The year 2020 was abnormal. As you probably see, I’m referring to the worldwide pandemic called COVID-19. This historic pandemic has forced people around the world to stay at home. As a result, many industries like tourism, restaurants, shops, etc., have had financially devastating damage, and they haven’t seen a silver lining yet. On the other hand, many people have spent the time brought by stay-at-home orders with streaming services like Netflix and Amazon Prime Video, e-commerce shopping like Amazon, and digital content like mobile apps.

The mobile app is one of the genres activated by this pandemic. According to AppsFlyer, App downloads were up 33% in 2020, growth of 25% compared with 2019. You can understand how 2020 was an abnormal year if you look at the 2020 top ten apps list in Japan, tallied by App Annie.

Top 10 List Apps in Japan (2020)

1. COCOA — COVID-19 Contact App
2. ZOOM Cloud Meetings
3. PayPay
4. LINE
5. Instagram
6. Amazon Prime Video
7. SmartNews
8. TikTok
9. UberEATS
10. Twitter

2020 Top Ten List Apps in Japan according to APP ANNIE

COCOA (№1 on the list) is a COVID-19 contact app officially provided by the MHLW (Ministry of Health, Labour and Welfare of Japan). Japan and many countries have taken advantage of this kind of app to track the spread of novel coronavirus. But people in Japan aren’t forced to install and utilize this app because Japanese authorities are very conscious of personal privacy. Even if someone has tested positive for COVID-19, they don’t have any obligation to report the infection to the app. I have not seen restaurants make customers use this app so far. Therefore, many experts and even everyday people criticize such a policy. I would say this is a controversial app, and this controversial app was ironically installed the most in Japan last year.

I don’t think I have to explain ZOOM Cloud Meetings (№2) and UberEATS (№9). When it comes to Uber, there is no ride-sharing economy in the Japanese market because old industries like the taxi industry have successfully influenced authorities. There are strict laws, and politicians hesitate to overhaul these laws. Therefore, Uber has no choice but to focus on the delivery business. Of course, there are some competitors. For example, Door Dash seems to prepare for expanding into the Japanese market because I have seen the job listing. Wolt, which is from Finland, is already trying to market their service in Japan, but they are hardly well known by everyday people. DEMAE-CAN, which was taken over by LINE (№4), is a strong rival for UberEATS.

Global social media platformers have played an active role in Japan

Japan has the third biggest business market next to the Chinese market. Therefore, global social media platformers don’t ignore the Japanese market. Instagram (№5), TikTok (№8), and Twitter (№10) are very prevalent and popular for Japanese people.

Instagram is the most popular app in Japan now. Many Japanese brands have an official account on Instagram, and they are actively involved in it. Many influencers regard Instagram as the main field, and there are many campaigns there. I guess this popularity will last for the time being.

TikTok is also popular for mainly Gen Z in Japan. But in my opinion, we have to pay attention to the US government’s policy. President Trump (as of this article’s writing) tried to prohibit TikTok in the US market because of a national security threat. As of now, there is no movement to ban or impose regulation on TikTok in Japan. But we shouldn’t forget Japan is one of the US’s allies. There are several US military bases in Japan. If the US government requests something about TikTok or Chinese companies in Japan, I guess the Japanese government can’t ignore such a request. When President Trump issued the executive order about TikTok, many Japanese media outlets covered it, and several municipalities in Japan decided to stop their campaign on TikTok. Unfortunately, Japan and China have political issues. If something happened between Japan and China and then many Japanese had a negative impression about the Chinese government and the Chinese Communist Party, nobody can deny the likelihood of strict restriction on TikTok in Japan.

When it comes to Twitter, I would say Twitter is the social media platform that the Japanese feel most familiar with. According to the company’s release, Twitter in Japan has 45 million MAUs as of 2017. Instagram users have been increasing during recent years at a rapid rate, but Twitter is the №1 social media platform except for messaging app, LINE. Even if Instagram and TikTok increase their market share more than now, I guess Twitter would retain the power of influence for the moment in the Japanese market.

LINE has no rivals in Japan

Speaking of messaging apps in Japan, there is no contender for LINE. I know WhatsApp and WeChat are the global standard, but they are hardly a contender for the Japanese. Instead, LINE has a dominant share in Japan. LINE has almost 86 million MAUs in a population of nearly 120 million. This is really the only app everyone, from children to older people, uses daily in Japan.

LINE is supposed to merge with Z Holdings in 2021. Z Holdings owns Yahoo! Japan, and the Yahoo! brand still has retained sway over many Japanese people, unlike foreign countries. The biggest shareholder of Z Holdings is SoftBank, a multinational conglomerate holding company led by Masa (Masayoshi Son).

LINE has no rival in the field of messaging apps in Japan. Therefore, LINE has tried to expand its products and services by taking advantage of the existed enormous users. LINE already released several businesses like music streaming, financial services, Saas business for the company, etc. I anticipate they will positively release more innovative services in the days ahead.

What app will run rampant?

Based on the trends of 2020, I want to anticipate what kind of apps will become popular this year in Japan. In my opinion, there are significant trends such as “mental health management,” “live streaming,” and “cashless payment” in 2021.

This pandemic has forced many people to stay at home. As a result, it is said that many people have a mental health problem around the world now. Some of them are looking to manage their mental health by taking advantage of the functionality of apps.

For example, the sleep-improvement app “Loóna” is popular in the US. According to its own announcement, the average conversion rate from free trial to paid subscription was 52.5 percent. The company says the app is supposed to become a new type of app that can manage the mood by expanding the range of management from the current bed scene. I guess they noticed the importance of mood or mental health management. Some companies might start to provide this kind of app to their employees as a benefits package.

As you know, 5G is one of the biggest trends. I can say live streaming is one of the genres that can achieve its benefits. The so-called influencer usually markets the sponsor’s product or service on Instagram now, but as there are many best practices in China, I guess selling on live stream is becoming more prevalent. This kind of marketing method will become widespread over time. It seems that total compensation so-called Livers (performers) can earn from their fans during the live streaming of a show already runs to billions of yen (over $10 million) per month on the market. Young talented performers have been moving to the internet field from the traditional TV industry. Nobody can stop this movement. The leading apps in this field are 17 live, showroom, MIXCHANNEL, etc.

I expected cashless payment would grow with the trigger of the COVID-19 crisis. I have to say there are still many shops and restaurants that only accept cash in Japan, but the movement of cashless payment has been steadily growing as one sphere of the digital shift. PayPay (№3) has risen in prominence by surpassing other competitors like LINE Pay, Merpay, etc. PayPay has been ballooning by running out of enormous marketing costs, apparently bleeding red ink. The reason why PayPay can fight in this way is that the parent company is SoftBank. It is said that the winner-takes-all policy is the typical SoftBank’s strategy.

I expect we would go back to normal, step by step, thanks to the new vaccine creation for COVID-19. Even if that is the case, we will never forget the digital shift benefits during the stay-at-home period.

According to the research conducted by Adjust, Gen Z and Millennials are most likely to not hesitate to pay subscription fees for entertainment services like streaming. We are more than ever willing to pay for apps to make our daily life better and happier.

It’s getting difficult for publishers to profit from advertisements because iOS14 doesn’t allow targeting ads to work as before. The Japanese love iPhone. According to Statcounter Global Stat, the market share of iOS was 63.21 percent as of November 2020. In my opinion, many publishers will try to diversify their monetization from only advertisements to the subscription fee model as a strategy in 2021.