Arcade business is down. Way down, but Sega believes they can reactivate the market globally.
Sega outlines a revised arcade strategy on page 40 of their 2009 annual report. These bullet points are excepts from their four market reactivation initiatives.
- SEGA is working to promote the uptake of the revenue-sharing model. Under this model, cabinets are sold to operators at low prices and content is provided without charge, while
revenues from the use of the machines are shared by the center operators and SEGA. We will develop this model on the ALL.Net network service infrastructure, which links game machines over the Internet, makes possible networked gameplay, and activates player communities. This enables amusement center operators to introduce machines with a low initial investment and for SEGA to secure ongoing revenues through the replacement of content, without limiting revenues to the sale of the machines.
- At SEGA, we are working to promote standardized cabinets, which make it possible to introduce new products (content) simply by changing specialized software.
- While raising performance, it [RINGEDGE] offers a 30% reduction in costs in comparison with conventional products. On the other hand, RINGWIDE is a multi-purpose board for the development of a wide range of products, such as those used overseas, and offers economical pricing that will support its uptake through specification selection.
- Higher-end products that appeal to frequent players are too complicated for casual players and are not effective at drawing them to amusement centers. SEGA will work to reactivate the market by expanding the base of users through a broad product lineup that can meet these diversifying player needs.
Sega also wants to expand overseas sales “through development that entails the localization of products sold in Japan to prices and specifications that meet local market needs.”
Awesome, so more Sega arcade cabinets overseas, but other than Sega owned GameWorks chain where are they going to go?