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Video arcades in Japan face extinction as console sales hit record high amid pandemic

This photo shows the interior of Kasuga Amusement Arcade in Osaka's Naniwa Ward on Jan. 20, 2021. In the foreground is "Gator Panic," a game similar to "Whac-a-Mole." (Mainichi/Hitoshi Sonobe)

OSAKA -- Video arcades in Japan are facing extinction amid the novel coronavirus pandemic, while console sales have reached a record high.

    As of 2019, the number of gaming arcades in the country had already fallen to a sixth of the level seen during the asset-inflated "bubble economy" period due to the penetration of home gaming consoles amid a technology revolution. Recently, the number of arcades is further plunging due to the trend of the times and people refraining from going out amid the coronavirus pandemic.

    Meanwhile, gaming consoles have sold well due to stay-at-home demand, and because of this, major game makers are shifting their operating resources from arcade machines to consoles. In spite of this, some arcade operators are keeping the establishments open to protect what they regard as "places where people can feel excited, like amusement parks in the old days."

    Owner Susumu Kobayashi disinfects a game machine at Kasuga Amusement Arcade in Osaka's Naniwa Ward on Jan. 20, 2021. Partitions are installed between game machines. (Mainichi/Hitoshi Sonobe)

    At the Kasuga Amusement Arcade in Osaka's Naniwa Ward, where lively game music and the jingling sound of medal games are heard, some 130 game machines are lined up, including "Mario Bros.," "Puyo Puyo" and "Gator Panic." The atmosphere of the early 1990s, with an afterglow of the economic bubble era, drifts through the establishment.

    The arcade, located on a shopping street in the Shinsekai tourist district, has been operating for 50 years. Over its history, it has introduced popular games from "Whac-A-Mole," which spread nationwide around 1980, to the fighting games of the 1990s. Though arcades used to carry an impression as dimly lit places filled with cigarette smoke and frequented by rough characters, today the Osaka arcade has a no-smoking policy, and patrons include families with young children. One regular customer in his 60s who lives in the city was enjoying a puzzle game, saying, "This is a place I can stroll into when I want to refresh myself and relax."

    Owner Susumu Kobayashi, 65, said his arcade had always been filled with about 150 people -- more than the number of game machines. Many of them were return customers from all around Japan, from the northernmost prefecture of Hokkaido to the southernmost prefecture of Okinawa. That was until two years ago. Inbound tourism had also been doing well, but the coronavirus pandemic changed everything. Since April 2020, the arcade's monthly sales have hovered at around 20% compared to the same period the previous year, with the daily number of customers dropping as low as 70. Though he applied for the government subsidy program to sustain small- and medium-sized businesses and started selling original retro products, he is far from making up for the fall in sales. The arcade is complying with Osaka Prefecture's request to shorten business hours, but there is no financial compensation. Kobayashi dropped his shoulders in disappointment, saying, "At this rate, I'll go out of business this year."

    This photo shows a rhythm game on which players simulate playing "taiko" drums in Tokyo's Shinjuku Ward on Dec. 26, 2021. These kinds of games have been popular among foreign tourists. (Mainichi/Kazuya Suzuki)

    He believes that he has taken thorough measures to prevent infections. The game machines are disinfected every time customers leave them, and partitions made of plastic curtains have been installed between the machines. Eight ceiling fans are operated at full blast, and players can even feel the strong ventilating wind. In addition to making customers wear masks, when employees see customers conversing for a long time, they approach them and say, "Excuse me, but could you tone it down a bit."

    Yet customer numbers have not recovered. "Do people think they'll get easily infected if they stay inside for a long time? Or have we been discarded by society for being nonessential and nonurgent?" Kobayashi asked.

    While arcades have taken a hit, game consoles have taken off amid stay-at-home demand. Nintendo Co. announced on Feb. 1 that its consolidated net profit for April through December 2020 grew 91.8%, compared to the same period the previous year to reach 376.6 billion yen (about $3.56 billion) -- a record high. Its sales climbed 37.3% to 1.404 trillion yen (about $13.29 billion). The company's popular game software "Animal Crossing: New Horizons" sold 19.41 million copies in nine months, and the Nintendo Switch console has also been selling well. Video game companies Sony Corp. and Capcom Co. have similarly seen sales rise.

    Claw crane games are seen at an arcade in Tokyo on March 21, 2014. (Mainichi/Koichiro Tezuka)

    Even among major firms that operate amusement facilities, there have been moves to downscale arcades and shift to home consoles. In December 2020, Sega Sammy Holdings Inc. sold more than 80% of its shares of Genda Sega Entertainment Inc., whose lines of business include arcade operation, on the grounds that arcades were seeing fewer customers amid the coronavirus pandemic, among other reasons. The company's arcades, which first appeared in 1965, were what helped it to disseminate the Sega brand. Some 200 arcades around the country will be taken over by another firm while maintaining the name, but still, the sale marks a major turning point for the company. Small and medium businesses are doing even more poorly. The Shinjuku Playland Carnival arcade in Tokyo's Kabukicho entertainment district, which had featured in the popular video game series "Yakuza," also closed down in November 2020.

    According to a police white paper, the number of arcades has been declining since 1986, when there were 26,573 nationwide, and stood at 4,022 in 2019. Due to closures amid the coronavirus pandemic, the number is expected to fall further in 2020 statistics.

    One trend for arcades in recent years is their increasing reliance on claw crane games, in which players try to win prizes such as stuffed animals and toys. Statistics compiled by the Japan Amusement Industry Association, which represents about 200 companies, show that the total sales of arcades fell continuously from 573.1 billion yen (about $5.42 billion) in fiscal 2008 to 422.2 billion yen (about $3.99 billion) in fiscal 2014. But sales began to increase again in fiscal 2015, and had risen to 520.1 billion yen (about $4.92 billion) by fiscal 2018. Of the sales in fiscal 2018, claw cranes, or "prize games," accounted for nearly 90% at 281.3 billion yen (about $2.66 billion).

    This file photo shows a claw crane game with Hanshin Tigers baseball team prizes in Osaka's Chuo Ward in July 2003. (Mainichi/Akihiro Ogomori)

    Meanwhile, sales from both medal games and video games dropped almost by half during the 10-year period from fiscal 2008. Medal games saw sales fall from 167 billion yen (about $1.58 billion) to 85.5 billion yen (about $808 million) over the period, while video games sales dropped from 112.8 billion yen (about $1.07 billion) to 68.6 billion yen (about $649 million). The association struggles to see a bright future in these areas, with a representative saying, "We wonder how we can vitalize games other than claw cranes."

    Even so, Kobayashi continues to underscore the allure of arcade games and is keen to keep the Kasuga Amusement Arcade in Osaka alive.

    "There are various games at arcades, and there's a fascination in people being able to enjoy them together," he strongly stated. As if talking to himself as he continued to disinfect machines, he mused, "I'll keep hanging in there, to retain a place where people can drop in with their families and friends and spend time, like on a festival day."

    (Japanese original by Hitoshi Sonobe, Osaka Bureau)

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