Sega Is Exiting The Japanese Amusement Arcade Business After Half A Century

Sega Sammy has announced it is selling the remaining 14.9% of its Sega Entertainment division to rental business Genda Inc., the company which purchased 85.1% of Sega Entertainment’s shares in 2020.

The sale follows a torrid time for arcade operators globally, with the ongoing pandemic massively impacting business. It also marks the end of 50 years of Sega arcades in Japan. Sega Entertainment is to be rebranded as ‘Genda GiGO Entertainment’, with all Sega arcades in Japan being turned into ‘GiGO’ centres.

Sega’s history in Japanese arcades stretches back to the 1960s, and it is thought to have operated around 1,000 game centres in the late ’90s. However, since then, the arcade sector has been in a slow decline as home systems have increased in power, and today, only a fraction of the arcades that were operating during the ’80s and ’90s continue to do business.

Sega’s history with co-op gaming goes back even further, of course; established as ‘Service Games’ in the 1950s with the aim of supplying coin-operated amusement machines to U.S. military bases, the company would eventually release its own coin-op, Periscope, in 1966. When the explosion of video game arcade machines happened in the ’70s and ’80s, Sega became one of the leading firms thanks to a string of hits including OutRun, After Burner, Virtua Fighter, Daytona USA and countless others.

It was this arcade pedigree that allowed the company to enter the home arena and challenge Nintendo – another company that had benefitted from the increased popularity of arcade machines. Sega’s most successful system, the Genesis / Mega Drive, would become a best-seller in the west, ending Nintendo’s period of dominance. However, subsequent systems fared less well and at the turn of the millennium, Sega was forced to abandon its hardware concerns and become a third-party publisher. It maintained its arcade centre business even since via the Club Sega arcades and sprawling Joypolis amusement parks, but that is now coming to a close.

Genda GiGO chairman Hisashi Kataoka said of the news:

Sega stores across the country will be switching their store names to GiGO, to express our gratitude for Sega’s 56 years of history and our desire to be an oasis that quenches people’s thirst for real entertainment. We will start with Ikebukuro, Akihabara, and Shinjuku. Then to the whole country.

There’s some good news here – Sega Entertainment only runs arcade locations, and the arm of the company which manufactures and distributes its actual arcade machines is different, so we’ll still be seeing Sega games in amusement arcades – just not ones owned by Sega itself.