The number of Japan arcades ‘has declined by 8,000 in 10 years’

The number of arcades in Japan, the world’s third-biggest games market, have declined by nearly 8,000 over the past decade, according to a new report.

Research published by financial analyst firm Teikoku Databank suggests that during the last financial year, there were 18 cases of ‘game centres’ going bankrupt in the country, which is the highest number in the past five years, and the second consecutive increase.

Since before the 2020 pandemic, the number of arcades have declined by 30%, the report suggests, and this has reportedly been accelerated by recent increases in operating costs, such as consumption tax hikes, coin exchange fees, and electricity rate hikes.

In recent years, crane games have become mainstream, making it difficult for game centres to maintain their ability to attract customers with traditional store layouts featuring arcade machines, the report said.

A graph showing the number of Japan arcade bankruptcies.

An increased focus on crane games also means that businesses are vulnerable to an increase in the cost of prizes, according to the report.

An analysis of the profitability of game centre operating companies found that operating profit was only 6 yen ($0.039) per 100 yen ($0.65) of sales on average.

Arcades in Japan have reportedly been on a downward trend even before the Pandemic. According to a police white paper, in 2019 there were only 4,022 arcades across Japan, down from 26,573 in 1986.

In 2022, Sega’s iconic arcade branding disappeared from Tokyo, after the company officially ended its 50-year association with Japan’s game centres.