The gaming floors of Japan’s casinos are expected to be uniquely Japanese in theme and will differ from other jurisdictions around Asia in that they are likely to be dominated by machine-based play.
Once the first casinos open, Japan is expected to be one of the largest gaming markets in the world, with revenue in excess of $24 billion by 2030, according to Global Market Advisors’ estimates.
As a result, it is expected to produce unique opportunities for global gaming suppliers, from the international giants, such as Scientific Games, Aristocrat and IGT, through to the locals such as Aruze Gaming and Konami.
Although it will be at least another three to five years before the first IR breaks ground, already suppliers have begun to thrash out their battle plans to ensure they are in the driving seat to capitalize on the opportunity.
Aruze Gaming Macau senior compliance & operations manager Joji Kokuryo says that, given the lack of clarity on regulations, it’s difficult to know what will be developed, however once that is in place “it will be a race.”
First, it’s important to look at the types of games that will take centre stage on casino floors. And with the country’s huge appetite for pachinko, it looks set to be very different to other Asian jurisdictions where table games reign supreme.
“We expect that slots will be featured heavily on Japan casino floors,” says Ken Jolly, VP and managing director of gaming, Asia, at Scientific Games.
“There are more than 10,000 pachinko parlours operating slot-machine style (pachislot) and pachinko games across Japan. Players spent more than $196 billion on pachinko in 2015, and the parlours operate with all the enthusiasm of slot players.
“We think player adoption from pachinko to slot games will be seamless and we expect that adults in Japan will flock to Japanese casinos for social and entertainment experiences,” he adds.
Pachinko machines are similar to traditional arcade pinball machines, but many now feature electronic components making them near-identical to video slots. Like slots, they are designed around different themes and characters.
Popular designs feature aspects of the country’s rich and vibrant culture, and take style cues from manga and anime. This extends to licensed games such as Monster Hunter, Evangaleon and Bio Hazard.
Vincent Kelly from Aristocrat says slots machines carrying these, and similar, themes will certainly have a place on the casino floor in Japanese integrated resorts.
“From our experience supplying to the pachinko market, we know that Japanese players are sophisticated and particularly enjoy manga-based games with an affinity to Japanese history and folk heroes.
“Legendary manga titles developed for the pachinko or pachislot player sell at 5-10 times the volume of other games.”
However, Aruze’s Kokuryo points out that it will be important for IRs to identify their main client base, as overseas visitors are likely to have different tastes from the locals.
“The biggest factor will depend on what kind of visitors the IRs will be trying to bring in. If it is as expected and is more mass market based, a good balance of high and low volatility titles would help cater to all sections of players,” he said.
“The perception of electronic gaming in Japan is very unique, and that could be something reflected on the gaming floors. There are the uber-experienced gaming players who seek the perceived "sure win" situation. This group is rather indigenous to Japan. Then there are the curious guests looking to enjoy a night out in a new and exciting environment, as well as the players hoping to hit the big win of their dreams.”
Slots based on blockbuster entertainment franchises will also be popular. Japan has one of the most innovative and eclectic film, music, TV and art industries in the world, offering plenty of inspiration for designers and developers to leverage.
Western brands will be a major draw, too – for both Japanese and international players – with larger suppliers possibly at an advantage due to the agreements they already have in place with license holders in other markets.
“We expect licensed themes like Walking Dead as well as recognised proprietary games like Lightning Link, Buffalo Stampede and Tarzan to be popular with Japanese players,” Kelly adds.
Mitchell Bowen, managing director of international, Australia and New Zealand at Aristocrat agrees, and says players will want a mixed bag of games, and that suppliers need to push the boundaries.
“There will be a broader range of offerings for the Japanese market. We have talked about skill-based games, heavily themed games - those sorts of things.
“The option of slots around lower volatility and sustained revenue streams as a choice for operators and consumers is going to be incredibly important, too,” Bowen told a panel at G2E Asia.
Aruze also sees electronic table games as being an important part of the mix to help introduce new players to the table games concept.
“ETGs provide lower minimum bets and more privacy, but also allow for players to experience the excitement of a real table game. This will also help to introduce players to the actual tables and help to broaden diversity in the playing patterns of visitors,” he said.
Suppliers will also need to future-proof the games they are developing for the Japanese market. By the time the first IRs open their doors in five to ten years’ time, player preferences will have changed.
The millennial generation will be at an age where they can gamble, and will be seeking a very different entertainment experience to what is currently offered on the floors of casino across Asia.
“More intensive video offerings will surface, just like we are seeing in the US and other parts of the world with skill gaming and eSports,” says John English, president of WEBE Gaming.
“Content will have to be vibrant, fast moving and intense – much like today’s popular video games. It is an exciting mix, and one that is entirely unique to the Japanese market,” he adds.
In this regard, it could be argued that local suppliers are much better placed to design and develop games that will meet the wants and needs of Japanese players, but the larger suppliers also plan to put boots on the ground.
“Scientific Games is committed to market-specific game development,” says Jolly.
“As we get closer to casino gaming legislation, we would expect to develop a Japan-based game development studio and also leverage the success of our Asia-Pacific teams through content that appeals to Asian players,” he adds.
It must be remembered that while locals are expected to make up the bulk of the Japanese market – GMA estimates domestic revenues could account for up to 66 percent of the total – tourists remain a key consideration.
“This, says English, could lead to suppliers joining forces with local distributors, with global entertainment manufacturers and brands also likely to get in on the action.”
“We have already seen traditional video game company Namco partner with slots manufacture Ainsworth Gaming to develop a series of Pac Man slots machines for launch in other Asian markets.
“Japan will be no different; we will see strong partnerships, just like we have in Macau and other gaming jurisdictions around the world, with some of the supplier giants already starting to line them up,” he adds.
But until a proper plan is authorized by the government, suppliers can do little more than dip their toes in the water.
Question marks still hang over where the resorts will be built, who will be able to apply for a license, which games can be offered to players, and what, if any, restrictions will be placed on locals.
But as Walter Bugno, CEO of IGT International, said at G2E Asia: “It [Japan] will be big. But we don’t know when, we don’t know what and we don’t know how. Other than that, we are excited.”
Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.
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