Cast your minds back, dear readers, to the start of the year. We reported that Sega would sadly be leaving the arcade market, selling the remaining 14.9% of its Sega Entertainment division to Genda Inc with the division being subsequently rebranded as 'Genda GiGO Entertainment'.
Now, it looks like the arcade business might be starting to flourish under its new ownership, though not without a bit of jiggery pokery in the accounting department. See, Genda GiGO Entertainment has posted a profit of 3.175 billion yen in its most recent financial report, which is quite the turnaround when you compare it to the 2.308 billion yen loss that was reported the previous year when Sega was still holding the reins.
A 5 billion yen turnaround is impressive, to be sure, but according to Sora News 24, Genda began a mass re-evaluation of its arcade assets and took in what's known as "impairment loss", which essentially means that an asset's fair value is deemed to be less than the full market value on the balance sheets. This then means that the depreciation costs against the assets are much lower than they would have been prior to the takeover, meaning profits can be achieved much more easily.
So while the profit recorded by Genda is good, it's doesn't necessarily mean consumers are suddenly flocking to the arcades. To put it in perspective a bit, when Sega was running the arcade business, its fixed assets were listed at slightly less than 24.8 billion yen. In comparison, after Genda's re-evaluation, the fixed assets were valued at 11.5 billion yen. So, not quite a miracle success story. Regardless, any profit is positive, and it could signal a turn in fortunes for the arcade business in Japan going forwards.
What do you make of Genda's strategy in achieving profit in the arcade space? Reckon it can maintain its good fortunes? Share your thoughts in the comments below.
[source soranews24.com]
Comments 21
On YouTube I have seen a Video of such an arcade. If I recall correctly only the name on the outside changed. Seemed really fun, as do all arcades in Tokyo. Hopefully they will stay profitable. No more arcades would be a big loss and I don't even visit arcades. I am simply happy they exist.
@Jhena
Depends. If the arcade was already mostly UFO, gacha and card based machines, which a lot where, then there was almost no change. The arcades that more closely resembled what people in the west think of when they hear "arcade" got complete overhauls though. A lot of times this isn't cosmetic, given you can just swap the boards on the machines that are already there, but on a practical level the type of games you can play is very different now.
This actually happened to Sony arcades in the west years ago, when they all moved from simple game cabinets to more "ride based" items and "skill" games that dispensed tickets.
Arcades have that air about them that you just can’t get anywhere else, I don’t know how to describe it.
Long live Sega, and the arcades !!
Apples to oranges obviously, but a local brewery turned their basement into a rather impressive arcade recently and the place has been PACKED. There’s often a waitlist to get in. It’s incredible.
Did Sega not take its allowed depreciation?
Bad business in another way.
@commentlife Another reason for me to visit Canada! Whereabouts is it?
I just wish that arcades would return to their old mentality. Give us more stuff that can ONLY be done at arcades, whether it be due to unique control setups, or because standard consumer tech just isn't strong enough to be able to run it. Please, companies, stop with the arcade ports of console games. I want something cool to be in arcades again.
@alexybubble Silly, they don't port console games to arcades. They port mobile games. The one arcade around, which is a great one, but it has rows of Flappy Bird, Candy Crush, and Crossy Road, I kid you not. Who goes to an arcade to pay to play a game that's literally already available in your pocket AT the arcade?
@alexybubble To be fair, especially in Japan, a ton of games come out with controllers that wouldn't be possible at home (Music game machines, but not only, look at Dance Central or the Densha de go with the crazy full sized train cabine)
For the rest you mention, I don't think that it's still possible for the arcade material to surpass home entertainment anymore. Most cabinet are PC based today, with the exact same components that are available to the general public.
It is far the time where arcade machines were so much ahead of everything we could get at home, sadly.
@NEStalgia True. I was mostly thinking of the modern fighting games that have arcade versions that feel more like afterthoughts than anything.
@F_Destroyer They could still get the absolute top of the line hardware that costs so much that average consumers just won't be able to afford it. Plus, there are still plenty of things that you can only get in arcades. You can't exactly get the experience of a full sit-down racing game arcade unit anywhere else, even if you have full VR with haptics and a steering wheel controller. I'm sure there are other experiences that you could only get in arcades as well. Imagine some Gundam tie-in that actually took advantage of the fact that you were in an arcade, and had an entire system set up as though you were actually in the cockpit of a Gundam, with all of the various switches and controls that would be inside it if it was a real machine. It might feel ridiculously complicated at first, but once you got it down, it would probably be one of the coolest video game experiences you could ever get. The same goes for any vehicle-based game; the arcade allows you to get a controller that just wouldn't work anywhere else. I'm sure that there are plenty of other possibilities that I'm could come up with, but that would take a bit more time than I have at this moment.
If there was any arcades locally to me I'd support them in a heartbeat but alas there isn't...
@Jhena Maybe KidShoryuken? He has great videos about Tokyo arcades: https://www.youtube.com/watch?v=pgQSp3s0wrw
@Snatcher Absolutely. The lights, the sounds, the fun and the victories and the losses. There's such a vital energy about an arcade, especially for people who grew up using them.
@GG11
Yes, that's the one. I am really enjoying his videos.
@Skunkfish Not sure if he can was talking about my town, but we have a place that is call Barcade and it's in Saint John, New Brunswick. That have a place sounds like that comment described.
@alexybubble When I was in Japan Mech simualtors were exactly what were taking a full floor at many arcades, games likes Gundam Battle Pods for exemple (https://otakuusamagazine.com/Uploads/Public/Images/Newsletter/1-8-13/GundamPod_02.jpg)
I tried to play one, really, you need a diploma to get it right, it's super complicated. I believe the machines were connected online, you were battling with other people at the same arcade, or maybe even on the whole Japan, I thought it was amazing
@Maximumbeans Yes, hit the nail right on the head! It’s amazing!
@mike_intv Yeah I wondered that too, I would be curious as to what Sega’s accounting staff did different from Genda.
It's becoming increasingly harder to do those GameCenter CX "visit an arcade" segments. Sigh...
If you're ever in Japan, be sure to check out Big-One, where they play a lot of fighting games. Here is their Twitter: https://twitter.com/public_bigone
Long live fun arcades!!! There is a special feeling to them that is hard to replicate. Preserve & update them.
... Wun can only hope.
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