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Issue Date: Vol. 52, No. 1, January 2012, Posted On: 1/31/2012


In Redemption's Great Debate: Tickets Still Beat Ticketless


by Frank Seninsky
amusement business, coin-op games, amusement industry, family entertainment center, FEC, entertainment trends, great ticket debate, redemption, ticketless redemption, coin machine route, arcade game, vending route, vending business, Frank Seninsky, Alpha-Omega Amusements, coin machine service, arcade game service, Amusement Entertainment Management

The Great Ticket Debate is still going strong. I touched on this controversy in my previous VT article, "An Updated Survey of Technology for the Amusements Industry" in which I noted "My data show that going ticketless is not the best option." | SEE STORY

Tickets Real Incentive photo | REAL INCENTIVE: Tickets remain a powerful psychological reward. Pictured above, tickets offer thrills to children, teens and adults at family entertainment centers in most markets.

What data, you ask? Well, long-term weekly revenue tracking from my own company’s now more than 40 debit card revenue-share and client FEC locations, as well as having access to dozens more FECs, leads me to believe that ticket-based redemption games (especially token action games) earn more money when customers receive tickets -- and of course when these games are properly located and programmed according to their category. My experience is based on real weekly data in the U.S., which may or may not hold true in some other parts of the world.

That column provoked some thoughtful reactions from some very wise industry veterans, including Steve McCaul of Global Coin-Op Equipment, who defended ticketless redemption operations (at least in some instances) on other grounds. He said using the token-based Universal Hopper Kit, marketed by his company, resulted in revenue increases of up to 43%, as well as reduced labor costs in quite a few leading arcades. Of course, I questioned what his statistics are based on and have not received a response. (The cost for each hopper system for each player station is about $500.)

In addition, a balanced list of pros and cons for ticket vs. ticketless operation was provided by Leisure and Allied Industries chairman Malcolm Steinberg, a longtime associate whose company runs a large number of highly successful arcades across Australia and Asia.

Finally, I noted that CEC Entertainment Inc. chairman Richard M. Frank offered a thoughtful discussion of the pros and cons of tickets vs. ticketless redemption in a recent speech. He admitted that some players "hated" electronic points and cards, but also said this kind of system could theoretically result in far fewer operational headaches across 500-plus Chuck E. Cheese’s arcades (such as eliminating the need to purchase and handle 6.5 billion tickets a year). The Chuck E. Cheese’s chain continues to operate with tickets.

I appreciate the input from all of these industry leaders and I have no doubt that they are accurately reporting the facts, based on their experiences, operation types and market. After giving due consideration to their views, I am bound to say that I remain convinced that ticket-based operation is better than ticketless in most cases.

Ticket-dispensing games are better when it comes to a typical family-based clientele, which includes lots of little kids as key players, and when we are talking about standalone locations, not mall-based units, in the U.S. Conditions may be quite different in other cultures.

Here are 10 reasons why I believe ticket redemption is best:

1. Psychological reward. First and foremost is the powerful psychological reward of winning tickets. Anyone who has spent five minutes in a ticket-dispensing FEC has seen mobs of happy children running around with fistfuls of tickets, delighted by this visible evidence of their skill and success at playing the games. Just winning these colorful bits of paper is a genuine thrill for millions of children (and I have also seen it with teenagers, young adults, adults and seniors).

As one industry expert put it: "I truly believe the real experience of redemption suffers without ticket payout and the upbeat buzz of a location and player vibe is affected as well. No rewarded player’s eyes light up and say, ‘Wow, look how many swipe card points I won!’"

2. Relative expense. A common alternative to ticket redemption means adding swipe card readers/controllers to each station of every token action game. It’s not cheap. The typical cost of such stations to an average 60-game location is approximately $7,500 including labor. (Did you know that card system readers must be synchronized on a regular basis to ensure they emit and read the same pulse frequency?) Hoppers for token-based systems incur their own costs of purchase in addition to the labor cost of continually refilling the tokens.

Obviously, the cost of the ticket dispensers is already factored into the price of a large majority of redemption games, and the cost of tickets (approx. 1/10th of a cent each) and ticket-eater terminals are pretty small when one realizes that the ticket-processing stations are attractions themselves.

Admittedly, there is also a cost to purchase tickets, maintain ticket mechanisms and acquire ticket eaters. But I still consider the cost of this option to be lower. There are relatively low-cost ticket centers from companies like Deltronic Labs and Benchmark that can significantly reduce redemption prize center staff labor costs associated with ticket-based operation.

3. Player confusion. With most card-based points systems, players have to use their cards to activate the game, then swipe their cards afterward to have any accrued points added to their accounts. Many players don’t understand this.

As a result, many players swipe the card first, thinking that’s the way to activate a game. When nothing happens, they are upset. Other players get the game started, play and win points -- then walk off without swiping their card, and losing their points as a result. Still, other players simply get excited and forget to swipe their cards before rushing off to play the next game.

Yet other players may swipe their cards after gameplay, but they don’t realize more points are being added to their accounts. They expect to see a display -- "Congratulations, you won 500 points; you now have a total of 1,237 points," for instance -- or they expect to get tickets regardless of using swipe cards.

Either way, the experience leads to unhappy customers, some of whom don’t get what they have earned, and others who don’t quite understand what is going on. The process of educating customers to play in a ticketless environment can be lengthy and frustrating.

4. Point stealing. What happens when a confused player does not swipe his or her card after playing the game? He or she often walks away to complain to the manager. Meanwhile, a savvy player runs up to the reader and swipes his own card to steal the first player’s points.

Some young, and unscrupulous, entrepreneurs work in teams to steal points. Kid A "accidentally" bumps into a player who just won points before the player has a chance to finish his game, swipe his card and collect his points. While the player is distracted, Kid B steps up and swipes his own card, stealing the player’s points.

It’s almost impossible for the FEC manager to find out who stole the points. Even if he knows, it’s usually a headache to transfer the points from the thief’s account to the victim’s account.

5. Accounting confusion. Some ticketless systems are based on a combination of cards and tokens that are dispensed from a game. At each game station, the instructions say:

1. Swipe card
2. Get tokens
3. Play game

But if the player swipes his card, collects the tokens, then changes his mind and decides to use them to play another game, the operator is left with an accounting mess. The tracking system is "wrong" because this happens quite often and it cannot easily track every token out against every token in from all token-action games.

6. Lost opportunities. Tickets are great marketing tools. The operator can print any message he likes on the ticket, from a company logo to a soft drink promotion. Or, the operator can offer tickets as small prizes in merchandise-dispensing machines like Stacker, Key Master, Barber-Cut, Winner’s Cube and Road Trip, as well as skill cranes.

When operators host birthday parties, the FEC can give extra tickets to the birthday child. Kids love this ... and if you set up the birthday party correctly, the perceived value of the tickets is four times their real value to the operator.

Operators can also run game tournaments where just one person wins all the tickets, generating amazing levels of excitement among players. Without tickets, such marketing opportunities will be difficult to achieve.

Tickets Marketing Opportunities photo | MARKETING OPPORTUNITIES: Pictured above, tickets are also valued prizes that can be stocked in cranes and merchandisers; and operators can print messages and images on tickets. At left, young girls gather at the ticket eater.

7. Reduced revenues. Token-action games are the highest-earning category on the FEC floor, when properly run. Converting to ticketless operation can reduce their earnings, and so can moving the fast-action games any distance from the redemption counter.

Admittedly, when comparing ticket-based to ticketless redemption earnings for similar games in different locations, it is difficult to assign a direct "cause and effect" relationship between the payment and reward system on the one hand, and earnings levels on the other.

8. No KISS. Some FECs give players the option of tickets or cards that can store points. This could lead to additional confusion among players, requiring more customer education. It also triggers the need for more staff training, because qualified personnel need to be available to explain and provide the choices; so far, kiosks are unable to provide this option.

Does offering the customer a choice of ticket-based or ticketless operation result in lower revenues? It’s not clear based on weekly earnings reports from only two locations that offer both, even though the revenues from both of these locations on a per-machine average is below our averages in the other 38 locations. But when in doubt, I say trust in the classic marketer’s rule of thumb: "Choice depresses response." This is a variation of the old KISS principle: keep it simple, stupid.

9. Legal issues. My reading of the law in Florida is that redemption operation requires tickets and that ticketless systems are not legal. Some states have been cracking down on previously accepted pushers and cranes in recent months (think California), especially if they pay off in coins or have bills wrapped around prizes. But rewarding players with tickets is accepted by most citizens and, I believe, by most law enforcement bodies.

10. Physical safety. Very young kids, who play ticketless games, still want that instant psychological payoff. Since they don’t get tickets, they often tend to run ... at top speed ... across the gameroom floor. Why? They are racing to a ticket evaluation station, where they can swipe their card and get a reading of how many points were added to their accounts.

The problem is, these small kids often run into other customers, or into a machine, or they just trip and fall. The outcome is tears and bruises, or a chipped tooth or sprain, among other injuries. In other words, it’s a ruined afternoon instead of a happy memory. In theory, the operator could install ticket evaluation stations every 10 feet, but in practice this is cost-prohibitive.

SUMMARY
There are some who say that in the digital era, all paper-based products from books to newspapers are going the way of the dinosaur, so operators might as well bow to the inevitable and get rid of paper tickets. I disagree. No iPad can replace a beautiful coffee table book of lavish photographs and no swipe card can replicate the thrill of winning tickets.

On the other hand, there is no doubt that anyone who looks at the results achieved by ticketless operation, as described by Malcolm Steinberg, has got to be impressed. At the same time, he concedes that his mall locations in Asia are a bit different than FEC’s in the U.S. His patrons are made up of a large percentage of teenagers and adults. This group is more prone to enjoy a ticketless operation.

For now, at least, I believe that on balance, the logic and results suggest that the best course is to "stick with tickets" in the typical American FEC. This is not the last word, however. I am quite sure that the Great Ticket Debate will continue.

Someday we’ll see three-dimensional virtual tickets coming out of a machine, floating through the air and going right inside a customer’s debit card, with all of the bells and whistles. I have already a prototype of this technology, but it has a long way to go.


FRANK SENINSKY is president of Alpha-Omega Amusements (East Brunswick, NJ), parent company of Amusement Entertainment Management, a consulting agency; Alpha-BET Entertainment, a nationwide revenue sharing equipment provider; and Alpha-Omega Sales, a distributor of new and reconditioned games. During his 40 years in coin-op, Seninsky has presented nearly 300 seminars and penned more than 1,300 articles. He served as president of the Amusement and Music Operators Association and the International Association for the Leisure & Entertainment Industry. He is editor of The Redemption Report and an instructor at Foundations Entertainment University. Seninsky can be reached at (732) 254-3773 or by emailing fseninsky@aol.com.


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