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Pachinko operator Okura sees opportunity in machines with “gamble”

Tuesday, 27 February 2018 05:31
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Japanese pachinko operator Okura Holdings says it will focus on machines with more “gamble” after seeing its revenues steady in the six months to 31 December 2017.

Revenue fell slightly by 0.6% to ¥4.5 billion (US$42 million) for the period, buoyed by a 2.1% increase in gross pay-ins to ¥18,993 million. The group also announced an operating profit of ¥252 million (US$2.4 million), having reported a loss of ¥146 million in the six months to 31 December 2016.

In its results announcement, Okura pointed to new laws issued by National Public Safety of Japan governing the operation of pachinko and pachislot machines, which came into effect on 1 February 2018 and further limit pay-out abilities. In response, Okura said that since August 2017 it has “begun adjusting its business strategies to increase the proportion of high playing costs machines at strategically selected halls to maintain customer traffic, where customers prefer playing with machines with a higher gaming element.

“For instance, our group installed a higher proportion of high playing costs machines in our new hall, Big Apple Dejima, in Nagasaki to enhance customer traffic in the long run.

“We aim to maintain our high market share in the market by adjusting the ratio of high playing cost machines and low playing cost machines from time to time depending on the market conditions.”

Okura said it was continuing to review the performance of the 19 pachinko halls it operates nationwide, noting that profitability in Tokyo was down due to increased competition but that those in Nagasaki had “on an overall basis demonstrated more promising performance.”

Nevertheless, the company reiterated its intention to expand by acquiring pachinko halls from smaller operators who lack the assets to constantly replace their machines to keep up with current trends.

“The expenses in relation to machine replacement are burdensome for small-sized pachinko hall operators operating less than 15 halls as most of these halls do not have the financial resources to enable frequent machine replacement,” Okura said. “Thus the pachinko industry remains relatively favorable for mid-sized pachinko hall operators operating 15 to 19 halls and large-sized pachinko hall operators operating 20 halls or more as they may further develop their business by absorbing the market share of small-sized pachinko hall operators. We are optimistic that we can continue to tap into the potential acquisition opportunities of small-sized pachinko hall operators to achieve economies of scale in operations.”

Okura operates pachinko halls under the Big Apple, K’s Plaza, Big Apple.YOUPARK and Monaco brands.

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