Sega sells off its Japanese arcade business, blames Covid-19 for the decision

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2020 is a bad year to be an arcade owner

In brief: The Covid-19 pandemic has accelerated the world’s race toward digitalization, and unfortunately, that’s resulted in quite a few casualties in the brick-and-mortar retail world. Now it seems Sega’s arcades are among those casualties: new reports claim that the company has sold off an 85.1 percent stake in its Japanese arcade business.

That still leaves Sega with a small ~15 percent chunk of the business, but that’s hardly enough to control its operations. No, from here on out, Sega has essentially washed its hands of its arcades, which might disappoint some of its Japan-based fans.

The buyer in this case is Genda, an “amusement machine company,” according to a Eurogamer report. The outlet says Sega was quite open about the reasoning for the sale, stating the following:

As Amusement Center Operations area in Entertainment Contents Business is strongly affected by COVID-19, utilisation of facilities has declined remarkably, and a significant loss was recorded at 1Q of the fiscal year ending March 2021.

Sega also claims that it doesn’t intend to make any money from this sale. On the contrary, the company is preparing for “extraordinary losses” as a result of the deal, which isn’t something investors are likely to enjoy hearing.

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Practically speaking, not much will change for customers in the foreseeable future. Sega will no longer be operating its arcades, but they will still bear the Sega brand name, and the company will continue to create new arcade games as it sees fit.

It’s sad to see Sega divest such a large portion of one of its classic physical businesses, but it sounds like the move is for the best. There’s no sense remaining on a sinking ship when no rescue is in sight, after all.

Image credit: Sonic Stadium

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