New consumption tax worries arcades in Japan

A consumption tax in Japan, which came into force on October 1 and is applicable to arcade machines, could impact the profits of the country’s amusement arcades. The rise in tax percent is low – just a 2 per cent increase from 8 per cent to 10 per cent. But it could be significant for arcade developers.

The arcades have been built around a single coin experience, either the ¥50 (US$.44) or ¥100 (US$.88) variant.

The problem for the operators is that they have to choose from one of the two options:  either absorb the levy or adopt some other cashless solutions. Both the options have its pitfalls.

 “This industry might vanish,” a 47-year-old arcade owner in Yokohama told Sankei Business. “We cannot raise the price of a ¥100 game to ¥110. The only choice is for the arcade to absorb the tax increase.”

Like elsewhere, Japan’s arcade industry has been facing challenges in the past decade. In 2006, there were 24,000 arcades in Japan. By 2016, however, that number had decreased by nearly half to 14,000 according to Kotaku.

While larger operations are able to upgrade to cashless and manage the tax, smaller, independent sites are expected to suffer, even close.

Source: InterGameOnline