When you see the name SEGA, you might think of Sonic the Hedgehog or the Dreamcast console, but that’s not all the company does. SEGA has a long history in the arcade realm, making arcade machines like OutRun and running arcade emporiums. That latter example is coming to an end, though, as SEGA sold its arcade businesses thanks to significant revenue losses.
According to Eurogamer, SEGA doesn’t mince words on why it’s selling Sega Entertainment, its Japanese amusement business:
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.
In addition, despite the recent recovery trend, the situation remains uncertain. 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 of Amusement Center Operations area.
In this process, we have been discussing the transfer of SE shares to GENDA, a company that has a strong desire to expand Amusement Center Operations business and has decided to conclude the share transfer agreement at Board of Directors meeting held today.
The global pandemic led to SEGA Entertainment’s demise. Arcade machines are a shared space and involve touching joysticks and buttons that other strangers handled. Even if you can sanitize everything well enough, keeping the people’s trust is difficult. Ultimate that led to revenue losses and no company can live with that forever.
The good news for arcade center lovers in Japan is, the locations aren’t shutting down. Genda, which bought the majority of the stake in SEGA Entertainment, plans to keep locations open. And if you like SEGA arcade games, there’s happy news too.
For now, SEGA plans to continue creating arcade games and machines. That’s especially good news, as many games we’ve come to love on home consoles started life in the arcade. In many ways, arcade centers are testing grounds for SEGA, and it’s good to see that won’t go away.