Any mobile game enthusiast knows just how cut-throat the platform can be. Every month, dozens of gacha games on Android and iOS announce their shutdowns, with even seemingly successful games getting the axe without warning. Apparently, according to a new report from Japanese research firm Teikoku Databank, Japan’s mobile and gacha industry might just be approaching its breaking point.
The firm reported that a total of 10 bankruptcies involving sumaho geemu (smartphone game) operators were ‘confirmed’ between January and July 2026. While that might not sound like much, it already ‘greatly exceeds’ 2025’s cumulative total of just three companies going under. It’s also on track to surpass the previous record of 12 cases way back in 2015. And with four months still left in the year, things could definitely get worse.
The report opens with, “Looking at the 29 bankruptcies of smartphone game operators that occurred within the past five years, very small businesses with capital of under ¥10 million (around $63,000) accounted for 15 cases, or 51.7%. There have also been bankruptcies of small-scale businesses after losing contracts from major game companies withdrawing from development, among other factors.”
A big part of the problem seems to be attributed to rising development and operating costs, as the mobile market shifted from lightweight browser-based social games toward the more sophisticated ‘native apps’ around 2015. “Nevertheless, as the complexity of game content changes to 3D graphics and full voice acting, with added chronic game creator shortage, initial development costs often balloon to the scale of several hundred million yen,” the report writes. It also adds that demand for post-release updates like characters and events, while seen as necessary to compete, put a massive maintenance burden on companies.
A couple of years ago, visual novel developer Visual Arts (via AUTOMATON) candidly revealed that it cost around $13,600 just to keep its now-defunct Itsuwari no Alice gacha game running every month, with $7,600 going toward cloud server fees. It showcased how expensive it is to keep a niche mobile game alive, let alone ones with a much higher number of active players. Teikoku Databank’s report also cited that Japanese social media erupted when Ambition, developer of Bungo Stray Dogs: Tales of the Lost, announced the game’s end-of-service just one day before filing for bankruptcy. The situation quickly became a hot mess as players were left with unused paid items and no refunds for their microtransaction payments.
“Competition has also intensified with long-running mega-hit titles, titles from established IP, and overseas companies from countries like China and South Korea that have abundant financial resources and high development capabilities,” added the report.
Our weekly report of Top 10 gacha game charts also illustrates this issue. Japan may have pioneered social games — and paved the way for gacha regulations into the mainstream — but the influence of Chinese and Korean games on its home turf can no longer be ignored. Often, Wuthering Waves, Honkai: Star Rail, and NIKKE dominate not only the global top-grossing charts but Japan’s domestic market as well. Even highly popular Japanese-made games like Fate/Grand Order or Umamusume have to fight tooth and nail just to stay in its own Top 10 chart.
ObserverCrew Picks
bserver
