Japan´s pachinko industry shrinks 27% year-on-year to US$21 B

According to a white paper published by Daikoku Denki, a major manufacturer of equipment for pachinko parlors, in July, the market size of the pachinko industry in 2020 was JPY14.6 trillion (US$133 billion), down by JPY5.4 trillion (US$49.2 billion) from the previous year, with total gross profit down JPY890 billion (US$8.1 billion) to JPY 2.35 trillion (US$21.4 billion). Sales and gross profits fell 27% year-on-year.

Tsuyoshi Tanaka, executive officer and Managing Director of Amusement Press Japan – a respected local news outlet for the amusement industry – said COVID-19 is not the only reason for the decline in the pachinko market.

“There has also been an increased removal of machines with high gambling properties,” he said. “Many players feel that the machines are no longer exciting. The segment that lost the highest player population in 2020 was not the elderly but the younger players.”

He also commented that the pachinko industry had been contracting long before the start of the pandemic.

In his opinion, this is because of parlors making it more difficult to win in order to increase their profit margin; regulatory changes which have seen machines with higher gambling properties and big wins removed; and the high cost of playing compared with other leisure activities available to younger players who have stagnated wages.

This has been compounded by the pandemic, with the player population decreasing further and leading to a decline in revenue for parlors.

However, one industry insider told IAG, “There are signs that the pachinko industry will improve [even though] the market is certainly getting smaller. I think it may have shrunk even more than 27%.
“If you are not a major company, your parlor may struggle with capital investment in your facilities such as new units or replacing old ones. “However, for the pachinko industry as a whole, there are signs that it will trend slightly upward as popular models are released. I think it may take a little longer for pachislots to enjoy this updraft.”