Stinger Report - 08/03/2021

TSR Newsletter | March 8, 2021

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Asian Amusement Impact

# 1060

Report Skinny

In The Stinger Report #1060 – This issue covers in detail:

1. Major developments with leading Japanese Amusement Factory BANDAI NAMCO are covered, including changes in governance and the closure of their North American Amusement facility business (NAMCO Entertainment)

2. Further details of the impact of the current conditions on the Japanese amusement scene, including the impact on ALL.Net, and a brand new partnership with famous arcade racing IP from SEGA.

3. News gathered from the limited information revealed from the JAEPO Online Business Meeting – replacing the JAIA physical trade exhibition, as trade gears for summer focus.

4. News from other major Asian online exhibitions, with a breakdown of the latest Chinese Amusement & Entertainment Online Expo – looking at the new trends revealed for the coming year from this industry in transition.

….and much, much more!

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- The Stinger Report, published by KWP and its director, Kevin Williams, is the leading interactive Out-of-Home Entertainment news-and-views resource, covering the immersive frontier and beyond.

Main Report

This latest report lifts the lid on the realities of the Asian amusement scene in lockdown – looking first at the impact and the compromises of continuing restructuring on the Japanese amusement factories, and then turning a gaze to the new shape of virtual conferences in Japan and China to compare the wealth of new products presented.

- The Next Shoe Drops with the Japanese Factories

Continuing our coverage of the restructuring reverberating through the Japanese amusement scene, and following on from January’s SEGA restructuring report, and the next major Japanese amusement factory comes under the spotlight. It was revealed by media service Siliconera, during February in BANDAI NAMCO Holding’s financial report (for the third quarter), that they would be undertaking major restructuring across all their divisions (units) which would take place during the period leading up to April 2021. This comes with the company having taken on series losses, the amount of which was not disclosed until later.

The translated report stated the BANDAI NAMCO ‘Gaming Busines’ unit would see restricting of key areas of business, resulting in a merger with the ‘Network Entertainment’ unit – it will be renamed the ‘Entertainment’ unit. The division currently encompasses the consumer game and network content (including the enza operation), as well as the emerging company eSports Initiative. The company is expected, after the restructuring, to announce a new strategic direction.

Concerning the corporation’s ‘Real Entertainment’ unit, encompassing amusement facility operation, amusement machine design and development, and management of satellite interests (such as BANDAI NAMCO Amusement), information was contained in a separate revision of consolidated projects which revealed the unit had experienced an extraordinary loss and had been heavily impacted (compiled by the COVID situation and other associated factors). It was revealed that the unit will undergo consolidation and concentration into a strong group. How this will impact amusement development and operation, let alone the satellites, was left to be seen with later developments.

The early ramifications of this have already started to be felt, even before the current Global Health Crisis decimated facility business revenue. The BANDAI NAMCO board closed the “Project i Can” VR facility business, represented by the flagship ‘VR ZONE Shinjuku’, and original ‘VR ZONE Tokyo Plaza’ facility. This also saw the heavily VR-inspired ‘MAZARIA’ facility shuttered (with no official word on the fate of the remaining sites). At the same time, the company has invested more in new brands – first with its new ‘VS Park’ sports facility brand, with plans to open their third new facility in AEON Mall Shinrifu in March 2021; and secondly, with the ‘Hugood’ anime and movie IP band brand, that opened its first facility in NAMJA Town, Tokyo. This is a totally new concept moving towards a non-amusement, brand IP specific, flagship store.

Artist’s interpretation of the new VS Park [BANDAI NAMCO]

Regarding the permanent shutting of certain Japanese amusement facilities, it needs to be understood, as reported by InterGame, that the territory’s amusement centers are being hit harder by the stipulations of lockdown due to COVID rules, as amusement sites do not benefit from the same support as Japan’s hospitality businesses and are not receiving compensation from the Japanese Government for enforced closure. Some are blaming the trade association for not correctly petitioning for the sector’s rights. This has been compounded by several Japanese game and amusement operations using this current situation to “clear dead wood”, which sees the abandonment of non-profitable Pachinko and Pinslot business, and amusement centers housed with unfavourable leases and landlords.

Meanwhile, the biggest announcement of the February posting was saved for last, with the restructuring of the board of the corporation that will see the appointment of a new President of the company. This is being seen to address what were, at that time, still unknown losses. Regarding the rest of the operation, little further information was revealed regarding the other units including the ‘Toy and Hobby’, ‘Visual and Music’, and ‘IP Creation’ units. But it would not be until the end of the month before the big impact for the Western perspective of BANDIA NAMCO’s restructuring would be felt.

In March, the extent of the impact that BANDAI NAMCO Holdings had taken on was revealed, stating extraordinary losses of approximately 13 billion yen. The company is undertaking more extensive streamlining measure to address this, along with the previously reported actions. The Real Entertainment Business (operation of amusement facilities, development, and sale of arcade games, etc.) has been impacted heavily by the closures of amusement facilities in response to the current conditions. As seen with SEGA, BANDAI NAMCO looked towards to lightening the load. And this saw the axe turn on NAMCO USA (NAMCO Entertainment), the operation which handled the North American amusement facility business.

The parent company undertook the sale of the amusement holding in North America to three buyers (yet to be announced), that will see the facility business assets passed on to these buyers, and the removal of BANDAI NAMCO from the American amusement facility business. This will see the sale of the infamous ‘Pac-Man Entertainment’ facility in Chicago (previously ‘Level 257’), as well as amusement venues dotted across the States, including the ‘Pac-Man Zone’, ‘TIME-OUT’ and ‘Cyberstation’ brands (35 directly owned, and 760 revenue-shared). After the handing off of this business for the end of March, the remaining NAMCO USA will be merged into BANDAI NAMCO Amusement America (BNAA). Sources close to the developments claim this move will not impact the ‘VR ZONE Portal’ plans in the States, being run through BNAA.

One of the many Pac-Man Zones venue [Atlanta Journal]

As stated, this move to sell off the North American facility interest mirrors the moves by SEGA with GENDA – finding an interested party to off-load a growing concern that will need to see investment, but is not of interest to the parent corporation. Rather, BANDAI NAMCO Holdings is focusing on its own home facility aspirations. This will mark the withdrawal from amusement facility in American NAMCO’s infamous tenure in facility business, marked by acquisitions of smaller operations (such as ‘Aladdin’s Castle’ chain) and three failed attempts to develop a US Mixed-Use Leisure entertainment brand (‘XS Entertainment’ 1997, ‘Level 257’ 2015, and ‘Pac-Man Entertainment’ 2018). Regarding the UK-based amusement facility business run through BANDAI NAMCO Amusement Europe, sources stated no changes were expected in this business. We await further detail for the end of March.

- Other Japanese Amusement Impacts

Another Japanese corporation that undertook major restructuring is KONAMI. Although information of the actual change internally has been limited, a January 2021 announcement revealed executive changes in sales at the amusement business. KONAMI Holding represents its various divisions, such as ‘Digital Entertainment Business’ (with consoles and mobile content), ‘Amusement Business’ (including amusement machines and facilities and eSports interests), ‘Gaming Business’ (gambling and casino machines), ‘Sports Business’ (exergaming and fitness in home and fitness clubs), and other businesses.

One impact that will affect the likes of TAITO, KONAMI and BANDAI NAMCO is their involvement in the SEGA lead ‘ALL.Net’ (Amusement Linkage Live Network) facility content and licensing infrastructure. Information on the way this system of distributed content to amusement cabinets at the corporates’ respective game centers has always been a difficult web to penetrate at the best of times – especially its link to revenue sharing. With the suspension of business under lockdown, closely followed by the acquisition of SEGA Entertainment by GENDA, information on how this infrastructure was going to continue to work was hard to find at the time of writing. (The Stinger Report will provide additional information on the ALL.Net situation in a coming report).

The ALL.Net console – payment-and-play [SEGA]

The stranglehold on new game releases for the lucrative Japanese amusement center cabinet business, was a reported factor in the creation of the independent exA-Arcadia amusement platform. This will give the ability for connected cabinets to have an alternative delivery system, offering access to indy-arcade content, without the shackles applied through the SEGA ‘ALL.NET P-Ras Multi’, KONAMI ‘e-AMUSEMENT’, or equivalent TAITO ‘NESiCAxLIVE’ channels. It is stated to be an important aspect of the exA-Arcadia system’s popularity. With the GENDA SEGA Entertainment situation, the status of these systems was placed in the air, with no real confirmation regarding whether SEGA or GENDA will be directing the system. With most Japanese arcades in lockdown, however, this may be a moot point for the time being.

Speaking of the interoperability of the Japanese amusement factories, a major collaborative project between SEGA and BANDAI NAMCO was announced in February, which brings together the universes of their two most popular street racing titles. It was revealed that, along with the launch of the new ‘Initial D THE ARCADE’ (tenth in the series), the game would include famous vehicles from the BANDAI NAMCO Entertainment racing property, ‘Wangan Midnight’. This is a momentous move of collaboration by the two corporations, seeing the IP from the two famous manga comix and animated series compete in the same universe – a first of its kind in the racing game genre. This unique patch to the cabinet will also see the vehicles added to the players’ roster, and used in competitions on the network tournaments, starting in spring.

The momentous coming together of IP [SEGA]

Obviously, no news if SEGA Amusement International (SAI) would even consider releasing the new tenth instalment of its Initial D racer in the West, let alone incorporate the crossover vehicles. The racing franchise was popular with Western players, seeing the last version of the game translated for international sales with the 2006 ‘Initial D Version 4’. However, the cabinet’s expense, and addition of a smart card element, proved unpopular with certain operators, and this was the last international outing, depriving a strong player base. Likewise, BANDAI NAMCO Amusement America (BNAA) saw some success with the Western release of their racer, with ‘Wangan Midnight Maximum Tune 5’ in 2017 being the last support of the property. That was until January’s announcement by BNAA that they would be releasing a new North American tournament, called “The 4th Nagoya Area Online Champion Match”. Played on the four-year-old hardware with an updated game patch, the tournament ended just as the Japanese SEGA ‘Initial D’ cross over was about to start – though there was no acknowledgement of this release.

These moves come from a need to stay relevant for the Japanese developers who have seen popular consumer titles co-opting well-known IP into their properties. This is best illustrated by the mega-hit ‘Fornite’ adding other game characters to their mix, recently including Capcom’s ‘Street Fighter’ stalwarts Ryu and Chun-Li. With the current impact inflecting the Japanese amusement scene, it is expected that other partnerships, as well as the offloading of less profitable divisions, will be a factor in their future.

- Continuing Asian Virtual Expos (Japan)

Returning to the Japanese amusement factories, while weathering the overall storm of COVID restrictions, the fracture lines within the actual corporations were too deep, and this impact on revenue has proven to be a tipping point. For several operators in Tokyo and other Japanese cities, a new flare up of cases forced local governments to activate the re-locking down of entertainment businesses, adding to the pressure on these operations.

Another victim of the COVID conditions was the 9th Japan Amusement Expo (JAEPO), rebranded the ‘JAEPO2021 Online Business Meeting’. Emulating the rest of the industry, the organizers of the event and the Japan Amusement Industry Association (JAIA) reverted to a virtual (online) style convention, although the access outside of Japan was extremely limited. The Stinger Report would like to thank our sources in the area for supplying information on some of the key announcements and developments that were revealed from the behind the closed doors of the event.

One of the more accessible exhibitors was BANDAI NAMCO Amusement division, with their 2021 lineup. First off, a statement was made about ‘Mobile Suit Gundam Extreme VS.2 X Boost’, with its new cabinet the system being rolled out. Next up, ‘Taiko No Tatsujin’, with its popular drum music machine, was marking its 20^th anniversary with the latest version of the platform, which offers a larger screen. Also, the game was released with “multilingual” support that saw English added, and it will be interesting to see if this could encourage a Western release? This was supported in the videos with ‘Ace Angler’, the latest version of the fishing simulator, with the latest version having improved features and game elements. ‘Mario Kart Arcade GP DX’ is the latest iteration of the popular cartoon racer, (loved by US Presidents alike). All the games are heavily supported by the BANDAPASSPORT card/app system. Although, in reality, the big news from BANDAI NAMCO mostly concerned the ramifications of their ongoing restructuring.

One of the few big release videos scheduled [BANDAI NAMCO]

Information from other exhibitors proved more difficult to amass. SEGA, now under new restructured colors, was reported to be pushing ‘Initial D THE ARCADE’, which had already seen loc-testing. But the impact of COVID on the Japanese amusement trade was self-evident – with new releases in short supply, explaining the closed nature of the virtual event. TAITO was uniquely quiet, with the only real news of interest being the first teasers which were revealed for the company’s new facility project. Opening in March at ‘Taito Station Fukuoka’, the new “intensely stimulating entertainment spot” will be named ‘Kurayami Amusement Park’. Information was limited on the “stimulating” element, located in the basement of the venue. However, it was leaked that the site will include new VR attractions such as ‘Resident Evil Walkthrough the Fear’, and other experiences.

The absence of information from KONAMI also proved how much the amusement aspects of the amusement factories has been decimated and has fuelled, as mentioned previously, the spate of intensive restructuring. Coming out of the COVID lockdown, the Japanese amusement trade will be a totally altered beast – possibly seeing some operations reduced by over 50-percent. KONAMI, like others, is looking to new verticals like eSports to shore up fractured business divisions.

The impact on the JAEPO event can be placed into perspective with the understand that the event, in 2020, saw attendance of some 15,000 trade professionals from some 40 companies exhibiting. Sources spoke of the JAIA’s focus on sales business in the summer, explaining why many Japanese factories seemed to be holding back from any major releases until closer to that cycle. We will continue to bring these developments as more news emerges.

- Continuing Asian Virtual Expos (China)

While the Japanese virtual trade event is more selective in sharing what little information it had, another Asian exhibition corporation has bitten the bullet and embraced an inclusive virtual event. The Asian Amusement and Attraction Expo (AAA) organizers held, at the end of February, their 2021 Russia Amusement Rides & Entertainment Equipment Expo online. Part of their web-centric marketplace was for exhibitors to show the latest work from Chinese territory. This was the latest gathering, and continuing snapshot on the new trends that developers were looking to present to the market.

The key trends were palpable from the technology and innovation on display – such as “Immersive Theaters”, “Projection Motion-Tracked”, “Active Sports”, “Interactive Audience Experiences”, and the continued drive towards “Virtual Entertainment”. It was also obvious that some of the VR product designs on display had not changed since 2018’s first appearances. This is a concerning situation, as Western operators could not fall into the trap of offering sub-par VR entertainment as the consumer VR revolution advances. The issues of self-service and autonomous operation were also watch words fuelled by the COVID landscape.

While much of what some companies exhibited had been previously seen, LEKE VR showed its ‘VR Big Space’, an HTC VIVE powered, four-player, 8x12m Arena-Scale system for backpack PC action. VR games promoted on the platform include ‘HELIOS’ and ‘Battlefield Company’, in this free roaming VR format. A fun new upright VR kiosk was also shown from Daka Animation Technology – ‘Space Time Hacker VR’, with a tethered headset. Movie Power had its previously seen VR platforms, as well as a new two-player upright kiosk (‘VR Infinite Battle’), but also augmented this with the appearance of new lines such as ‘Orbit Screen Cinema’ – a immersive circular screen theater.

New Generation of VR Upright Kiosk [Movie Power]

A little mentioned trend in Asia that is gaining interest in the West, is that of the “Driving Simulator” – favouring the three-screen, rather than immersive headset, approach. Companies such as Jiashi Computer Technology showed, online, their new ‘Three-Screen Spin Car’ – offering an energetic motion base for a driver and passenger seating arrangement. The high-definition screens also add to the immersion. The company also showed off its ‘Robotic Arm Simulator’ for intense racing action. Another three-screen racing simulator was on show from Magic Space, with ‘VR Dynamic Racing’ – a rider and passenger configuration with a motorized screen system, as well as the ability to deploy VR headsets.

Regarding other trends on display for the amusement trade, the “Kidtainment” video amusement scene was represented by a new selection of titles, such as Resurgence Animation Technology launching ‘Skater’ and ‘Skateboard Hero’ – physical video titles. The “Active Sports” trend was also seen from exhibitors such as Huoshichuan Entertainment Technology, with their stylish “Riding the World” cycle system and their new “Punch Out” boxing game platform. Several manufacturers have developed cycling game systems, pointing to a common theme.

Overall, this AAA event followed the same format as we previously reported (at the Chinese ASEAN Virtual Exhibition), just with a wider selection of exhibitors. It was clearly aimed towards being a marketplace, as opposed to a convention-style event. However, it provided a means for commerce to continue under trying conditions. The holding of this event came just as another major China show announced their postponed plans. 2021 China (Beijing) CAAPA (also known as the China Attraction Expo), previously scheduled for 25-27 March 2021, has decided, faced with increased Beijing Municipal Health Commission for the controls, to postpone their expo to the 22-24 May 2021. News was also broken of another postponement – the Saudi Entertainment and Amusement (SEA) Expo that had previously been scheduled for June 1-3, in Riyadh, has announced they have changed their schedule to taking place now on September 7-9 at the same Saudi location. The organizers pointing to the continued closure of their boarders to foreign visitors forcing the postponement, moving to September was supported by the expo’s stakeholders.