Karaoke box businesses in Japan sing blues as customer spending wanes

TOKYO >> Karaoke operators in Japan are struggling to secure profits as customers purchase less food and drink and more frequently go to karaoke alone.

The grim business environment forced major operator Shidax Corp. to effectively end its management of karaoke boxes, highlighting the difficulties plaguing the industry.

According to a paper on the karaoke industry complied by the All-Japan Karaoke Industrialist Association, the number of karaoke customers fell below 50 million in the 2000s, with the number of outlets tumbling to fewer than 10,000.

The decline is attributed to the collapse of the bubble economy and subsequent economic slump, and the diversification of the entertainment industry.

In recent years, fewer customers have gone out for karaoke after work, parties or other occasions, with declining attendance by large evening groups who often purchase food and alcohol. At the same time, the number of students and senior citizens who visit outlets during the daytime when rates are cheaper has grown.

Shidax struggled to react to the changes in consumer habits. The company entered the karaoke business in 1993 and established about 300 “restaurant karaoke” outlets that provide highly rated meals. However, the subsidiary operating the outlets recorded losses for the last three years.

The company sold or closed about 80 outlets in 2016 and 2017, after determining that reconstruction of the business on its own would be difficult.

Shidax announced it would sell 81 percent of its karaoke stake to B&V Corp., a Tokyo-based company that operates the Karaokekan chain of karaoke outlets.

The 180 karaoke outlets will retain the Shidax name and continue offering meals and other services.