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Japanese ArcadeAlthough video game arcades are mostly seen as a thing of the past throughout the world, they still remained very much alive in Japan before the COVID-19 pandemic. That, however, might soon change.

Before COVID

Japanese Arcade Business Market Size
The industry had been growing in the years before the pandemic

The numbers released by the Japan Amusement Industry Association (JAIA) in February 2021 indicate that the size of the market for arcades, valued at 705.5 billion yen in 2019, had in fact grown by 3.5% from 2018. While the market had actually been shrinking in size from 2011 to 2014, dropping to 588.3 billion yen in 2014, it started to see steady growth from 2015 to 2019.A contributing factor to the rising popularity of arcades before 2020 was the changes to the Law on Control and Improvement of Amusement and Entertainment Businesses – typically known as the “fueiho” in Japanese – in 2015, which made it so that children below 16 years age would be allowed into arcades up to 10 PM when accompanied by a parent or guardian.

This is not to say, however, that traditional video game arcades were doing particularly well before the pandemic. Though the arcade business as a whole was doing better, a closer look at the numbers indicates that a lot of this growth had come from “prize games” such as crane game machines being installed in venues that are not arcades: It is not uncommon to see such machines in department stores, restaurants, and assorted amusement facilities, and these are counted as part of the market.

Crane Games in Japan
Crane games are the single most lucrative type of arcade game

Prize games (which are 89.46% crane games) accounted for a whopping 55.3% of the arcade game market in 2019, with second place going to medal games at 29%. Video games, trailing in third place, accounted for only 11.7% of the market in that year.

Additionally, while all other major categories listed by the JAIA – prize games, medal games, music/rhythm games, and “amusement vendor” machines (a category comprising of machines that print cards, photographs, or bromides, or dispense trinkets such as embossed metal tokens) – saw growth in 2019, video games alone went down to 92.1% of the previous year.

Taito Station Fuchu Kururu
Taito Station Fuchu Kururu has 454 crane game machines in a single venue

The popularity of prize games has reached the point where there are now amusement arcades with no video games at all. Despite the ongoing pandemic, Taito Station opened a massive 1800㎡ arcade comprised almost entirely of crane games on August 2020 in Fuchu, Tokyo, and the total number of 454 machines got the title of “most claw crane game machines at a single venue” from Guiness World Records – At least until it was taken by a Sega arcade in Kabukicho which reopened in December 2020 with 477 machines.

Frontline Gaming Japan talked to some arcade gamers on their thoughts regarding the situation.

“It was always hard to get into arcade gaming” says Satou, a university student. “If you aren’t good you lose really quickly. There’s a need to train, but arcade games aren’t kind (to newcomers). While some have tutorials now, most people still have the impression that they’re difficult and hard to understand.”

Fate Grand Order Arcade
Some arcade games are balanced to require the player to invest heavily in the gacha

“It doesn’t help that many arcade games now have online game-like elements, like log-in bonuses, equipment drops, and leveling, making them harder to get into,” continues Satou.  “The game companies probably think this helps to make new players continue playing, but I think it has the opposite effect. In the end, even people who are used to arcades have problems getting in if they do not follow them from launch.”

Koyama, an office worker, thinks that smartphone games have also contributed to youths losing interest in arcades. “Smartphone games can be played anywhere, and are free to play. You have to spend money on gacha, but recently arcade games have started to implement gacha as well in addition to the fee for playing them.”

After COVID

The COVID-19 pandemic has hit arcades hard. While the Japanese constitution means that the government does not have the power to impose a real lockdown, most businesses complied with requests to close early or entirely during the state of emergency declarations issued in April 2020 and March 2021. These declarations hit large cities and especially the Tokyo metropolitan area – and thus the areas with the biggest concentration of arcades – the hardest.

Japanese Arcade Games
Many arcades are seeing far less customers due to the pandemic

Small, privately-owned arcades had already seen falling revenue in recent years, and many of them closing down was not unforeseeable, but 2020 saw several big and famous arcades close down as well: Kabukicho’s Shinjuku Playland Carnival, which had been a fixture in the neighbourhood for 35 years, closed down in November, as did Adores Akihabara, which had opened in 2012.

Sega Akihabara 2nd closing down in August was likewise a huge shock to arcade-goers, as was the follow-up announcement in November that Sega Sammy Holdings would be pulling out of arcade management entirely, selling 85.1% of Sega Entertainment’s shares to Genda. The decision is understandable, as Sega Entertainment was hit particularly hard by the pandemic, with losses of 900 million yen at the end of the fiscal year ending March 2020, and further projected losses of 2.7 billion yen for the first quarter of the next fiscal year (ending March 2021).

Other companies have suffered losses as well. Round One, which runs amusement centers which include arcade games, reported a negative net income of 16.48 billion yen in Japan for the period of April to December 2020. Aeon Fantasy, which operates arcades primarily targeting young children, in August 2020 estimated losses of 11 billion yen for the fiscal year ending in February 2021. Konami and Bandai Namco, which are also involved in arcade business, similarly reported losses, in stark contrast to game companies less involved in arcades such as Nintendo and Square Enix actually seeing increased profits due to people staying home more.

Taito Station - Disinfection Sign
Taito Station has signs on cabinets that players flip over when done, signalling to staff to disinfect the machines

The arcades are of course trying their best to weather this storm. Most have implemented anti-COVID measures, such as setting up ample hand sanitisers, giving players access to antiseptic and towels so that they can use to wipe machines off before use, having staff frequently disinfect machines, anti-virus coatings for machines, setting up plastic barriers in between machines, and of course requiring the use of masks at all times. Several small arcades have also resorted to alternative forms of income, such as streaming or uploading videos or crowdfunding.

It will be some time before we have access to real numbers that show the full impact that COVID-19 has had on arcades, especially given how the pandemic is still far from over, but it is already clear that it will certainly have severe and long-lasting effects on the industry.

 

Also see:

Farewell to Warehouse Kawasaki: Japan’s Cyber Kowloon Walled City

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