Namco Bandai / Sega Sammy

With the exceptional capabilities of today's home consoles it seems that the last bastions of arcade gaming; the Japanese market, is now feeling the pinch.

Earlier this month arcade firm Namco Bandai announced plans to close at least 50 of its arcade locations across Japan and Sega Sammy likewise announced plans to close over 100 arcades. Namco Bandai cited the expanding home console market, and the Nintendo Wii in particular, as a big part of the problem. Sega Sammy also announced that it plans to offer early retirement to approximately 400 employees.

"A lot of the types of games that people played at an arcade can now be done at home," said Namco Bandai spokesman Yuji Machida. Machida went on to state that strong holiday sales for the console meant a lot of kids have spent their time at home playing, and spent their money on more Wii software and hardware, such as the popular Wii Fit package. Machida also cited rising gas prices as a concern, as families become less willing to travel back and forth from shopping malls, where arcades are normally located. The closures amount to approximately 20% of Namco Bandai's arcades in Japan.

Just a couple of years after increased profits, Sega Sammy has announced expectations of an estimated loss of 26 billion yen (approx. $230 million) for this fiscal year; compared to the previous projection of a billion yen profit for the year. The main culprit behind the downturn seems to be the pachinko side of the business, which saw a predicted 85 percent fall in profits, and arcade sales, which switched from a slight profit last year to a 11.4 billion yen loss this year.