Why Japan’s Gen Z Is Spending Less Time and Money on Video Games: Trends, Causes, and Industry Impact

Japan’s Gen Z and the Changing Face of Gaming

For decades, Japan has been a global epicenter of video game culture, home to legendary companies like Nintendo, Sony, and Sega. But in 2025, a surprising trend is emerging: Japan’s Generation Z (those born roughly between 1997 and 2012) is spending less time and money on video games than previous generations. This shift is not unique to Japan—similar patterns are being seen in the United States and other major markets—but the reasons behind it, and its implications for the gaming industry, are uniquely shaped by Japanese society and Gen Z’s evolving values.

How Much Are Gen Z Gamers in Japan Really Playing and Spending?

Recent surveys paint a clear picture of declining engagement. According to data from Intage and SHIBUYA109 Entertainment, the proportion of Japanese people aged 15-29 who play video games at least once a year is dropping, especially among those in their 20s. Among Japanese Zoomers (aged 15-24) who do play games, the average daily playtime is about 100 minutes, and annual spending hovers around $70. However, most identify as casual or idle players, with the median yearly spend closer to $42. This is a stark contrast to Millennials, who globally spend much more—up to $112 a month in some regions.

These numbers are echoed in the United States, where a Wall Street Journal report highlighted a 13% year-on-year drop in spending among Americans aged 18 to 24, and a 25% decrease in weekly spending. While the Japanese decline is less dramatic, it is still significant given the country’s historical love affair with gaming.

Console Gaming on the Decline

One of the most striking findings is the waning popularity of traditional home consoles among Japanese Gen Z. Surveys and anecdotal reports suggest that platforms like PlayStation 5 and Xbox are far less popular with today’s youth than with previous generations. Instead, Gen Z prefers gaming on smartphones, gravitating toward free-to-play titles and quick, accessible experiences.

Mobile and Free-to-Play Games Dominate

Mobile gaming is now the dominant platform for Gen Z in Japan, mirroring global trends. According to SQ Magazine, 92% of Gen Z globally engage with games on mobile devices, and 86% identify as “mobile gamers first.” In Japan, this preference is even more pronounced, with console and PC gaming taking a back seat to smartphone-based, free-to-play games that fit easily into busy, multitasking lifestyles.

Why Is Gen Z Spending Less on Games?

Understanding the reasons behind this shift requires looking at both economic and cultural factors, as well as the unique mindset of Gen Z.

Economic Stability, But Shifting Priorities

Unlike their American counterparts, Japanese Gen Z are not facing a severe economic crisis. Japan’s unemployment rate remains low, and job availability is steady. In the U.S., by contrast, a cooling job market, rising student debt, and inflation are forcing young people to cut back on discretionary spending—including games. As one analyst told the Wall Street Journal,

The rug’s not just being pulled out from under young people, it’s being burned while they’re still standing on it.

Yet, even in Japan’s relatively stable economy, Gen Z is choosing to spend less on games. Why?

The Rise of “Taipa”: Time Performance

A key concept shaping Gen Z’s behavior in Japan is “taipa,” short for “time performance.” This refers to the value placed on maximizing the return on time invested in any activity. Japanese Zoomers are increasingly conscious of how they spend their time, seeking content that delivers the most value or enjoyment in the shortest period. They are more likely to multitask, fitting gaming into idle moments rather than dedicating long, uninterrupted sessions to a single title.

This mindset makes free-to-play mobile games, which can be played in short bursts, far more appealing than lengthy, expensive console or PC games. As development costs and prices for full-priced games rise, Gen Z’s reluctance to invest significant time and money in such experiences becomes a major challenge for the industry.

Social Connection, Not Just Gameplay

Another major driver of Gen Z’s gaming habits is the desire for social connection. According to SQ Magazine, 58% of Gen Z consider gaming their main social space, and 67% of multiplayer gamers use voice chat regularly. Platforms like Roblox, which allow for creativity and social interaction, are especially popular.

This trend is not limited to Japan. Globally, Gen Z values games that offer open worlds, deep stories, and opportunities for social interaction. However, they are also savvy about spending, favoring free-to-play and affordable games with microtransactions over expensive AAA titles.

Gaming as Part of a Broader Digital Lifestyle

Gen Z’s relationship with gaming is deeply intertwined with their broader digital lives. Social media, streaming, and gaming are all part of a seamless ecosystem. User-generated content, influencer culture, and digital fashion are increasingly important, with many young people expressing themselves through in-game customization and sharing their experiences online.

In Japan, this is reflected in the popularity of “oshikatsu”—the practice of supporting favorite idols or franchises through merchandise and social activities. While not limited to gaming, oshikatsu spending often overlaps with fandoms related to anime, games, and pop culture. The Bank of Japan has even noted the economic impact of this phenomenon, as young people prioritize spending on special experiences and goods tied to their passions.

Comparing Japan to Global and Regional Trends

Japan’s Gen Z is not alone in reshaping the gaming landscape. Globally, the industry is experiencing both growth and transformation:

• The global games market is forecasted to reach $188.9 billion in 2025, with mobile gaming leading the way.
• Console revenues are declining in some regions, while PC and mobile gaming continue to grow.
• Microtransactions and in-game purchases now account for a significant share of revenue, especially among Gen Z.
• Social and user-generated content platforms like Roblox and Fortnite are surging in popularity.

In China, a parallel trend is unfolding. The “2D goods economy” (erciyuan) and “guzi” collectibles market are booming, with Gen Z and Alpha consumers driving demand for anime, comic, and game-related merchandise. These goods are seen as emotional investments and status symbols, reflecting a broader shift in how young people value and express themselves through consumption.

Regional Differences and Similarities

While economic pressures are a major factor in the U.S. and parts of Europe, Japanese and Chinese Gen Z are more influenced by cultural shifts, digital lifestyles, and changing definitions of value. In all cases, however, the move toward mobile, social, and affordable gaming is clear.

Industry Response: Adapting to Gen Z’s New Priorities

The gaming industry is taking notice. With Gen Z spending less on traditional games, companies are pivoting toward models that align with their preferences:

• Free-to-Play and Microtransactions: Games that are free to download but offer in-game purchases are thriving. Microtransactions now drive 76% of global online gaming revenue.
• Social and Cross-Platform Play: Developers are creating experiences that allow players to connect across devices and platforms, emphasizing social features and community.
• Short-Form and Snackable Content: Games designed for quick sessions and easy access are increasingly popular, fitting into Gen Z’s multitasking habits.
• Brand and Influencer Integration: Collaborations with influencers, digital fashion, and branded virtual goods are becoming standard, tapping into Gen Z’s desire for self-expression and social status.

Even amusement arcades and entertainment centers are evolving, integrating VR, AR, and exclusive merchandise to attract young customers. In Japan, claw machines offering rare goods and themed cafes tied to popular franchises are drawing crowds, blending digital and physical experiences.

The Challenge for AAA and Console Games

For traditional console and AAA game developers, the shift is more challenging. Rising development costs and higher retail prices make it harder to appeal to a generation that is both time- and cost-conscious. As one Reddit user observed,

Sony took its game HQ out of Japan because console gaming is dying in Japan.

While this may be an exaggeration, it underscores the urgency for established companies to adapt or risk losing relevance with the next generation of gamers.

Beyond Gaming: Gen Z’s Broader Consumption Patterns

It’s important to note that Gen Z’s reduced spending on games does not mean they are disengaged from entertainment or digital culture. In fact, their spending is often redirected toward other forms of fandom and self-expression. The “oshikatsu” phenomenon in Japan and the “goods economy” in China illustrate how young people are investing in experiences and merchandise that reflect their identities and passions.

According to the Asahi Shimbun, Gen Z’s enthusiasm for oshikatsu is so strong that it is being credited with boosting Japan’s economy. Young people are willing to cut back on daily expenses to save for special experiences, concerts, and merchandise tied to their favorite idols or franchises. This pattern is echoed in China, where the collectibles market is booming and seen as a form of emotional investment.

Gaming as Social Glue and Emotional Outlet

For many in Gen Z, gaming is less about competition or achievement and more about connection, relaxation, and self-expression. Games are a way to stay in touch with friends, explore new identities, and find respite from the pressures of daily life. This is especially true in a post-pandemic world, where digital spaces have become essential for socializing and entertainment.

In Summary

• Japan’s Gen Z is spending less time and money on video games, favoring mobile and free-to-play experiences over traditional consoles and AAA titles.
• The trend is driven by a focus on “taipa” (time performance), social connection, and smart spending, rather than economic hardship.
• Console gaming is declining among Japanese youth, while mobile and social gaming platforms are thriving.
• Similar patterns are seen globally, with Gen Z prioritizing affordability, flexibility, and social features in their gaming choices.
• The gaming industry is adapting by emphasizing free-to-play models, microtransactions, and cross-platform play, but faces challenges in selling premium games to this demographic.
• Gen Z’s spending is not disappearing, but shifting toward experiences and merchandise that reflect their identities and passions, such as oshikatsu and collectibles.
• The broader implications for the gaming industry include the need for innovation, new business models, and a deeper understanding of Gen Z’s values and digital lifestyles.