Sega to Close Arcades, Cancel Games, Lay Off Hundreds


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The house that Sonic built is getting significantly smaller.

Sega's Japanese main branch said Tuesday that it will close 110 arcades, cancel some games in development and seek to lay off 18 percent of its staff. In a series of press releases, the game publisher said that these cost-cutting moves come in anticipation of its recording an annual loss of 25 billion yen (about $238 million) during the fiscal year that will end March 31.

Arcades: Sega owns and operates 450 videogame arcades in Japan, and said it would close 110 of them that show "poor future potential and profitability." This move "may" make the company's arcades profitable even if the that segment of the business gets tighter in the coming fiscal year, Sega said.

Software development: Sega says it will chop 20 percent off its research-and-development budget for arcade and consumer games. The company plans to do this by "consolidating titles to be developed" and "enhancing the self-manufacture ratio."

Running this through my Japanese-to-English translator, these phrases mean that Sega will cancel some games in development and develop more games internally, rather than outsourcing them to outside developers. (I've asked Sega for clarification.) That's a lot of games.

Layoffs: Finally, Sega said it would "solicit the voluntary retirement" of approximately 560 of its 3,127 employees. I wrote in 2007 about the culture of Japanese layoffs: It's simply not done. Laying people off is like disowning children -- it's a long process that may take weeks of consultation with employees to convince them to resign.

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I went to an an arcade in Vegas called funworks in November, It was a pretty sad state of affairs. Actually not because it was totally dead but because about a 1/3 of all the games werent working right. It costs about $10 per person for 3 hours, and I saw about 50 different people in there during the time I played. There was a new aftreburner game, A rambo game which was pretty cool, this terrorist shoot em up game that was ok, they had a vintage corner that was pretty awesome. If it was cleaner and running better Im sure itd leave people with a better feeling.
I was going to go there in Jan, good thing I did not. Good arcades are dying, and the ones that are left seem to be few and far between. Maybe if they werent so bloody expensive to play.
You used to have to buy tokens, which were equivalent to quarters for the most part. It was physical. If something took 3 tokens, you made sure you really wanted to play it, since you could tangibly tell how many tokens you had left, and how much this game would eat into that.

Now the new places like Brunswick Zone XL and Dave & Busters use credit cards. You add money to the cards, and then when you want to play a game, you just swipe the card. You never get a feel for how much the game costs. It's just a swipe. Want to continue? Swipe again. No tangible feel for how much is left in your card and how much it eats into it.

The problem is now those games are taking advantage of the oblivious consumer, and they are damned expensive! 3$ and 4$ per game is not unheard of. You could easily spend 50$ (the cost of a new home console game) in just a half hour if you're not careful.

I of course look at the cost. Sure that shooting game might be fun. But do I really want to spend 10$ (including several continues) to play the game for 10 minutes? I could go buy a retro Saturn or Playstation lightgun game for 5$ and play it for hours.
Dedicated arcades make to sense. I can only see it working in bars, pubs or pizza parlors, where you can play a few rounds with friends while you wait for your food or bored by bloody chit-chat during corporate outings.

I spend about 20$ in one go on arcades a few years ago, but it was in a bar, I was high on liquid courage and flirting with a cute girl. I would not dream about doing it alone or sober :)
I haven't been in an arcade in a good 9 years or so when they closed the local arcade because they were dealing date rape drugs out of the back room.