Question: How is a 2009 amusement videogame like a jukebox?
Answer: in more ways than many industry members might imagine.
In the simplest terms, the music industry now regards the downloading jukebox not as a competitor to home sales, nor as an irrelevancy, but rather, as a great way to introduce new music to the public. In the eyes of the music labels, digital jukes are also useful tools to track song, artist and album popularity, and to promote new music sales. That's why Ecast, TouchTunes and AMI have become favored vehicles to "break" new albums to consumers, days or weeks before these music products are released for sale in "brick-and-mortar" stores or on the Internet.
Of course, this is not strange to anyone familiar with the history of the jukebox business. From the 1930s through the 1950s, jukeboxes were one of the most important promotional channels for new records.
What has happened since then? Very simply, after a few decades of drifting apart, modern jukeboxes and contemporary music labels have rediscovered each other, in recent years. They have come close to recreating their original symbiotic relationship. Since that relationship made so much commercial sense in the first place, there is really nothing terribly shocking about the strong re-emergence of this business model in the 21st century.
But now, something oddly similar is happening with videogames, too.
The home videogame industry -- after decades of viewing "coin-op" video as either an obstacle or an irrelevance -- now increasingly sees arcade videogames as a promising partner. Amusement video is suddenly considered a potentially powerful way to get owners of Xbox, PlayStation, and Wii systems excited about playing (and then purchasing) a hot new videogame title for enjoyment at home.
The result of this new relationship benefits both the consumer and amusement sides of the videogame industry. Consumer game manufacturers get more publicity for games like Guitar Hero (first published in 2005 by Red Octane and distributed by Activision). This publicity hopefully translates into more player excitement and sales of consumer software.
Operators, for their part, also get something valuable from this arrangement: exciting pay-for-play videogames (such as Guitar Hero Arcade from Raw Thrills) that come with built-in player loyalty. At their best, such games can create genuine buzz among on-location players, leading to healthy cashboxes.
MORE CONVERGENCE LIKELY
The convergence of amusement and home videogames seems likely to grow even closer in the years to come. Both platforms will continue to evolve ... perhaps to a point at which the physical box used by the player, both at home and on location, is almost a "dumb terminal" for streaming digital content. If so, then the "public venue" videogame will probably become an even more valuable publicity channel and promotional vehicle for consumer games sold to home players.
If it seems ironic for jukeboxes and videogames to be on this parallel path today, just wait ... because the parallels between them are only going to increase. At some point in the next decade, these two iconic machines -- jukeboxes and amusement videogames -- may become almost indistinguishable in terms of technologies, business models, and relationships to their consumer counterparts.
One of these days, operators may wake up and realize that both jukes and videogames are performing the same basic function: providing high-profile public access points for the same digital content that players can purchase for home entertainment.
This parallel evolution of music and video, ending up at a strikingly similar place for both platforms, may seem peculiar to traditional street operators, many of whom have long expressed love for the "good old jukebox" and (in some cases at least) near-loathing for videogames. But considered rightly, this parallel evolution is a logical development in the history of both machines. However, it calls for a new way of thinking about each of them.
To begin with, operators will need to think differently about their end-user: the player. For decades, the jukebox player was a working-class guy -- an adult of drinking age -- who dropped into his neighborhood bar for a beer and some tunes. But the videogame player was a "kid" who frequented "arcades" -- and never the twain would meet.
That picture is increasingly outdated. As demographics change, so do the industry's typical customers. Today, there are fewer and fewer differences between jukebox players and videogame players. Both groups are likely to have grown up with iPods and handheld videogames in their pockets; eventually, consumers will practically be born with iPhones in their hands that play both games and music. The day will soon come, if it has not arrived already, when we can say the jukebox player is the videogame player, one and indistinguishable.
Forward-looking manufacturers are well on their way to making the mental adjustment to this new era. These manufacturing executives are looking to licensing, streaming and advertising as their key expenses and profit centers. They realize that what they really have to sell is not technology or locations, but access to a valuable customer base.
Some operators are only now beginning to realize that this broad-based "convergence" between music and video is occurring, and that just like the manufacturers, they too must change their thinking in order to keep up. It's not just that the jukebox player and the videogame player are increasingly one and the same person. It's also a question of redefining the basic role of the operator.
For years, many operators have resisted networked videogames and cherished their business privacy. That's perfectly understandable. But in times to come -- perhaps quite soon -- these operators will have to get their minds around the fact that they no longer can afford the luxury of quite as much independence as in former days.
As home and public technologies become more interdependent, it is inevitable that the operator and the content provider will also grow more interdependent. So the operators' role will not be that of a pure independent contractor, but that of a liaison between the public (players) and digital content (games and music). This means a form of de facto partnership with the giant entertainment industry will eventually come for video, just as it already exists for music.
AN EVOLVING RELATIONSHIP
How did we get here? The relationship between the amusement videogame and the home videogame sectors has evolved through several distinct stages. Stage one, beginning back in the mid-1980s, saw videogames debut in the arcades, then migrate to home systems (such as the Nintendo Entertainment System) up to a year later. If a game was an arcade hit, it usually sold lots of home versions, too.
Stage two arrived in the early 1990s, when a new generation of consumer consoles exploded into a multibillion-dollar industry. Suddenly, consumer games arrived very quickly after the "coin-op version." Then, both versions began to arrive in their respective markets simultaneously.
Stage three, in the mid-1990s, was defined by superior technology for home consoles, with some arcade hardware systems (from companies like Sega and Namco) actually becoming adaptations of consumer architecture. At times, the amusement version of a game still arrived first, but eventually, in most cases, there was no arcade version at all.
During stage three, consumer games publishers freely cannibalized the "gold" of popular content and gameplay concepts from arcade games, without so much as a tip of the hat to the originators. Indeed, there was frequently a strange dynamic at work: one division of a manufacturer actively (the big consumer segment) worked to undermine the market position of another division of the same company (the "coin-op" segment).
Stage four began in the late 1990s, when it became typical for hit console games to inspire pay-for-play, public venue versions, sometimes years after the home version's debut. During this era, the home game industry kept announcing -- against all factual evidence -- that the amusements video era was over. Arguably, the consumer sector did its best to help kill amusement video, shamelessly raiding past classic titles, usurping game names, and even experimenting with the amusement industry's payment methods.
For a few unpleasant years, it seemed as if the consumer sector actively wished the amusement videogame industry would simply vanish, to avoid any confusion in the minds of players, and to leave consumer games as the "one and only" option. But the truth was that standalone amusement-only videogames continued to appear, and continued to succeed with players, during this stage.
What's more, stage four saw the start of convergence between these supposedly "hostile" markets (home and coin-op). For example, Global VR successfully adapted a series of hit consumer game titles to provide arcade-type gameplay and presentation. GVR enjoyed success with such games as Need for Speed. It followed up with pay-for-play versions of hit consumer titles from Electronic Arts and other consumer game publishers. Most recently Global VR has presented Twisted: Nitro Stun Racing, based on a popular release from an independent French game studio.
But now we are, arguably, in stage five, marked by sharply declining home game sales during the global economic meltdown. In the first part of 2009, even the mighty Nintendo has seen net sales plummet 61% compared to the same period last year.
The consequences have been painful for the consumer game business. Independent development studios have been hammered by dwindling opportunities to undertake projects as the large publishing groups cut back on expensive Triple-A game releases. The top-selling games now jockey frantically for share of a saturated market that is flooded with titles.
COIN-OP PUBLICITY HELPS HOME GAMES
Suddenly, there is a terrific need for more public recognition of new consumer games. This has forced the consumer game industry to seek new ways of achieving wider market exposure. As a result, the consumer videogame industry has realized that the amusements trade is not its enemy, but an ally -- and a potentially powerful one at that.
In other words, "jukebox logic" has finally occurred to many consumer game executives. And, as a result, the "jukebox era" for videogames has arrived. This helps explain a recent spate of crossover franchises, the most successful of which is the recently launched Guitar Hero Arcade. (The original concept for Guitar Hero was inspired by an amusement property from Konami that first had appeared years earlier.)
A similar "stage five" home-to-arcade strategy has been adopted recently by Namco Bandai Games. Namco took the Nintendo casual race game experience from the home and dropped it straight into an anarchic competition between groups of players simultaneously competing in the arcade title Mario Kart Arcade GP 2. The mixing of characters from the Nintendo universe with Pac-Man and other Namco properties resulted in a frantic and fun game for a much more casual and diverse audience of players.
Okay, so where is all this going? What will be stage six of the relationship between home video and amusement video ... and what will it mean for operators? To answer this question, we have to look at two factors: marketing and technology.
When it comes to marketing strategists, there have always been two schools of thought about the appeal of pay-for-play videogames. The first is "casual gaming"; this school insists that videogames are (or should be) impulse buys. If players happen to be in a fun location (such as a bowling center, a movie theater, or even an FEC) and if they happen to see a videogame, maybe they'll drop in some quarters or dollars or swipe their credit cards, and enjoy two minutes (or 20 minutes) of casual fun.
The second school of thought is the "destination entertainment" theory, which holds that amusement videogames, like home videogames or theatrical motion pictures, should be "events" that players seek out by name: properties that send players to locations as primary draws. This school asserts that videogames should offer uniquely engaging experiences that players return to again and again, moving deeper and deeper into the game's unique "world."
Amusement video began with casual gaming in the Pac-Man era, but evolved to "destination" gameplay by the time of (for example) Capcom's Street Fighter series, or some of the famous Sega driving simulators of the 1990s. Today's amusement sector has largely reverted to the "casual gaming" concept. Aside from a relative handful of tournament-based promotions, most game operators depend on impulse play as their core revenue generator.
This is where new technology comes in. Stage six of the home-and-amusement relationship may be determined by which school of thought (casual vs. destination) best fits the evolving technology of digital downloading video.
"JUKEBOX LOGIC" FOR VIDEOGAMES
What if on-site pay-for-play videogames really do become very much like jukeboxes? Suppose the typical pay-for-play videogame, five or 10 years from now, is a generic but sophisticated terminal that can download dozens, or hundreds, of different titles? Suppose those game titles are pretty much the same menu of games that players can enjoy at home? Will this business model support casual gaming, or will it trigger a new era of "destination" gameplay?
It's not an idle question. The biggest development underway in the amusement video sector is what might be described as "public console" type equipment: a sort of video jukebox that plays games, not music videos. These machines are hybrids, mixing the cybercafé game experience with a coin-operated or credit card-based payment mechanism.
The first of these was the Zazoox platform from Kiosk Information Systems, which gained ground in cybercafés, truckstops and airport lounges. A newcomer to this sector is the GameGate VU, distributed in the United States by Innovative Concepts in Entertainment. Now, just imagine that today's home consoles are replaced by similar technology for players' living rooms. Sound implausible? It could well happen -- and soon. The PlayStation 5 or the Xbox 2012 edition could conceivably be a "slave" box plugged into a broadband network. This box will "pipe in" each game live from a remote server. The box will be the interactive game equivalent of the cable TV box that is already a comfortable and familiar fixture in people's living rooms.
This, in turn, could trigger another giant step in convergence between digital jukeboxes and amusement videogames. Indeed, evidence already suggests that this is occurring right now. The AMI Entertainment Network of music and video (TAP.tv) is only one step away from providing an interactive element.
In the amusement videogame sector, the closest equivalent to date is the networked trivia system from NTN Buzztime. This game network for bars and restaurants offers multiple-venue terminals for competition and tournament play. Although player interaction is limited, advances in the system have made a poker experience available on the network. It is easy to anticipate that a fully interactive, highly visual experience could soon be piped down the wire to all the NTN client machines in locations nationwide. (By the way, NTN's stock is publicly traded on AMEX.)
Amusement operators are quite familiar with networked videogames, of course. Incredible Technologies paved the way with its Golden Tee Golf products. But this famous IT franchise has catered to the familiar software and hardware purchase model that traditional operators prefer, not the subscription model that drives the digital jukebox.
Videogame companies such as JVL have tried to sell operators a subscription model for networked games, with mixed results. But the subscription model may gain new force in the amusement video sector as new services such as CoinUp from Betson and Raw Thrills, plus e-AMUSE from Konami, propose a monthly operator subscription.
Industry traditionalists like to remind us that, "gameplay is what counts, not technology" -- and there is much truth in this assertion. The development of an online subscription service will only succeed according to the number of players it entices to play and pay.
Nevertheless, amusement operators should be aware that a sea change is building. The "jukebox era" for videogames has already arrived ... and it's only going to get stronger in the years to come.
KEVIN WILLIAMS is founder and director of the out-of-home leisure entertainment consultancy KWP Ltd. His extensive experience in global video amusements and high-tech attractions includes top management and design posts with a focus on new technology development and applications. He is a well-known speaker on the industry lecture circuit and has authored numerous articles. Williams is also editor and publisher of The Stinger Report, a leading industry e-newsletter and Web-based information service. Go to thestingerreport.com to sign up for a free subscription.