In Japan, arcades are in crisis

In recent years, Tokyo’s arcades, these very popular establishments concentrating games of all kinds, have seen several of their famous representatives close one after the other – for example the late Sega Building 2, in Akihabara, the electronic and trendy district of the Japanese capital, in 2020. And this negative spiral is struggling to reverse itself.

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In a note published on April 7, the analysis company Teikoku Databank looks at this decline in traditional Japanese arcades, marked by the bankruptcies and closures of 18 of them during the 2023 financial year (it there were still 4,022 in 2019). Which represents an increase for the second year in a row, and a record since 2018. In ten years, nearly 8,000 centers and arcades have disappeared.

In fact, the economic model of these establishments is shaken: operating costs have become prohibitive, particularly due to high rents in urban areas and increasing energy bills. Operators are also facing a decline in interest among younger generations, who are more attracted to home entertainment offerings – led by home consoles and streaming platforms. In addition, some companies are obliged to honor loans granted during the Covid-19 pandemic.

Gripper machines

The average operating profit of this type of establishment is only 6 yen (less than 4 euro cents) per 100 yen of turnover. Thus, for every 100 yen coin spent, the usual price of a game, 94 yen is only allocated to operating expenses, which does not allow viable profit margins to be maintained.

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Even video game giant Sega had no choice but to withdraw in 2022, after more than fifty years in the arcade market. After the establishment of Akihabara, that of the Ikebukuro district closed at the end of 2021. At its peak, at the end of the 1990s, Sega was a real heavyweight in the sector, with just under a thousand theaters operated throughout the Archipelago.

Certain large chains, which favor shopping centers, have nevertheless been able to adapt to market developments, by turning to a single economic model, by only offering gripper machines (with which we catch lint), in order to respond to an increasingly family and occasional demand. On August 29, 2020, Taito Station even validated the world record for the largest number of gripper machines in the same location for its Fuchu branch and its 454 devices.

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