Executive Officer, GENDA GiGO Entertainment Inc.
General Manager, Hokkaido and Eastern Japan Sales Division
In 1994, he joined SUGAI KOUGYOU Co., Ltd (now SD ENTERTAINMENT Co., Ltd.), which has its Headquarters in Hokkaido, and after working as the General Manager of the Corporate Planning Department and the GAME Operation Department, he was appointed as the Representative Director of SUGAI DINOS, Inc. in 2018. Engaged in the amusement industry for almost 30 years; he was appointed Executive Officer of GENDA GiGO Entertainment in October 2022; in current position since April 2023; Drawing on his previous experience, he oversees not only the Hokkaido area but also the eastern Japan area.
Lack of funds plus Covid-19 disaster…
One phone call from GENDA Chairman Nao Kataoka changed our fate.
Before transferring the business to GENDA, we were operating the amusement business with investment from a fund managed by Hokkaido SO Capital in December 2018, but to be honest, we were lacking investment funds to develop the business and were in financial difficulties. Added to this was the impact of the Covid-19 disaster from 2020, which led to insolvency, and on 30 May 2022 the company applied to the Sapporo District Court for the Civil Rehabilitation Law.
I had a relationship with GENDA Chairman Nao Kataoka, whom I met twice through mutual acquaintances, and we discussed the transfer of business once before the civil rehabilitation application. At that time, he responded that he would only do the amusement arcade business. We were grateful, but we still had some unfinished business in the amusement complex business, so we looked for another partner and applied for a separate sponsored civil rehabilitation.
At that time, I received a call from Chairman Kataoka, who had learned of the application for civil rehabilitation through the press, to the effect that we also had the right to join with SUGAI DINOS. I think this changed our fate. Chairman Nao Kataoka also approached the court, which led to a switch to civil rehabilitation with public bidding in June 2022 and the implementation of competitive bidding. As a result, we decided to join GENDA, which gave us the highest price.
Despite the uncertainty of a 20x increase in the size of the business
GENDA Group listened patiently.
Because the transaction was a competitive bid, the business integration work with GGE had to be done in a hurry. SUGAI was a company that had been in the amusement business for almost 100 years, so for better or worse, it had many habits attached to the way it did business. I think we may have given GGE a hard time in this respect.
We assumed that there would be a certain amount of discrepancies when integrating with GGE, whose business scale is about 20 times larger than ours. We were concerned that it would take time for GGE to understand our business structure, especially outside of the amusement arcade business, but GGE patiently listened to us, which was very helpful. In a sense, it was probably a good thing that the management of SUGAI had changed three times before the transfer of the business, so in a sense, both I and the employees had developed a tolerance for change and were able to accept any discrepancies as a temporary thing.
The amusement arcade business is the main focus of both GGE and SUGAI, so it was reassuring to know that they understood the direction we wanted to take and were willing to correct any shortcomings. Of course, there were difficulties because the integration work was carried out in a tight time frame, and there was also the pain of closing unprofitable stores, but I have the impression that in total the process went smoothly.
Improved customer satisfaction thanks to a much stronger product range
Sales have also exceeded the level before the Covid-19 disaster.
The amusement arcade business has seen a dramatic increase in the product quality and profitability of prize game machine prizes as a result of becoming a member of the GENDA Group. The line-up of prizes at the GiGO Group stores, which have approximately 260 stores nationwide (as at end-November 2023), includes original products that attract customers, such as anime-related products and collaborations with popular YouTube stars, while the unit cost of purchasing products is reduced due to economies of scale. Thanks to this, store sales and profits have improved significantly and are already above the pre-Covid-19 disaster level.
Store operations have also improved. With the help of GGE’s area managers, we have been able to give our employees detailed lectures on how to operate stores in the GGE style – how to make customers happy and generate profits. It was beneficial to have a detailed lecture on how to make customers happy and make a profit in the GGE style of store operation. As a result, monthly sales fluctuations have been reduced and a sense of stability has been achieved.
In the bowling business, we were grateful that the employees understood that in some cases we have long-term relationships with individual customers. For example, there are customers who have been coming to our bowling classes for five or ten years. Bowling balls cost between 50,000 and 100,000 yen, so we spend a lot of time selling them so that they can choose the right product for them. There are inefficiencies in this way of doing things, but we are also allowed to take in GGE’s know-how, and it looks like we will soon recover to pre-Covid-19 disaster levels in terms of sales and other aspects.
Despite being bewildered by the new culture,
motivatited to become a member of the GENDA Group
Due to the difference in the scale of the business, the GGE way of working is still confusing and unfamiliar to some SUGAI employees, but we are optimistic that this will gradually resolve itself over time. Having been taken over by a company of a much larger scale than SUGAI, we are aware that there have not been zero cases where the relative status within the company, for example, the change from department head to section manager. Nevertheless, although the hurdle is raised, it does not mean that you cannot reach the position of head of department in the future. We are in a position where we can compete, so I think that should be valued, and I talk about it with employees as well.
On the other hand, when it was decided that the amusement arcade and bowling businesses would be taken over by GGE, I was impressed by the positive attitude of the employees. As I mentioned earlier, the management body has changed three times at SUGAI, and this is the fourth time. This time, they felt overwhelmingly secure in the fact that the company had taken over the amusement arcade business of the Sega Sammy Group. I think many employees were motivated to work by the sense of anticipation of becoming a member of a company that is aiming for the global market, even though they thought they were working for an amusement company in Hokkaido.
Realizing the credibility and brand power of the GENDA Group
Focusing on store development in Sapporo and aiming to be number one in Hokkaido
To tell you a little about myself, I am now in charge of not only the Hokkaido area but also the eastern Japan area. GENDA aims to be the world’s number one entertainment company, and I have started to think about what is needed to achieve this. I have also started to think about what is needed to realize this. I myself am motivated to be involved in the amusement business in a comprehensive way, and I would like to give back my experience because I believe that providing many options for places to play, without being limited to amusement arcades, is the right way to do so in an age of fragmented tastes.
My speciality is ‘changing perspectives’. Although I haven’t yet materialised it, I have a number of ideas for the bowling business, and I believe that by changing the perspective of existing amusement arcade operations, new businesses can be created from there. We would like to continue to realise these ideas as businesses in the future.
To establish a firm foothold, we first aim to become number one in Hokkaido. Sapporo, a city of two million people, is probably the main hub for store development in Hokkaido. However, the number of stores in Sapporo is currently too small, so we need to reinforce it. Fortunately, we have an abundance of projects from developers due to the credibility and brand power of the GENDA Group, and we plan to open a store in the centre of Susukino at the end of January 2024, our first store under the GiGO brand since the M&A. The stores transferred from the previous company to GGE currently retain the ‘Dinos’ name, but I am not particularly concerned about this and am waiting for my turn to be able to call them ‘GiGO’. I am now in the process of developing the business while making the most of the strengths of being part of the GENDA Group.
Overview of M&A
SUGAI DINOS Inc (Headquarters: Sapporo, Hokkaido; hereinafter ‘SUGAI’). The company operates amusement arcade, bowling and cinema businesses in Hokkaido. The company has a 100-year history, counting from the founding days of SUGAI KOGYO. After GEO Holdings, Rizap Group and Hokkaido SO Capital, the amusement arcade and bowling businesses were transferred to GENDA GiGO Entertainment of the GENDA Group on 30 September 2022, and the cinema business was transferred to GENDA GiGO Entertainment and Sasaki Kougyou transferred the cinema business to Dinos Cinema, which is a joint venture between GENDA GiGO Entertainment and Sasaki Kogyo.