If there's one element of gaming culture which has held on in Japan longer than the US, it's big video game arcade sites. But it seems that the COVID-19 pandemic will be claiming them as their next casualty with news that Sega Sammy is selling off their arcade business division.
Sega announced to shareholders yesterday that they would be selling 85.1% of shares of the Sega Entertainment division to Japanese amusement rental business Genda. While the company would retain 14.9% of the shares, Sega reported they would be posting "extraordinary losses" in the ¥20 billion deal. Genda reportedly will be buying up amusement machines, prizes, and related items as part of the deal, according to Gamesindustry.biz.
The Sega Akihabara Building 2 arcade in Akihabara shut down permanently at the end of August this year, after closing near the start of the pandemic before reopening briefly in June. Sega had previously reported that the pandemic's effect on business was highly detrimental, posting significant losses across multiple divisions in the first fiscal quarter of the year, with the Entertainment Contents division being the only bright spot due to video game sales. Even then, the performance wasn't as good as it could have been due to arcade machines being under the same umbrella.
It should be pointed out that Sega Entertainment's function was primarily the creation and operation of arcades, and which will now likely be a potential area for Genda to expand into should things stabilize. However, Sega Sammy will still be making the actual arcade machines themselves.
Food For Thought
The loss of the arcade business, and the currently crippled demand for arcade machines (along with pachinko machines, which Sega also manufactures), is a harsh blow not only to Sega, but to gaming culture at large. One would hope Genda could salvage something out of this, but they're as subject to the knock-on effects of the pandemic as Sega was. Japanese gamers will doubtlessly be wondering what happens next, right along with the rest of us.