Report: Japanese arcades in slump

There seem to be arcades on every street corner in Japan, and the industry is worth some $6.9 billion a year--but the sector seems to be in something of a slump. Recently, Sega Sammy and Namco Bandai, two of the biggest arcade owners, announced that they will be closing a significant number of their arcades. Sega Sammy will be shutting 110, around a quarter of its total, whereas Namco Bandai is giving the boot to between 50 and 60, approximately 20 percent.

According to analysts interviewed by Reuters, one of the main reasons behind the closures is the advances in home and mobile gaming, including the arcade-style experiences offered by Nintendo with games such as Wii Sports and Wii Fit. A Namco Bandai spokesperson earlier in the year pointed the finger at the Wii, along with other factors including rising petrol prices. Widescreen HDTVs are also partly to blame, say analysts, allowing gamers to use gaming platforms such as the PlayStation 3 to essentially re-create "the arcade experience" at home.

Namco president Jun Higashi commented at a recent conference, "We need to innovate, especially in the realm of games where people move their bodies. We also need to develop games that can't be played at home."

Square Enix president Yoichi Wada told Reuters that what the industry needs is a breath of fresh air, and he suggests measures such as inviting nonarcade businesses to open franchised stores to bring in new ideas, and developing games for couples and the elderly. He concluded, "The industry is at a crossroads. We are going to have to change anyway, so we might as well take the lead."