Sega sells its arcade business due to the COVID-19 pandemic

It doesn't know when business might pick up again.

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The arcade industry has unsurprisingly taken a steep hit during the COVID-19 pandemic, and that’s leading Sega to bow out. Eurogamer reports that Sega Sammy Holdings has sold 85.1 percent of its Japanese arcade business, Sega Entertainment, to the amusement machine company Genda. Sega isn’t shy about the reasoning. Its amusement unit has been “greatly affected” by the coronavirus, and it wants a company that can change with the times and reduce its fixed costs.

The company still expected to record “extraordinary losses” as part of the transfer. While there had been some recovery after the initial blow from the pandemic, the situation was still uncertain enough to prompt the selloff.

The arcades won’t vanish. Sega told Famitsu in an interview that customers can still visit, and that it would still develop arcade games. Genda said it aimed to expand the amusement facility business, although it appears Sega’s plans to turn arcades into “fog gaming” data centers didn’t pan out.

It’s still the end of an era, though. Sega’s arcades are iconic parts of the Japanese landscape, to the point where they appear prominently in games like Persona 5. Sega had already closed its legendary Akihabara Building 2 arcade in August, and it won’t be surprising if there’s more consolidation. Unfortunately, the gaming pioneer might not have much choice. Arcades by their definition involve many people touching the same controls and frequently getting close to each other — none of that will be safe until the pandemic is over.