To put it simply, we do not see AI as replacing our physical “Entertainment Platform.” Instead, we believe “Entertainment Platform” will remain vital in the AI era, and that leveraging AI to drive operational efficiency will serve as a tailwind for our business.
In the current AI-driven stock market, the keyword “HALO (Heavy Asset Low Obsolescence)” is gaining significant attention (literally translated, this refers to a group of stocks that “possess heavy assets and do not easily become obsolete,” meaning stocks that are less susceptible to the influence of AI). The primary criterion for HALO is whether or not AI is capable of replicating the company’s products or services.
From that perspective, we believe that no matter how convenient digital technology or AI becomes, the human desire for “physical experiences” – those enjoyed directly through the five senses – will not easily disappear.
Our core business portfolio includes the following types of physical entertainment;
- Amusement arcades: A physical platform that provides a tangible anime experience, allowing fans to immerse themselves in the popularity of their favorite series through all five senses.
- Karaoke: “Singing,” an ancient form of entertainment that has endured throughout human history, having never been weeded out.
- Photography studios: An experience that turns commemorative photography into an event, documenting life’s milestones.
- Foreign currency exchange machines: A physical infrastructure that handles “cash” – an indispensable element of Japan’s inbound tourism demand.
Our “Entertainment Platform” operates on a business model of “building attractive venues (physical distribution networks) and continuously refreshing the content with the latest trends.”
Even as AI generates an endless stream of new entertainment, we believe that we are unlikely to be fully replaced as long as our store network serves as the “physical gateway” for people to experience that content.
Precisely because the world is changing so rapidly through digital advancement, we feel that our physical locations – which cannot be easily moved or replicated – have ultimately become one of our core strengths.
On the other hand, there is significant room for improving operational efficiency and enhancing the customer experience through AI-driven digitalization. Accordingly, we are leveraging AI to strengthen our physical service offerings.
For instance, by utilizing AI to streamline store operations and provide personalized services tailored to each guest, we aim to further unlock the inherent appeal of our physical locations.
The trend toward AI integration is irreversible, and we view it as a powerful tailwind that will maximize the value of our physical locations.
A defining feature of GENDA is that 99 of our employees – representing more than half of our standalone workforce – are technology professionals driving AI and DX (Digital Transformation). Notably, this group of tech talent is larger than our administrative team responsible for M&A execution.
Each of these professionals brings a specialized career in technology and data, leveraging their expertise to implement industry-disrupting DX initiatives.
Please refer to the following materials for details regarding our specific initiatives.
- Amusement: “Project PAO”
Previously, determining the optimal allocation of prizes to stores – deciding exactly “which items and quantities to send where” – was impossible to do manually, resulting in cumbersome Excel files with tens of thousands of rows. We implemented an AI that uses brute-force computation to evaluate countless distribution patterns, minimizing both inventory waste and opportunity loss. This has led to a dramatic improvement in accuracy, reducing the standard deviation of the variance between order plans and actual store allocations from 32.6 down to 4.9.
(For reference: page 28 of “FY2025/1 2Q Earnings Presentation”)
- Karaoke: “BanBan AI Agent”
To address operational bottlenecks involving high call volumes and cumbersome manual documentation, we developed an in-house manual ChatBot powered by Generative AI. This initiative significantly reduced manual reference times for field staff and decreased incoming call volumes, alleviating the workload on our headquarters. By building this solution in-house, we achieved an approximate 40% reduction in operational costs compared to external SaaS alternatives.
(For reference: page 22 of “FY2026/1 1Q Earnings Presentation”)
- Foreign currency exchange machines: “MEO” in AI-driven route optimization
We have transitioned the entire process of identifying machines requiring replenishment, assigning transport vehicles, and planning routes – tasks previously handled manually – to an AI system that makes these decisions holistically based on cash balances and usage frequency. Furthermore, the AI factors in recent dispensing trends and staffing schedules to predict the optimal cash amounts required for each replenishment.
(For reference: page 22 of “FY2026/1 2Q Earnings Presentation”)