Game centers

Sega pulls out of business as game centers take pandemic economic hit

In August, the “Sega Akihabara Building 2” closed its doors for good. At the Manseibashi intersection, the game center located in Tokyo Electric City (Chiyoda Ward) was a symbol of Akihabara subculture.

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The closure of the mecca of gamers and otaku fans is a tangible sign of the ongoing economic difficulties plaguing gaming centers across Japan.

Japan’s state of emergency and subsequent COVID-19 mitigation policies have resulted in continued difficulties for some of the gaming center business. Several famous shops in Akihabara and Shinjuku have closed in recent months. The trend prompted SEGA SAMMY HOLDINGS (HD) Inc. to pull out of the industry together.

In the arcade and game center sector, many stores have closed and many companies have had to optimize their management. When COVID-19 hit, businesses additionally scrambled to introduce virus prevention measures, such as the use of sanitizers and masks.

SEGA SAMMY HD announced on November 4 that it would transfer 85.1% of the shares of its subsidiary SEGA Entertainment (Ota Ward in Tokyo), the part of the company that operates arcades, to GENDA (Chiyoda Ward, Tokyo ), which handles the rental of gaming equipment. Kazuko Nagata, a senior analyst at QUICK Corporation who studies business value and strategy, commented on the decision, explaining, “This is a structural reform in order to focus on managing the strong home video game industry.”

SEGA SAMMY HD is expected to continue in the esports sector, which is expected to use game centers. The company will also continue research and development on next-generation game distribution and communication technologies for arcade equipment, among others.

Looking at the trends, a spokesperson for the Japan Entertainment Industry Association (JAIA) said The Sankei Shimbun: “The deterioration of activity in the commercial areas of the city center is particularly serious.”

In August 2020, Sega closed “Sega Akihabara Building 2”, which was a symbol of Otaku land in Akihabara. “Adore” in Akihabara was also closed in August. On November 29, the grand “Shinjuku Playland Carnival” closed its doors, leaving behind more than 35 years of history.

Game Centers are a social phenomenon that exploded in Japan in the 1950s. Unfortunately, they have been in gradual but steady decline for over 30 years. Nevertheless, arcades are still part of people’s imagination in Japan and abroad.

Operators had found ways to increase revenue by introducing e-money, streamlining operations with larger stores, and taking advantage of the popularity of crane games. However, the already struggling sector found itself taking another hit due to COVID-19.

Companies are still functioning and holding up well, despite the crisis. At Taito, which is operated by SQUARE ENIX HD, (Shinjuku Ward, Tokyo), the battle against COVID-19 continues as employees apply virus mitigation measures and disinfect equipment after each use.

(Click on here read the original article in Japanese)

Author: Sankei Shimbun