Facing decline, Japan's pachinko industry tries offering a clean, well-lighted place

Dynam Japan Holdings

19/08/2014 09:00

By Minami Funakoshi 
    TOKYO, Aug 19 (Reuters) - Japan's once-booming pachinko 
industry, grappling with a greying customer base and the threat 
of new competition from casinos, is adopting a softer touch and 
smoke-free zones to lure a new generation of players, 
particularly women. 
    Pachinko, a modified version of pinball, is a fading 
national obsession, with about 12,000 parlours nation-wide and 
one in thirteen people playing the game. 
    But that figure is declining as the population shrinks and 
younger people prefer games on their mobile phones. 
    To try and reverse the trend, some pachinko operators have  
built spacious, airy parlours designed to attract more women and 
younger players to a pastime tarred by its association in the 
public mind with older and idle men given to chain smoking. 
    Catering to different tastes to boost an industry that still 
sees some $185 billion wagered annually, machines in pachinko 
parlours now feature anime characters, games and idols, ranging 
from all-girl group AKB48 to Resident Evil, a video game 
blockbuster by Capcom Co that was made into a Hollywood film.    
    "We're trying to change the image of pachinko as loud, 
smoke-ridden and male-dominated," said Tomoko Murouchi, a 
spokeswoman for one of the largest operators, Dynam Japan 
Holdings  6889.HK . 
    Dynam, which has 371 pachinko parlours around Japan, is 
building new game centres with higher ceilings, smoke-free zones 
and ventilators, with dividers between machines for privacy. 
    Rival Maruhan Corp, Japan's largest pachinko chain by money 
wagered, has tried opening buffets at parlours and promoting a 
new kind of pachinko, but has recently shifted focus back to 
existing players, said spokesman Kenjiro Shimoda. 
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    'COME ALONE AND FOCUS' 
    More than half of Dynam's customers are older than 50, with 
just 9 percent younger than 30. But the number of youthful 
players has almost doubled from 5 percent in 2006. 
    About 200 people queued at the recent grand opening of a 
Dynam parlour in Fuefuki city, 100 km (62 miles) west of Tokyo.  
   
    Although women make up just 27 percent of players at Dynam's 
parlours, Marina Osada, a clerical worker, said she played 
pachinko three times a week, sometimes for the entire day when 
she was off work. 
    "I still remember the day I hit a jackpot and saw a very 
rare  the best  scene from the anime 'Basilisk'. I was so 
happy," said Osada, 21, who looks for machines that feature her 
favourite anime. 
    "Pachinko used to be just for men, but I like pachinko. I 
come alone, and just focus." 
    Pachinko revenues are falling as Japan's population ages. 
    Gross revenue has shrunk to 19 trillion yen ($185.75 
billion) from 31 trillion over the past two decades, and the 
number of players halved between 2002 and 2012, research by 
investment bank Morgan Stanley shows. 
    Part of the problem has been a 15-year economic slump just 
ending. Spending on all kinds of leisure has dropped by almost a 
third over the past 20 years, but the number of players per 
machine has roughly halved since 2000 to stand at just over two 
in 2012, Morgan Stanley estimates. 
    Japan's moves to legalise casino resorts could force 
pachinko out of the grey zone where it has thrived for decades. 
It faces no gaming taxes, since it is not treated as gambling, 
which is illegal, but is viewed instead as an amusement. 
    Pachinko began as a children's toy in the 1920s, which 
gained popularity among adults after World War Two. 
    Machines spew out winnings in the form of small metal balls. 
Most players opt to swap winnings for cash, with 87 percent of 
players at Dynam going this route. 
    Maruhan and Dynam have fared better than the rest of the 
industry, which is dominated by family-owned firms. Maruhan's 
annual revenue after payouts was about 80 billion yen for the 
fiscal year that ended in March, up about 16 percent from 2012. 
For Dynam, revenue was flat over the same period. 
    But even big operators face difficulties, one expert says. 
    "Every year, fewer and fewer people are playing 
pachinko," said Tohru Okazaki, who has published five books on 
the industry. "Young people are simply not playing." 
    Young people stopped because payouts are smaller and they 
find it harder to borrow money, said Naomi Suzuki, whose family 
runs a chain of parlours in the Fukushima prefecture that was 
hit by the 2011 earthquake and the nuclear crisis that followed. 
    "Twenty years ago, pachinko parlours were full of young 
people, but now it's mostly all middle-aged and old people that 
come and play," said Suzuki. "Young people have no money." 
($1=102 yen) 
 
 (Editing by Clarence Fernandez) 
 ((minami.funakoshi@thomsonreuters.com; +81 3 6441 1130; Reuters 
Messaging: minami.funakoshi.thomsonreuters.com@reuters.net)) 
 
Keywords: JAPAN RECREATION/PACHINKO