Japanese gaming preferences point to a bonanza for slot machine suppliers once casinos open in the country, with local manufacturers likely to provide strong competition with new products based on local tastes, according to a white paper from Global Market Advisors.
The 114-page report, entitled White Paper: Japan Integrated Resorts, found that while there has been considerable research on the likely market size based on factors such as propensity to gamble, there has been less study of the types of games that are likely to appeal to the Japanese gamer. These preferences will play a crucial part in the future design of the casino floor, revenue per square foot, labor costs and ultimately EBITDA, it said.
The games of pachinko and pachislot remain highly popular in Japan. Although revenue has been declining, it was still a $34 billion industry in 2016, GMA said, citing Ministry of Finance and the Nichiyukyo Association figures.
“The single greatest misconception a casino operator can make is to assume that Japanese gamers will play the same games as those players that frequent Macau,” the report, which studied both games preferred at home and preferences displayed by the Japanese while travelling. “The Chinese have a table game centric gaming culture and have long embraced Baccarat and Sic Bo. While the Japanese enjoy Oicho-Kabu, they have a long-established history as a machine-centric gaming culture, as they are enthusiastic Pachinko players,” it said.
Oicho-Kabu is a traditional Japanese card game similar to baccarat.
As a result, GMA predicts slot machines will take up a far greater percentage of the casino floor than in other Asian markets. It estimates that operators will at first allocate 45 percent of the floor to slots, 5 percent to electronic table games and 50 percent to table games. However, going forward it sees slots gaining an increasing share of the floor.
The report also points out that the revenue derived from the pachinko and pachislot industry is mostly from men. The venues are smoky and noisy and unappealing to a female audience. It predicts that with the right kind of gaming environment the participation rate of Japanese women would quickly rise to match those of men and could reach those seen in western casinos, which can be as high as 58 percent.
The local manufacturers, such as Aruze, Konami, and Sega Sammy, understand what appeals to the Japanese gamer in terms of maths, symbols and themes and will be well placed to develop casino products for the market.
“It is also advised that gaming operators design casino floors that are flexible and can be quickly altered to meet the evolving needs of the market.”
The report sets out four potential scenarios for the Japanese gaming market, with revenue forecasts for each model. The estimates range from $12.5 billion to $24.2 billion. The lowest projection is based on just two integrated resorts, one in Osaka and the other in Yokohama.
The highest assumes an Osaka Strip-style development, with additional IRs in Tokyo, Yokohama, Hokkaido and other regions. It assumes a first wave of IRs up and running before more properties are added.
It assumes a tax rate similar to that of Singapore and an entry fee projected at Y2,000. It also expects similar restrictions to Singapore in terms of junket operations.