Why Japan’s arcades are its game industry’s cutting-edge labs

Arcades aren’t what they used to be, especially in the West. They’re looked upon as places for retro nostalgia, not where you’ll find some of the most interesting games available. But that’s where Japan has an advantage as some of the arcades are being used to test cutting-edge virtual reality games.

Arcades, or “game centers” as the Japanese call them, are alive and kicking in Japan as I noticed in my whirlwind visits to Tokyo, Osaka, and Fukuoka last week. Many companies have exited the business as the market for arcades has sagged in the U.S. But in Japan, arcades still occupy a huge amount of real estate. Square Enix’s Taito has more than 138 arcades throughout Japan, and it’s just one of the companies in the business. Square Enix said that arcade sales were $360 million in the year ended March 2016, up 9.7 percent from a year earlier. One of the reasons? Foreign tourists like me.