GENDA turns everyday into a playday—through arcades, mini-locations, smart tech, and bold acquisitions—building out its global entertainment network so your next dose of joy is just around the corner.
Let’s begin with a broader view of Japan’s entertainment industry. Japan has a long and storied history of entertainment, encompassing both deep-rooted traditions and remarkable innovation. With global recognition in anime, gaming, film, and more, what do you see as the unique strengths of Japanese entertainment? What sets it apart?
I think that there are two major characteristics that explain why Japanese entertainment is so popular worldwide. They are a “meticulous attention to detail” and the “ability to build compelling worlds.” I believe that these two aspects are very deeply ingrained.
Japan faces stiff competition in entertainment from regions like South Korea, China, and, of course, Western powerhouses like the U.S. and Europe. In that context, how is Japan’s entertainment industry adapting to stay competitive globally, and where do you see opportunities for further growth?
In the sense of the Japanese entertainment industry, as I have just mentioned, I believe that a “meticulous attention to detail” and the “ability to build compelling worlds” have a depth that surpasses any other content in the world, even at this very moment, and that is why Japanese comics and anime are so popular worldwide. Therefore, we are now making a serious, concerted effort as a nation to use this as a strength and promote these contents globally.
As GENDA, in addition to creating contents, we also want to firmly establish a platform that "delivers” a lot of amazing Japanese contents to fans.
If Netflix is an online platform, I think that our amusement arcades and mini-locations (* mainly a gaming corner with 30 or less game machines installed) are, so to speak, “offline and real platforms.” We would like to deliver Japanese entertainment contents to a global audience through these platforms.
One of the major challenges facing not only the entertainment industry but Japanese businesses in general is the demographic shift. Japan has one of the world’s oldest and shrinking populations. How does this affect your business outlook, and how important is international expansion for ensuring long-term growth?
You are right; while Japan’s population is declining annually, the number of people participating in our largest business – amusement arcade – is actually growing each year. Although amusement arcades used to be for a specific crowd, they are now a place for everyone. The number of people who have visited an amusement arcade within the past year is growing year after year. For that reason, I am very optimistic about the immediate future. Meanwhile, the world’s population is growing. Since we have no intention of limiting our business to Japan, I believe that by expanding our business globally, Japan’s population decline will cease to be an issue.
The role of technology in entertainment is expanding rapidly—particularly with the advancement of AI, AR, VR, and DX (digital transformation). GENDA has developed digital platforms such as the GENDA ID app, GiGO app, and others. Could you elaborate on your technology strategy and its role in enhancing the business?
First of all, we have two main priorities in our tech strategy.
The first priority is to enhance operational efficiency through AI. By utilizing AI, we are streamlining operations that used to require significant time and resources. This is what we are working on right now.
The second one is the introduction of the group-wide integrated ID platform, “GENDA ID.” As GENDA has various companies in the group, this enables cross-company customer referrals and the improvement of the customer experience across group companies, such as amusement and karaoke. These two are the most important for us in terms of technology.
In terms of the customer experience, in the future, I would like to create a seamless experience between our apps and physical stores. In other words, we will be able to provide personalized recommendations to customers who love a certain IP, seamlessly reaching them both online and in-store. We will also be able to utilize our database to deliver campaigns that are a perfect fit for each customer.
Speaking of expansion, GENDA recently acquired U.S.-based operators including Player One Amusement Group through M&A, and now operates hundreds of amusement arcades in North America. How do you plan to integrate these platforms, and what are the prospects for growth in the Western market?
We acquired National Entertainment Network, which operates approximately 8,000 mini-locations, through M&A last year. This year we acquired Player One Group through M&A. These two are really huge businesses in the U.S. In addition to them, we have Kiddleton, a company established from scratch by GENDA. This means that we currently have three major operations in North America. In the future, we intend to fully integrate them in terms of operational management and new store development.
Speaking of expansion, Genda recently partnered with U.S. based operators like Kiddleton, Pixel Companyz, and Player One Amusement Group, and nowoperates hundreds of arcade machines in North America. How do you plan to integrate these platforms, and what are the prospects for growth in the Western market?
I think that sales of 44.0 billion yen are achievable even with zero growth going forward. This fiscal year, Player One joined GENDA mid-year and will contribute to the P&L only for half a year. Starting next fiscal year, it will contribute for a full 12 months. Therefore, we believe that even with our current business scale and per-store sales, the business will be worth approximately 44.0 billion yen in the next fiscal year.
Right now in North America (the U.S. and Canada), we have succeeded in building a network with a total of 13,000 mini-locations and around 180 amusement arcades. This is exactly the GENDA’s offline “Entertainment Platform,” that I mentioned earlier. We are now in the process of bringing merchandise of Japanese anime IP to it and rolling them out as our exclusive goods across all 13,000 locations. We are changing the customer experience by replacing the original game machines with our own, which we have had manufactured as an OEM in China and we believe that they are fantastic, and by filling them with merchandise of Japanese anime IP.
Are M&A activities still part of your growth strategy? If so, what types of companies or regions are you targeting?
We are always looking for a new opportunity for M&A. While our current business domains are our highest priorities, we are not limiting ourselves to them. We are also actively seeking good opportunities for M&A across the entire entertainment domain. Similarly, in terms of regions, while we are prioritizing further M&A in the areas where we currently operate, we are also exploring opportunities in a wide range of other regions.
You’ve set an ambitious target of achieving ¥75.0 billion in EBITDA by 2030, a fivefold increase. A new stock option incentive plan has also been introduced. Could you speak to the thinking behind that goal and how this aligns with your internal performance systems?
First of all, we are serious about becoming “the world’s No.1 entertainment company” in 2040. To achieve that goal, we calculated a benchmark; if we do not reach at least this point by 2030 – ten years prior – becoming the world’s No.1 entertainment company in 2040 will be impossible. That is why we have set this 75.0 billion yen target.
The purpose of the stock option incentive program is to align the interests of our directors and employees with those of shareholders. This will foster a strong mindset of profit, efficiency and innovation, which will in turn become everyone’s motivation and become firmly established within the company. I am certain that this is what is exactly being achieved right now.
Recently, GENDA announced new initiatives in game development and physical entertainment stores. How do these fit into your long-term vision, and what opportunities do you see in the convergence of physical and digital gaming?
In the short term, our first priority is to create original titles and utilise the IP characters to generate synergy with our offline businesses, connecting them by utilizing the IP. I would like to do this first. In the future, we aim to create a groundbreaking gaming experience by connecting online games and arcade ones.
Japan is experiencing a tourism boom, with 38 million visitors in 2023 and a target of 60 million by 2030. How is GENDA leveraging its portfolio of amusement arcades, karaoke centers, and character attractions to engage tourists? And how do you plan to build loyalty among international visitors?
In terms of the experience, we install claw machines and put “Kawaii” prizes of Japanese IP into the machines, the kind of prizes that are sure to delight inbound tourists. That is the most important thing, but to help us expand it even further, we are intentionally creating a lot of highly instagrammable photo spots both inside and outside our stores. We are also making a point to properly install foreign currency exchange machines, especially in locations with a high number of inbound tourists, as we operate this business within our own group as well.
How do you see the next five years?
When we say “five years from now,” we are talking about the year 2030, which was mentioned in the previous question. By then, we plan to increase our EBITDA five-fold from the 2024 level. In other words, our business will be five times its current size. We believe that this is the minimum level we must achieve. To achieve this and grow our business five-fold, I do not think that the solution will be found by simply continuing on our current path. It will require us to undertake initiatives that we are not pursuing at this very moment and expand our business into regions we have not yet entered.
For more information, visit their website at: https://genda.jp/en/
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