subscribe below. Till next time :)
Source: Crunchyroll market research.
Source: American Time Use Survey from The Washington Post.