#1107 – The Tiger Eye’s Entertainment!

Moving fast into the Chinese New Year of the Tiger, and investments and developments have sprung into action, with major corporations pouncing on big opportunities. This report will start with a look at the investment in eSports, and the marriage with interest in cryptocurrency and beyond. Then we will turn to the Japanese amusement and gaming scene and view the upheavals, restructurings and new investments hoping to keep this market relevant in the modern time. 

Electronic Sports and Payment

Considerable investment in the eSports sector was made by the Saudi Arabian government, through their Public Investment Fund (PIF) through Savvy Gaming Group (game industry investment corporation), who acquired ESL and FACEIT groups for the sum of $1.5b. The groups run tournament competitions, as well as running apps for players to organize independent tournaments. This development marks one of the largest acquisitions in the eSports arena and will give Savvy Gaming Group a major stance in the market. The Saudi PIF has made considerable investment in other videogaming opportunities, recently investing in video game developers and publishers.

The investment in eSports venues continued apace in the New Year, with Monumental Sports & Entertainment (MSE) announcing their plans to open, by the end of the year, a brand-new entertainment space including eSports arena, live-event space, and gaming center. Under the ‘District E’ brand, the first 14,000-sq.ft. facility will open in Washington D.C., located within the Gallery Place mall. MSE has partnered with Ticketmaster and management firm Oxford Properties Group.

The investment into sports betting and eSports wagering has seen blockchain been brought into the discussion – with the possibilities of winnings being made and paid out in the cryptocurrency. As was seen last year, several game developers incorporated Lighting Networks as a payment protocol into their prize payment infrastructure (the network used to facilitate Bitcoin Satoshi fee transactions). Amongst several developers, companies including ZEBEDEE have been working on platforms such as the ‘Infuse’ platform, that should allow the company’s plug-in to be added to numerous popular competition games, allowing for a blockchain payment and prize solution. This is the latest attempt to create a “Play-for-Pay” (or “Play-to-Earn”) infrastructure, offering the ability to add a play-to-earn element that could revolutionize tournaments as well as casual gaming. Some developers are looking at rewarding players in NFTs, such as through the Axie Infinity platform.

Regarding the investment of the gaming and sports betting community into the new opportunities of eSports and beyond, it was announced that the world’s largest sports betting and gaming groups would be making a considerable investment to enter the eSports and immersive entertainment space. Entain (previously GVC Holdings) revealed in a press announcement that it was about to invest some £100m ($130m) into a new business approach – seeing the corporation move into immersive entertainment planning to open, later this year in London, their flagship facility called ‘Ennovate Experience Zone’. This space will include VR arcade gaming and immersive experiences, along with retail elements. This marks a major departure for Entain, better known for their online and retail brands Ladbrokes, Coral, BetMGM, bwin, Sportingbet, Eurobet, partypoker, partycasino, Gala and Foxy Bingo. This is part of a greater investment by the operation to be a global leader in interactive entertainment, and the company has already invested in a NFT platform through their partypoker operation, and Theta Labs.

Speaking of supporting blockchain adopters, the location-based entertainment space has started the long process of recognizing cryptocurrency as a possible payment medium. It was revealed that the social entertainment golf simulation venue chain, Five Iron Golf, was offering special access to their venues to LinksDAO members. LinksDAO is a unique membership community for golf enthusiasts, offering special events, discounted prices and perks to their community. The membership to the group includes the members’ own unique NFT, that is used as their personal “members card” for access to these benefits. Five Iron Golf is now offering LinksDAO NFTs access to unique benefits across its chain of ten venues – the golf experience company has received investment from Callaway Golf, who also owns Topgolf. 

Japan’s Entertainment Rebranding

February is marked with the loss of several physical shows, most of which have been postponed for later in the year – while the Japanese amusement trade has completely cancelled their plans to hold their annual JAEPO (Japanese Amusement Expo) industry event. However, developments in the Japanese amusement trade have continued apace, offering a reflection on the state of the amusement scene in this territory.

One of the major developments was the announcement of the future impact on a recognized brand in the Japanese amusement factory scene. After the purchase of some 196 SEGA Amusement venues across the Home Islands by GENDA, it was announced that the operations facilities would be undertaking a complete rebrand. The conjoined operation GENDA SEGA Entertainment (from the 2020 acquisition) revealed that the operation would now be renamed GENDA GiGO Entertainment, and that all the SEGA Entertainment sites controlled would now revert to the new brand ‘GiGO’, the name meaning in Japanese “Get into the Gaming Oasis”. 

Sources had revealed, back in 2021, that GENDA had major plans to establish a new culture and operational focus on the facility chain – although the complete removal of the SEGA branding comes as a slight surprise. GENDA GiGO Entertainment, along with the rebranding, has brought out the remaining 14-percent share in its operation that had been retained by SEGA (so retaining 100-percent control). This will see the removal of the SEGA brand from Japanese amusement facility, after a run of 57-years. It is expected that the conversion to the GiGO brand will be completed by the end of March. Meanwhile, at this point, the SEGA brand will still be found as part of the CA SEGA JOYPOLIS themed entertainment operation and their remaining Chinese and Japanese locations.

SEGA Corporation is expected to continue, for the foreseeable future, to manufacturer amusement hardware; but their core focus has been on establishing their consumer games and IP business. The company has already sold off its themed entertainment business to CA, its Asian amusement venue business to GENDA and is divesting its Western amusement distribution business in a management buy-out (SEGA Amusement International). While some media incorrectly called this the end of SEGA in the amusement scene, their presence in the Out-of-Home Entertainment scene is expected to continue – it will not, however, be part of a direct relationship, but more through licensed branding.

With GENDA now retaining 100-percent control of the amusement facility operation, questions remain on how this will impact the online support of the facility business. Such as seen with the SEGA ALL.Net (Amusement Linkage Live Network), that supports connected machines, distributes content, and retains players details and stats. Most SEGA amusement releases depend on this network system supporting game functionality and the player base. The latest incarnation of the system (‘ALL.Net P-ras MULTI’) is a full online distribution of game content to connected machines at a myriad of venues, supporting revenue sharing from games operated. All this is also supported by the ePayment infrastructure (‘AiME’), which could also be another victim of this consolidation. SEGA is also a partner of the ‘Amusement IC’ card standard with KONAMI (e-AMUSEMENT), and BANDIA NAMCO (Bana Passport). We await to see the ramifications of the GENDA move on these businesses.

Regarding the investment being made on growing their position from being the third-largest Japanese amusement facility operating business, GENDA continued the drive at assimilating operations. It was revealed, only days after the rebranding of their stores, that GENDA GiGO Entertainment had acquired all the shares of Treasure Island Co., Ltd, a Japan-based entertainment operator of some 24 facilities. With this move, these locations will now be added to the GENDA operation, bringing them to some 245 facilities in the Home Islands. The president of GENDA confirmed the company strategy in their usual manner, stating their mission is to create smiles and excitement through “fun places”. Sources close to the operation suggest this is not the only planned announcement of amusement operation assimilation into the group, and we will report on this additional news when it breaks.  

The churn in the Japanese amusement operation scene was exacerbated by developments in the Japanese electronic payment infrastructure, coming under review with the development of the Japanese banking services instigating “Pay for handling coins“. This development is having a direct impact on all enterprises that depend on currency handling for their business. While the Japanese amusement trade has attempted to embrace ePayment, there has still been an unfractured element of coin-handling in this make-up, and it is expected that a financial impact will be felt by this additional fee on operations. Some suggested this development could be the final nail in the traditional Pachinko trade, as well as eliminating the viability of traditional arcade halls. However, while the traditional amusement trade fights for survival, others have been looking at their futures – and developments likewise.

In an example of the move towards frictionless ePayment platforms for amusement, another Japanese amusement venue operator announced a new payment smart app. The corporation Aeon announced that the launch of their new ‘iAEON’ app will now support the ‘AEON Pay’ service, allowing the payment of services across the operation’s venues. This is a platform supported by AEON Financial and their credit card service (‘AEON Card’), allowing the app to operate like an electronic money platform, with a redeemable points element. The payment app is expected to be used across the AEON 300 amusement shops, and 83 cinema operations. Other venues are looking at implementing their own cashless ePayment systems, and a number have offered incentives to players only using their payment means. 

Evolving Japanese Market

Some media had been quick to paint the news of the loss of the SEGA branding from the 196 amusement venues as yet another example of the death of the amusement and attraction scene. The media has been hell bent on painting amusement as dead, while at the same time ignoring the reality of the business post-COVID.

The Japanese amusement and attraction scene has been in flux, though still seems to be emerging from a period of change. Data on the Japanese market was revealed by Statista, stating that the local amusement and theme park market generated revenue, in 2020, of some ¥263b ($2.28b) – this is in stark comparison to the 2019 revenue of some ¥718b ($6.23b). Obviously, this was impacted greatly by the lockdown during the Global Health Crisis but does not reflect an industry in decline as some in the media would present. The reality of the situation is that, in Japan, the amusement scene was still in these trying conditions but surpassed that of the cinema scene, that generated in 2020 ¥109b ($893m) – a market that has seen serious year-on-year declines (although, obviously, some media would avoid openly saying that). 

The Japanese amusement trade has been undergoing a move by leading operators towards reinvestment and restructuring, to establish a controlling position. The emergence of leisure entertainment investment in unique entertainment spaces, and the development of new businesses, have caused a fracture in the traditional amusement trade, seeing the erosion of the once-powerful amusement trade associations. This has left them feeling rudderless in a changed market, where once key Japanese factory executives ruled supreme. Operations such as GENDA and Round1 are seeing global expansion and a unification of businesses, while factories such as SEGA and Taito restructure or are acquired. But others are fighting to regain control.  

It was announced that the Mitsui Shopping Park LalaPort Fukuoka will be seeing, in April, the opening of three new entertainment components. The first being ‘Gundam Park Fukuoka’, an indoor complex including immersive entertainment, exhibits and retail, based around the popular brand. Next door to this will be ‘VS Park: with G’, the latest opening of the activity venue; and adjacent to that a NAMCO amusement venue. These venues are operated by BANDAI NAMCO Entertainment and will support the Gundam IP. This marks one of the latest “Retailtainment” style installations in the territory. 

This marks a reinterpretation of the support of the property by BANDAI NAMCO. The operation has recently started the process of BANDAI Spirit closing and restructuring its ‘Gundam Café’ chain (as we reported recently in The Stinger Report). While at the same time, the whole NAMCO amusement venue operation has been under restructuring, especially following the shelving of further exploration of the VR Zone chain concept. BANDAI NAMCO has seen incredible growth in their other venue business, through their Gashapon, capsule store chain of some 400 installations. While not an interactive entertainment medium, the capsule vending operation (“Vendortainment”) has proven a strong marketing and merchandising component of the current corporate business.  

The level of investment in new attractions for the sophisticated Japanese audience base has seen much investment in the latest technologies. Not slow to embrace new approaches, Universal Studios Japan, the theme park and resort who recently opened their ‘Super Nintendo World’ gate, opened a new immersive attraction to continue their strive for market dominance. 

Fully opening the beginning of January, the ‘Monster Hunter World: Iceborne XR’ attraction offers players a chance to jump into the popular Monster Hunter universe, based on the ‘EverQuest’ property from Capcom. The park has developed a four-player, free-roaming, backpack PC and HTC VIVE experience, with players moving through the virtual world of the property, while working as a team to defeat their opponents and collect magical items along their journey, amassing a score on their successful completion of tasks. Based on the 20m downloaded fantasy videogame property, this is the latest embracing of interactive immersive technology within the entertainment space.

And concerning the investment being made by Japanese amusement factories on new directions, we turn full circle with their report and return to eSports. It was announced that KONAMI Amusement would be partnering with GENDA GiGO Entertainment and Taito in support of the ‘BEMANI PRO LEAGUE – SEASON 2’. The BEMANI PRO LEAGUE is a professional competitive tournament based across the BEMANI series of music games (including ‘Dance Dance Revolution’, ‘Sound Voltex’ and ‘BeatMania’), with players competing towards winning the games to become a professional. Described by KONAMI as “esports x music”, this is the latest established amusement eSports competition. KONAMI has invested in an eSports style strategy for the business, including the formation of a sponsored team, and the coverage of the tournaments through streaming apps. Other venue chains have been added to the list of facility supporters, including Round1 and Game Panic. The competition is planning to eventually comprise 32-players, who will then battle it out to become sponsored professional players. Several Japanese amusement factories have created their own sponsored eSports teams, and it is expected that eSports will be injected into the focus of most of these corporations’ growth strategies. 

Speaking of parent company KONAMI Holdings, it was cited as having seen a 12-percent increase in sales and profits in recent financial reporting. This rise was across all the divisions, including the digital entertainment business and the amusement business (revenue up by 21.7-percent). This was seen as a return to expectant business conditions, even after the hard COVID lockdown conditions in Japan. The corporation has positioned itself into new fields, as we stated earlier, including eSports and more innovation from its popular IP; and it is also one of those corporates looking at new business sectors. 

As has been reported on before, the Japanese amusement factories, in part, have also looked towards their future growth strategy in the casino and gaming scene. Companies have seen mixed fortunes regarding sales of their unique products in this sector. For example, as reported, SEGA Sammy Creation had to totally restructure its operation, at the same time launching its latest cabinet, called the ‘Genesis Crest’. Meanwhile, KONAMI Gaming still works to innovate in the gaming scene, supported by its own IP (the group is seeing a revenue growth of 58.9-percent). Much of this investment also has one eye on the prize of the planned Japanese casino scene’s emergence under new regulations, although much of this has been slowed by the Global Health Crisis, so straining the core businesses. It is expected that, at the end of the year, the whole Japanese amusement scene will be a totally different animal, led by a new cadre of younger executives that will not continue to support the older “traditional” ways.