6 2.0 Japanese marketing environment analysis-PESTEL
2.1 Political and legal factors
2.1.1 Form of Government
2.1.3 Judicial branch
2.2 Economic factors
2.2.2 Interest rate and inflation
2.2.3 Three major industries
2.3 Technological factors
2.3.2 Internet access
2.3.3 Science and technology
2.4 Legal factors
2.4.1 General legal system
2.4.2 Trademark law
2.4.3 Labour law
2.5 Social-cultural factors
2.6 Environmental factors
10 3.0 Consumer behaviour
10 4.0 Marketing plan
4.1 Marketing goal
4.2 Marketing objectives
4.2.1 Short-term objectives
4.2.2 Long-term objectives
4.3 Financial objectives
4.4 Market entry strategies
4.4.1 Mode of entry
4.5 STP (Segmentation / Target / Positioning)
4.5.1 Market segmentation
4.5.2 Primary target market
188.8.131.52 Secondary target market
4.5.3 Market positioning
4.6 Marketing Mix
4.6.7 Physical evidence
23 5.0 Plan assumption
5.1 New product – LoL as a console game
5.2 The cooperation with GungHo
5.3 The operation system in Japan
5.3.1 Monitor and support GungHo
5.3.2 The R&D of LoL in console game
24 6.0 Implement and contingency plan
6.1 Specific action plan
6.2 Contingency plan
27 7.0 Marketing budget plan
28 8.0 Conclusion
29 9.0 References
30 10.0 Appendix
Executive summary Enclosed in this foreign market entry report is the proposed expansion of league of legend by Riot Games in Japan. In this report, the below is the proposed market entry modes, which is being a partner with GungHo. The GungHo Online Entertainment known for hosting the Japanese server for a wide range of online games. After Riot has gained enough knowledge, experiences about the Japanese game culture. Riot Games could be able to establish its own company and run Asian servers itself in Japan. In Japan, Riot Games will maintain it’s positioning as providing a highest quality game services, healthy game environment. As well as Riot Games would like to position League of Legend as the current popular social online game played in the world that can play in PC and MAC as well. In addition, it is to offer the social game where people can come to play as a team to get victory, also they can make more new friend in the game. The total investment estimated of League of Legend server into Japan is 2.9 million. It was included that expensed for the game server lease, human resource, network technique and network equipment. It is planned for League of Legend Game to reach a break-even within 3 years, and then make the profit 20% of the market share within 3 years and to increase revenue by 20% per year after the break-even year. From the beginning of the planning to the unveiling of the League of Legend by Riot Games operating into Japan, the estimated time expenses of this entire process is one year. The entry planning is following the specific action plan which is laid out in section 6.1 a manager in Japan will be appointed to be the in-charge of the League of Legend by Riot Games operation which will be established as a separate section game serve under the Riot Game Group.
1.0 Introduction 1.1 Objective The objective of this League of Legends game which is one of Riot games company entry proposal is to advise and propose a series of preparations that are fundamental for entering the selected new foreign market, Japan. In addition, our marketing plans which are consisting of four components, which are the game culture environment analysis in japan, a marketing plan, a marketing budget and a marketing entry mode. It will ensure the success of League of Legends in Japan. In addition, the recommendations on implementation and contingency planning are also suggested at the end of the marketing entry mode. 1.2 Background League of Legends is a multiplayer online battle arena video game which is published and developed by Riot Games for Mac OS X and Windows (Kurtis, 2013). This game is not funded by ad or ordinary box sales revenue. It is a free game building for everyone. Actually, it was first announced on October 7, 2008, and then it was released on October 27, 2009. It has so many services in the world, such as North America, Brazil, Latin America North, Latin America South, EU West, EU Nordic & East, Turkey, Russia, Oceania, republic of Korea. In additionally, this game has grown in popularity in those years, and the daily active players are about 12 million. This game is so successful in America. It includes so many heroes, and every hero has its own history and background. It is very attractive for players. Moreover, American publics also care about the accomplishment and admire hero. Next, the game is not only one-person game, that should play likes a group. It needs everyone help each other to get the victory. 1.3 Research methodology To collect those data from the Internet bar, network in Japan. The research was decided by quantitative research which measuring the number of league of legend game players, then analysis the data about that. In addition, to care about the quality
of the league of legend game, the research also was decided by qualitative research which asking players how they feel about this game. 1.4 Scope The marketing plan entry in Japan was included insights to the game culture in Japan, marketing environment analysis that is PESTEL, marketing plan, marketing strategy, marketing enter mode, implementation, contingency plan and marketing budget about setting up league of legend in Japan.
2.0 Japanese marketing environment analysis-PESTEL 2.1 Political and legal factors 2.1.1 Form of Government Generally considered about the national form of Japanese government is constitutional monarchy. Japanese emperor is the symbol of the state and of the unity of the people. But he has not right to participate national policy. Cabinet is the highest administrative organ and responsible for Congress. The Prime Minister of Japan is the head of government and he is the chief of the executive branch. Amp Shinzo is incumbent Japanese Prime Minister. 2.1.2 Constitution According to the current Japanese constitution published on May 3, 1947. Japan implement the legislative, judicial and executive power based on parliamentary cabinet system. In addition, Congress is the highest authority and the only branch of legislature.
2.1.3 Judicial branch In Japan, Supreme Court is the highest court. The jurisdiction of Japan belongs to the Supreme Court and different level of Subordinate Court. The higher judicial
members are appointed by the Emperor. For the Japanese judicial system, the Supreme Court plays a role as the final judicial authority. 2.2 Economic factors 2.2.1 Macroeconomic In the economic area, Japan is an extremely developed country and one of the richest countries in the world. Therefore, Japanese has a high level material standard of living. According to nominal GDP, the economy of Japan is the third largest in the world. In 2013, the total GDP of Japan is $4.8973 trillion and GDP per capita is $38,459. Comparing with last year, the figure of GDP increase 1.5%. Japan’s service sector, especially banking, finance, shipping and business services accounted the largest proportion of GDP. 2.2.2 Interest rate and inflation For a long time, Japan’s deflation restricts the development of Japanese economy. In addition, Japan’s highly accommodative monetary policy makes Japanese prices rose in 2013 and dues to negative real interest rates at present. At the same time, Bank of Japan through buy more government bonds to hold down the rise of long-term interest rates. So that the real interest rates dropped to below zero from the last year. Negative real interest rates are likely to pull the Japanese enterprises and equipment investment.
2.2.3 Three major industries Among the three major industries, the proportion of tertiary industry accounted for to reflect the level of development of a country. In Japan, the tertiary industry occupies 65% of total three major industries. There are two special industries in Japan’s tertiary industry, animation industry and video game industry. For Japan, the video game industry has been one of the important pillars of the national economy. It occupies a pivotal position in the fifth of GNP. Japanese game is also an important part of export. 2.3 Technological factors 2.3.1 Internet Japan is the world’s leading in the Internet technology area. In 2013, Japan had about 40 million broadband lines service. It is the third largest broadband market in the world only after America and China. Therefore, the popularity of Internet rate is very high. More than 80% Japanese are using Internet now. Then a Japanese internet service provide a new broadband plan with 2Gbps downloads and 1Gbps uploads in Tokyo area. It is expected to become the world’s fastest commercial networks. 2.3.2 Internet access Now there are so many ways to access Internet in Japan. Generally, Japanese Internet Service Providers (ISPS) include ASAHI NET, J:COM and SpinNet. This three companies offer various types of high-speed internet, television and mobile phone service. It is also have a fair price. 2.3.3 Science and technology Japan is the world-class level in many areas like manufacturing and electronic information industries. As we know, the manufacturing industry is the pillar of the national economy. Now Japanese government put more attention on information appliances, video game and animation as a new breakthrough. With the development
of since and reduce the cost of technology. Games as an entertainment leader, it will naturally have influence on developing a country’s game industry 2.4 Legal factors 2.4.1 General legal system In the modern time, Japanese legal law system based on the European system. After World War II, the Japanese legal system has gone through judicial reform. Which is carried out large-scale changes between protection of human rights and criminal procedure.
2.4.2 Trademark law Today’s Japanese trademark law is mainly based on the Trademark Act of 1559. According to Japanese trademark law, only can establish a trademark right after registered trademarks. In addition, it is necessary to access examination procedure to registered trademarks. Through the protection of trademarks, trademark user maintenance services on credit, in order to conducive the development of the industry and protect the interest of those who demand. 2.4.3 Labour law Japanese labour law is the system of labour law operating. In conditions of employment must be clearly defined in the employment agreement or provide supplementary rules to the employees. 2.5 Social-cultural factors Social-cultural is an important factor for Riot games as well as League of Legends game to be successful in Japan market. The total population in Japan is 127.6 million in 2012. The total population of the total consumption in gaming industry in 2010 was 510 billion Yen (about 5 billion US dollars) and 469.2 billion Yen (about 4.5 billion US dollars) in 2011 (Asian Game Markets, 2014). This is a great opportunity for LOL game to enter the market since the overall population willing to
spend money on video games. Another thing is that Japan is on the top 3 biggest game markets in the world, LOL still have chances to compete and develop in the market. Plus, Japanese culture is collectivism, by understanding well the culture, Riot games can implement a great strategy to advertise and make LOL becomes more popular among Japan and familiar to all players. Unlike Japan, in USA, people always try every type of games and choose their most preferred one. 2.6 Environmental factors In this situation, LOL will be designed to have a friendly and "healthy" environment in game. Riot games does not support people to play game for long period of time or be obsessed with the game. There are many cases that players keep playing one game straight 3-day and then die right after because of stress. After two to three hours playing, there will be a notification pops up and remind that players really need to take a break. It helps prevent LOL from becoming a social problem or being harmful to players. Riot games want everybody plays and supports the game in such a positive way.
3.0 Consumer behaviour Games is like a fashion wear, people will play the kind of game that fit for them or most of people play in the same culture. In Japan, people love to play the traditional types of video games, which is shooting and adventure rather than strategy games, which LOL is. The number of players play LOL is because they want to try new thing and want to deliver the new taste of Western games into Japan market. For current situation, Riot games cannot expect large percentage consumption for LOL. Sony, Nintendo and Microsoft are the three giant companies that have strong background in game productions, all the games designed by them are very suitable for the Japanese culture. There are some main issues that directly affect the consumer behaviour in consume LOL game.
Japan is one of the biggest game markets in the world, however, Riot games has not opened a main sever yet. There are total nine severs are built in Asia market include: Korea, China, Thailand, etc. If players want to play, they are forced to play in foreign sever. However, playing in foreign servers may have some problems. Firstly, the connection is not stable, which distracts and make players feel upset during the battle. Secondly, the language issue is a big barrier for communication. Because this is a strategy game, they have to communicate well with the team to win. However, playing in other sever outside Japan means Japanese players need to talk in the second language: English, Korean or even Mandarin. Imagine how they will play without communicating with teammates or team members do not understand each other. Also, there are limited number of players and advertising in Japan, it could not gain attention from large group of people and people don't even know what this game is about. In another words, the brand name is not well-known and the distribution channel is still weak in Japan. In case they want to play LOL, where do they go to buy it, from which store or which website they can try out this product. From some research shows that, when a hit game release in Japan, that company normally does advertisement to attract people. Plus, if the game is kind of traditional type of video games, people willing to buy it even it's only available in English version. More people in the same culture play, another people start to play too because it's a new trend no matter what. Japan is a collectivism culture so Riot games should consider this point. However, that's the thing Riot Games is now lacking of. They need to improve in marketing plan to gain more customers' consumption, position it in customers' mind, get over other competitors and change their behaviour toward this new kind of game. If LOL is really trendy and famous among Japan, the consumer behaviour will definitely change again.
4.0 Marketing plan 4.1 Marketing goal To be the leader of online game market in Japan 4.2 Marketing objectives
4.2.1 Short-term objectives To create awareness of LoL to Japanese gamers (40% within 6 months; additional 40% within a year) To gain preference for LoL in Japanese online game industry (20% within 6 months; additional 30% within a year) To increase the number of LoL players in Japan (20% within 6 months; additional 30% within a year) 4.2.2 Long-term objectives To promote LoL as Top of Mind Awareness game for online games in Japan (40% within 1 year; additional 40% within 3 years) To rise the amount of Japanese daily active players (10% within 1 year; additional 20% within 3 years) To obtain over 1 million ID of LoL players in Japan within 2 years 4.3 Financial objectives To reach a break-even within 3 years To increase revenue by 20% per year To gain 40% of the market share within 3 years
4.4 Market entry strategies
4.4.1 Mode of entry
According to the above PESTEL analysis, Riot Game should enter to Japanese game market by using a joint venture with a Japanese game company in order to achieve its goal and objectives in Japan.
GungHo Online Entertainment would be the suitable partner for Riot to cooperate with in Japan. Since GungHo is a Japanese video game corporation, it is known for hosting the Japanese server of a wide range of online games such as Ragnarok Online, Tantra, Lucent Heart, Divina and so forth. In fact, GungHo is expert in planning, development, operation and distribution of online computer, mobile and console games. And it is the one who develop Ragnarok DS for the Nintendo Ds (GungHo Online Entertainment, n.d.). By cooperating with GungHo, Riot will be able to enter the Japanese market easier than by itself due to lots of nationalism of Japanese that is hardly to open for foreigner companies. This collaboration will help Riot overwhelming the language
and culture barrier as well as avoiding miss-decisions from the differences of consumer behaviour and easily solving Japanese Government regulation issues. Moreover, Riot will be able to have the server for LoL and efficient distributing networks in Japan.
Being a partner with GungHo, Riot will gain more insights information, knowledge and expertise about Japanese game market as well as more support from the local societies. Furthermore, it would help Riot for developing LoL into online console game since GungHo has experience about this issue from develop Ragnarok DS for Nitendo DS. After Riot has gained enough knowledge, experiences and profits in Japanese and Asian game market, the wholly owned subsidiaries could be the next step in the future. Since Japan is the centre of Asian game market, Riot could be able to establish its own company and run Asian servers itself in Japan. Even though this step will be so expensive, Riot could decrease its costs by moving its servers in Asia to the server in Japan and use it as its main server for Asia. Furthermore, it is worthy because having its own subsidiaries in Japan will make Riot has fully control and minimise its costs for operating in Asia. Likewise, it will be a bridge for Riot to launch its new games to Asia in the future.
4.5 STP (Segmentation / Target / Positioning)
4.5.1 Market segmentation Segmentation base Selected variables Description Demographic Age Between 15 – 25 years old Psychographic Lifestyle Fun seekers Behavioural Benefits Have fun with friends and meeting new friends
Age structure of Japanese demographics 2013 13.40% 24.80% 9.70% 13.80% 38.30% 0-14 years 15-24 years 25-54 years 55-64 years 65 years and over Figure 1. Index mundi (2013). 4.5.2 Primary target market
After conducting marketing research, teenagers (15-24 years old) have been chosen as the primary target market for LoL. According to Index mundi (2013), as illustrates in Figure 1 teenagers represent approximately 10 percent of Japanese citizens which is more than 12 million people. This number implies that there are plenty of opportunities in Japan for Riot to catch this target market.
The reason that targeting on teenagers is because the behaviour of this group of age which represents the best of “Fun seekers”. Adolescent tends to look for something fun and fresh more than older people as well as they like to do things with
their friends (Nishikawa, 2009). Moreover, teenagers account for almost 80 percent of LoL players throughout the world (League of Legends, n.d.).
Additionally, as mentioned in PESTEL analysis, Japanese people tend to play console game more than PC games and online games. Therefore, LoL in online console game would be the new alternative way for Japanese teenagers who want to try something new and have fun with their friends in the same time.
184.108.40.206 Secondary target market This secondary target market will act as the additional market for LoL after Riot have gained preferences in the primary target market. Adult (25-54 years old) or working people would be the secondary target market for LoL. This group of age represents the biggest amount of people in Japan by almost 40 percent of all Japanese citizens (Figure 1). Hence, there are many opportunities for Riot to expand the number of LoL players in this target market. Since working life in Japan causes a wide range of strains and stresses, LoL would be the way out for them to relax form their jobs and spend times have fun with themselves as well as making a new friend in social online game like LoL. However, it cannot be denied that there are lots of ways to relax in Japan but it also has to be accepted that it will costs a lot of money. Therefore, LoL would be their suitable alternative for relaxing at their home with the minimum spending that cost them just the internet data.
4.5.3 Market positioning At the present, League of Legends (LoL) has been known as the most PC game played across the world with nearly 1.3 billion hours of gameplay (Forbes, 2012). This means LoL has around 27 million people play the game daily or 67 million people a month (Frobes, 2014). To enter to Japan, Riot would like to position LoL as the current popular social online game played in the world that can play in PC and console. The purpose of LoL is to offer the social game where people can come to play and have fun with themselves or their friends as well as making a new friend.
4.6 Marketing Mix
According to the PESTEL analysis, Japanese prefer to play games with their own unique style of game characters called “Anime”. Likewise, PC game is not quite popular in Japan. Japanese rather play game in console than in computer. Therefore, by cooperating with GungHo, LoL will be turned into console game (PS4, X-Box and so on) and offered to Japanese market. New heroes and skins in Anime style will be launched in LoL every 2 months. However, LoL will also be available in PC game as offered in many parts around the worlds in order to gain the market share as much as it could.
For PC, LoL will be available for free download on the internet. LoL CD also be available for sell for 3,599 JPY (around $35). It comes with one exclusive alternate champion skin model, 20 playable champions, 4 special Summoner Runes and 1,025 JPY (around $10) of Riot Points for use in the game.
For console, the price will be higher than PC CD due to the costs of turning LoL into console game. LoL console CD will be sold at 5,099 JPY (around $50), it will come with one Anime exclusive alternate champion skin model, 25 playable champions, 5 special Summoner Runes and 1,535 JPY (around $15) of Riot Points for use in the game.
As mentioned in the entry mode, Riot will sign GungHo as its joint venture to distribute and run the server for LoL players in Japan. LoL PC and console CD will be available for sell at local game centres in Japan. Most of local internet café will have LoL available for consumers to play.
Being a partner with GungHo, Riot could advertise on local website and television to create awareness in Japan. Local game centre and internet café would be the great strongholds for LoL in terms of advertising to the target market. As well as in social network, do the marketing and public relations trough social media will easily reach the target market because nowadays almost of teenagers use social media at least one such as Facebook, Twitter, Social-Cam, Instagram, Line and so on. Furthermore, LoL could be able to participate in the Japan Online Game Association and run events together with the Japanese organisation.
In the first quarter after the entry, the selling price of LoL console CD would be sold at 20% off to the market in order to gain the market share and preferences for LoL. Afterwards, league and season tournaments will be conducted for Japanese player to compete and win the prize. Moreover, top teams of Japanese players will be encouraged and supported to go for international tournament of LoL. At the end, participating in charities and donations will be another way to do the marketing and public relations. These will create lots of awareness and good image for LoL in Japan and Asia.
The supported team will be provided to help and support LoL players. Players can contact the supported team via the help forum in the main website to inform any problem about League of Legends such as technical problems, top-up methods and so on. The supported team will reply and attempt to solve the problems within 24 hours. Moreover, game administrators will be provide and authorised to play the game with players in order to improve the quality of LoL as well as look for any problem occurs in LoL.
4.6.6 Process In the case of process, there are 6 methods that players can top up their Riot Points (game currency) in the League of Legends (Let's Talk Payments, 2014);
Credit Card: Discover, Master card and Visa are accepted
PayPal: This method require the user’s PayPal account that links with a bank account, credit card or debit account. This method allows users to purchase stuff without having to enter their personal credit details every time they would like to make a purchase.
Paysafe Card: This method is safe and easy for users to top up their Riot Points without requiring a bank account or credit card. Nowadays, Paysafe Cards are available in more than 300,000 sales outlets throughout the world.
Mobile Payment: This is an easy-to-use method wherein users can purchase by sending text messages, and the users will be charged through their mobile bills or balances.
Prepaid RP Cards: The Prepaid Cards is one of convenient ways to top up Riot Points without requiring a credit card or a bank account. These cards can be purchased at local stores and redeemed through LoL’s in-client store by entering the card’s pin code.
Cash and Gift Cards: These gift cards can be purchased from one of the retailers associated to Openbucks. The cards enable players to purchase the Riot Points with cash and use in LoL’s store to redeem their Riot Points.
4.6.7 Physical evidence Currently, there are more than 100 released champions and skins in LoL available for players to choose (League of Legends, n.d.). Moreover, every champion has different stats and skills, this implies that players will have a wide range of dimensions, styles and strategies to play this game. LoL will be able to play in both PC and console. The impressing point is there is no wall between the players on PC and console, so they can enjoy and play the game together. This would make LoL different from other PC online game.
5.0 Plan assumption 5.1 New product - LoL as a console game The one of the main objectives of the Japan marketing plan is the new design of league of legends as a console game. This strategy aim to create a new bursting point for the economic development. In the short-term, the game publish in the console will help the company’s development in the Japan market, depend on the Japan game culture. In the long term, this new product will lead the company into the console game world market. The console game market is a very big market in the game industry. For example, only for USA, there are 67% households play video game (ESRB, n.d). This big market will be an important factor that support the profit growth in the future. The marketing plan in Japan should provide this long term objective for the company, the joint venture partner and the development of the Japan operating system are all relate to this objective. 5.2 The cooperation with GungHo For a simple summary of the cooperated agreement with GungHo: the basic partner agreement is 40% of profit from Japan Market can be share to the GungHo
company. But the requirement for this high share rate is the GungHo entrainment not only provide the high quality operating of LoL in Japan but also support the design of the LoL in the console game. The professional design ability in console game and good relationship with Nintendo also is the main reason why we chose GungHo. However the Riot Game can undertake 20% operating expense in the first year as a promotion to ensure this cooperation can be done. 5.3 The operation system in Japan. Riot is decided to set its own branch in Japan for future development in Japan and Asia. The Japanese branch will directly manage the operating of LoL in Japan, the main operating management will be control by its partner- GungHo Company. There are two main functions or aims for the Japan Riot Game branch.
5.3.1 Monitor and support GungHo One basic aim for the branch is to ensure that GungHo has a good operating management for the LoL in the Japan market. And also give necessary support like promotions plan, game technical support and so on.
5.3.2 The R&D of LoL in console game This is the core function of the Japan branch in this two years during 2014- 2015. To work with the Research & Development department (R&D) of GungHo, design the LoL game in console in this two year. And also negotiate with Nintendo to ensure the game can publish in the Will finally. The simple structure of the operating system in Japan show in the Figure 5.1.
Figure 5.1 the structure of LoL in Japan.
Riot Game Japan Branch GungHo Online R&D Department Operate Management Game/ Financial New Product Customer Services Console game-LoL Services
6.0 Implementation and contingency plan 6.1 Specific action plan
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2014 2014 2014 2014 2014 2014 2014 2014 2015 2015 2015 2015 Initial
system Planning Discussion
with GH Process
set/test (PC) Game
design/test (Console) Final Test
*GH---GungHo Online Entertainment The official operating date will set at 5/5/2015- The Children Festival day for Japan.
Key Date for the Plan: 11/6/2014: The E3- Electronic Entertainment Expo in Los Angeles. World famous and biggest expo for Game industry (IGN, 2013). Announce the plan of go to Japan Market and cooperation with GH 18/9/2014: The TGS-Tokyo Game Show in Tokyo: The biggest game show in Japan. The detail of the operating of LoL will publish in this show also the idea of “play LoL in Console” 11/11/2014: The Final beta test combine with PC and Console will start. 5/5/2015: The official operating of LoL in Japan and official world publish of LoL in Console game. 6.2 Contingency plan A contingency plan is a plan B prepared for if the implementation plan failed. A prepare risk control plan for short-term and long-term problem of the Japan Game market. There is one important process in the Implementation will be the most uncontrolled element of the plan that we need to evaluate. The delay problem of the new product---LoL in console game. Even we consider the time for redesign the game as a console game is enough by cooperate with GungHo (5 months in Plan A), we still need to consider about the fail of design quality. A base line for the problem is we will not publish the LoL console game until the game is ready to be published with high quality. And we also need to be loyalty to the customers. First of all, we will require the R&D groups and main managers make evaluation about the design progress at September, it is the middle month of the design plan and in this months’s TGS show we plan to announce the plan of play in console. The Riot Game Branch will evaluate ‘does the products can be publish in the official operating date of Japan market. If not, the plan will change to Plan B: 1. The LoL in console game will not be publish in the TGS show in Tokyo, also will not be publish with in the official operating date until we confirm it is totally completed. To ensure the product can provide high quality services to our customers. 2. The whole plan of the operating in Japan will not change. The PC part of the plan
will continue and publish firstly in the official operating date as we plan. To ensure what we promise to our Japan customers in the E3, the trust of customers is very important to our company.
7.0 Marketing budget plan Japan has a high rent cost and labour cost in the world especially in Tokyo, so the branch operating expense become a main expense in the budget plan. And consider with the Japan Game market, the market research fee, promotion and products redesign also become an important expense for the game investment in Japan. According to this situation and the implementation plan, we make up a simple budget plan of the marketing that dividing the major operating expenses into five different factors in the Table 7.1: (The totally marketing investment budget can be find in Appendix 1)
Operate Expense 2014(May-Dec) 2015(Jan-Apr) Total (12months) Branch operate $1,114,000 $557,000 $1,671,000 Market Research $36,600 $22,800 $59,400 Product Design $166,660 $8,000 $174,660 Promotion/Ad $812,000 $118,000 $930,000 Interactive $29,400 $15,200 $44,600 Media(online) Total $2,158,660 $721,000 $2,879,660 Table 7.1: The simple summary of Market Budget for first year in Japan
The first thing that needs to be explained is the Branch operate as the highest expense in the budget is consider with the high rent price in Tokyo, We are try to keep it low as we can. But depend on the average rent price for business building is $183 for each square foot, the rent of the office cannot be reduce more (CBRE, 2013). The second is the market research fees, this fees include the policy consulting, target
market research in Japan to help our branch have a better understand of the policy and culture of Japan Game market. Another thing need to mentioned is the plan of promotion, it is decided not to keep invest in the TV ad and magazine, because the kind promotion way is not popular to the youths which is our target customer group. The promotion will focus on the interactive media with internet for example the famous ACG website in Japan - NicoNico, and the biggest blog website Mixi, depend on the low cost of this new promotion way, the expense of promotion will reduce (Kono, S. 2009). However, the total expense for the first financial year’s investment in Japan is nearly three million. We think this is an affordable expense for we set up the business in Japan game market. The potential market scale of the Japan Online game is nearly $1400mm, the expense for such big game market is necessary (Yamazaki, F. n.d).
In conclusion, Riot games need to have a great preparation for all information needed before entering Japan market. Japanese is a big game market for very game companies, however, not all the games can be succeed. What works in the USA might not be applied to Japan since there is a big difference between two cultures. It really requires Riot games to have right strategies and tactics to survive and develop among competitors and increase the total consumption.