Capsule Toys Captivate Kids and Adults in Japan, Surpassing $780M Market

The Rise of the Capsule Toy Market in Japan

The capsule toy market in Japan has experienced a remarkable surge, reaching an impressive 120 billion yen (approximately $784 million) in fiscal 2024. This represents a tripling of its value over the past four years. Known as "gacha gacha" due to the sound they make when the handle is turned, these toys are set to celebrate their 60th anniversary in Japan in 2025. Their popularity continues to grow, capturing the interest of both children and adults alike.

A Growing Industry

In late August, the Gashapon Department Store Ikebukuro Sohonten in Tokyo was bustling with visitors, including both children and adults. The store, which features over 3,000 vending machines, also attracted Chinese tourists. According to Bandai, the market expanded from 40 billion yen ($261 million) in fiscal 2020 to over 120 billion yen in fiscal 2024.

Bandai's "Gashapon" holds about 57% of the market, shipping around 220 million capsule toys consisting of approximately 1,530 types in fiscal 2024. If stacked, these capsules would reach a height comparable to the Earth's diameter, earning it a Guinness World Record for "largest capsule toy brand" in August. Yusuke Takiguchi, a Bandai executive, stated that the company’s continued creation of entertaining products led to this recognition, expressing excitement about the achievement.

Origins in the United States

According to T-Arts Co., a subsidiary of Takara Tomy Group, capsule toys originated in the United States around 1930. These early versions were gumball machines that dispensed small toys in capsules, with the toys reportedly made in Japan at that time. In 1965, toy distributor Penny Shokai (now Penny) imported American machines and launched capsule toys in Japan for the first time. Initially, they were placed in front of toy stores and candy shops, selling items like erasers shaped like vehicles and robots for 10 or 20 yen (around 7 to 13 cents).

The popularity of capsule toys surged in 1983 with the introduction of rubber figures of characters from the popular anime "Kinnikuman," which sold a total of 180 million units by 1987. In the 2010s, unique products from small and medium-sized manufacturers emerged, such as Kitan Club Co.'s "Koppu no Fuchiko" figures of a female office worker that sit or hang on the edge of a cup, expanding the customer base through social media buzz.

Specialty Stores During the Pandemic

The recent rapid growth of the capsule toy market was largely influenced by the COVID-19 pandemic. As vacant spaces in commercial facilities increased, more capsule toy specialty stores began to open. Once installed, vending machines require minimal staffing, reducing labor costs. Compared to game machines, they also use little to no electricity, incur lower maintenance costs, and do not require customer service. These factors have accelerated store openings.

As of the end of August, Bandai operated 149 domestic "Gashapon Department Stores" handling other companies' products and 262 stores selling its products exclusively. A representative noted that the establishment of specialty stores is invigorating the market and creating new entertainment venues, with plans for further expansion.

Diverse Offerings and Wide Customer Base

Celebrating its "60th birthday," the continued growth of Japan's capsule toy market is supported by a wide variety of offerings and a broad customer base. In addition to storefronts and commercial facilities, "gacha gacha" machines are now located in train stations and airports, broadening their reach and enabling manufacturers to create diverse products.

According to Bandai, typical capsule toys range from 100 to 500 yen (70 cents to $3.30). However, some vending machines now feature high-priced items up to 2,500 yen ($16). Intricate "Mobile Suit Gundam" figures priced at 800 or 1,500 yen are popular among men in their 40s and 50s. Capsules themselves no longer need to be spherical. In 2022, vending machines capable of handling flat products up to A4 size and 1 centimeter thick were introduced. Products featuring anime and manga characters, such as plastic sleeves, paper boards, and fans, are popular among women, riding the recent "oshikatsu" boom.

Toys like "Tamagotchi" evoke Heisei-era (1989-2019) nostalgia, with Bandai representatives noting that parents who remember the past and children who see it as a current trend enjoy them together. Once aimed at children, the burgeoning capsule toy industry now targets customers regardless of age or gender.

Expanding Japanese Intellectual Property Business

Capsule toy specialty stores have become recognized as tourist attractions for foreign visitors. There is especially high demand for characters from Japanese anime and manga. New products related to Sanrio Co. characters, such as "Hello Kitty" and "Cinnamoroll," are launched monthly, contributing to the expansion of Japan's intellectual property business.

As of the end of August, Bandai operated 112 Gashapon specialty stores in 17 countries and regions, mainly in Asia. A representative stated that the company aims to let overseas customers enjoy the experience of turning the handle and opening the capsule, and expand the business to the same scale as in Japan.

Capsule toy critic Hiroaki Omatsu attributes the success of capsule toys, even amid Japan's declining birth rate and aging population, to their quick success in attracting adults. Despite stagnant incomes in Japan, "Even expensive ones generally cost 500 yen. They have been the only toys that can be bought easily and provide comfort."

While there are concerns that the proliferation of specialty stores may dilute their scarcity and cap demand, Omatsu noted that "Demand from inbound tourists continues, and the market still seems to be growing."