Japan’s love of the arcade couldn’t weather the Covid storm, leading Sega to admit it had sustained “extraordinary losses” which have forced it to sell.
Sega has taken the drastic step of opting to sell off the lion’s share of the operating arm of its Japanese amusement business, citing a “remarkable” drop-off in trade due to the Coronavirus.
Parent firm Sega Sammy Holdings released a press statement late last week claiming to have sold off 85.1 per cent of its domestic arcade operation Sega Entertainment to GENDA, a firm which Sega directors said “has a strong desire” to step into the breach and increase its footprint within the Japanese market.
The company’s top-brass said that fears over Covid-19 had “strongly affected” the level of business Sega Entertainment was able to achieve, adding that “utilisation of facilities has declined remarkably.”
The directors added that the first quarter of Sega’s current financial year had seen SE rack up “significant losses,” although they were unspecific as to the exact amounts.
“Despite the recent recovery trend, the situation remains uncertain,” read their statement. “We have been considering various options in order to adapt to these changes in business aiming for improvement of the profitability and early recovery of sales.”
And it was to this end, so the company said, that it had chosen to drastically reduce its stake in its domestic operational division.
It is unknown exactly how much money will change hands as a result of the sell-off to Genda, however Sega has been frank enough to admit that it is likely to record “extraordinary losses” as part of the transition.
Japanese media have reported that all Sega arcades will maintain Sega branding despite the keys to the kingdom being handed over to Genda: with a statement to Japanese gaming site Famitsu claiming that all visitors “will still be able to continue patronage as usual.”