Inside Asian Gaming

September 2010 | INSIDE ASIAN GAMING 43 Mr Busujima junior took over the day to day running and direction of Japanese pachinko maker Sankyo in 2008 after his father, the founder, Kunio Busujima, stepped down as Chairman.The latter is still a Director and Senior Advisor of the company. Sankyo Co Ltd, based in Tokyo, Japan, was founded in 1966. It engages in the development, manufacture, and sale of pachinko and pachislot machines and related components, and also offers equipment for pachinko parlours, such as parlour management computer systems, ball bearing supplies, and prepaid card systems. 45 (-) Hideyuki Busujima Chairman Sankyo Co its pachinko machines. It has also signed an agreement to use the image of Japanese pop singing pin-up girl Kumi Koda. Sankyo’s spirit of innovation extends to the marketing and management of the pachinko halls it runs. In recent years, Sankyo has featured a Hollywood actor, Nicholas Cage, in its commercials on Japanese television. The fact pachinko can be advertised (even if somewhat obliquely) on television at all gives some indication of the charmed life the industry has led with help from the country’s lawmakers and the ongoing ban on land based and online casinos. Sankyo has also created women only sections in its gaming parlours—a major step in a country not always known for strong promotion of gender equality. Sankyo’s willingness to innovate in management and customer service is atypical of Japanese companies focused on domestic rather than on export markets. It is, however, an indication of the company’s belief that there’s a significant amount of life (and profit) in pachinko for some years to come. Sankyo has told analysts it expects a 51% jump in net income for the next fiscal year, reversing a one-third drop in the previous 12 months. Mr Busujima senior was ranked number five on Forbes’ Japan’s Richest list this year, with an estimated fortune of US$5.3 billion—down three places from his 2009 ranking, although his actual net worth went up by an estimated US$100 million during that period. others to retain that top position. Playwin was floated on the Indian stock market in November 2001, initially winning online lottery franchises for the governments of Sikkim, Karnataka and Maharashtra. Playwin products certainly appear to have captured the public imagination. In a country where, according to the World Bank, half the population earn less than one US dollar per day, Playwin’s record lottery prize (the product of a rollover from previous draws without any top prize winner) amounted to a staggering US$3.5 million won by a resident of Kolkata in May 2006. Playwin’s potential for profitability is hugely boosted by the fact that its products and services can be supported and cross-marketed by other parts of the Essel Group empire. An example is that Playwin lottery products have now expanded into the offline entertainment market using pre-paid scratch cards produced by ItzCash, another Essel business. The services offered by myplaywin.com cards can also be accessed by mobile phones through SMS. The lottery results are in turn promoted on Play TV, an Essel Group operation and India’s first interactive gaming television channel. Mr Chandra’s Essel Group also owns Hindi TV broadcaster Zee Entertainment,withanestimated500millionviewersin167countries. His son Punit was named Zee’s chief executive in August last year. The Essel business is still family run, with Mr Chandra’s brothers heading Zee News and Dish TV respectively. Other businesses include amusement parks. among players as fair in a country where paper lotteries are widely regarded with suspicion as corrupt. In January this year, Essel Group subsidiary Pan India Network signed a joint venture deal with British gaming company Sportech to create a multimedia sports gaming business aimed at Indian customers. Sportech operates pari-mutuel soccer betting (known in the United Kingdom as football pools) via retail outlets in the UK as well as online sports betting. The joint venture companies have invested £2 million (US$3.09 million) each to be spread over two years. Operations began in May. A spokesman for Sportech says the Indian website received nearly a quarter of a million visitors between June and early August, with 45,000 people registering online. But as Mr Chandra told Inside Asian Gaming during a visit to Hong Kong earlier this year, the main impediment to the growth of legal land-based and online gaming in India is domestic politics at national and state level. States are technically responsible for licensing new gaming ventures, but in practice, may find it hard to do so because of vested local interests in paper lotteries. Mr Chandra’s philosophy is to operate companies that are pre-eminent in their market. “I always pursued in my mind that I wanted to be either number one in any given business or a strong number two. If I am not either of the two, I will exit that business,” he told the Wharton Forum. Given his first mover status in online gaming in India, he should be better placed than Pachinko has been around since the end of the Second World War. It’s now a mature sector, facing many of the challenges typically found by older industries. These include the need to refresh the product offering, face up to changing consumer demographics and tackle new competition from alternative products and services (in pachinko’s case, multimedia online entertainment including video and role- play gaming aimed at an affluent younger audience). Pachinko’s ongoing struggle for Japanese players’ attention and money is also potentially under threat from international casino gaming operators if the country’s government ever gets around to legalising land based casinos. The company cited declining sales as a reason for lowering its revenue estimates for the financial year to 31st March 2010 from ¥270 billion (US$3.16 billion) to ¥220 billion, and its operating profit from ¥67 billion to ¥57 billion (US$670 million). Sankyo has, however, taken steps to strengthen its balance sheet. In August, the company announced it would repurchase a maximum ¥15 billion (US$180 million) of its common stock—or up to three million shares. That represents approximately 3.11% of its total outstanding shares. The share repurchase was to be conducted between 14th June and 30th December 2010. The company has also shown a willingness toadapt and innovate to changes in market conditions. It has recently done licensing deals with Japanese comic book publishers to feature popular characters on