Akihabara News (Tokyo) — The arcade and gaming business, led by firms such as Sega Sammy, has long been a staple of Japanese pop culture, but now arcade closures across the country threaten this traditional pastime.
Last November, Sega Sammy Holdings announced that it would be selling the majority of its shares in its arcade business to amusement rental business Genda Inc., explaining that this was largely about the impact of the Covid pandemic on its arcade business.
In the past year, Sega Sammy shuttered many of its most iconic arcades.
Most recently, the ax fell on the Sega Ikebukuro Gigo arcade, which had served as a popular tourist destination in Toshima Ward for 28 years. This comes just a year after the iconic Sega Akihabara No. 2 arcade was closed after after 17 years in business.
In both instances, the company cited Covid as the primary reason for the closures, as the pandemic prevented tourists from visiting Japan’s famous arcades. Japan residents too were restricted by early closing hours and lockdown restrictions.
In its latest financial report, the firm observed that “although the market has entered a recovery trend with a focus on prize category, facility operations have not yet reached a full-fledged recovery due to the impact from the spread of Covid-19.”
However, Covid alone is not responsible for the decline in Sega Sammy’s arcade gaming business.
The same report also notes that “the advance of digitalization has brought major changes to the market environment” as the “expansion of download sales for PCs, home video game consoles, etc., the emergence of cloud gaming services, and the diversification of platforms” have rendered the arcade business inconvenient and obsolete.
Even as the rest of the world moved on from arcade gaming by the 21st century thanks to the rise of the internet and consoles, Japan stood firm in its love for its arcades, with many of them becoming major tourist destinations prior to the outbreak of Covid.
But the decline has been structural and long term. While the size of the Japanese arcade market was actually growing in the years leading up to the pandemic, it had become dependent on so-called “prize” and “medal” games, which offer physical rewards to players, while cabinet video games themselves lost popularity.
Of course, he decline in video game arcades is not unique to Sega Sammy. Konami and Round One, have also reported financial losses, intensified but not caused by the pandemic.
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