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Issue Date: Vol. 40, No. 3/March 25, 2000 - April 24, 2000 , Posted On: 3/25/2000


Game Operators Find Increasing Role For Merchandising Vending


Marcus Webb

U.S.A. - A short time ago it was possible to define a vending and amusement machine operating company by the type of equipment it offered locations. Amusement, bulk vending, kiddie rides and cranes were, of course, the most popular categories that defined not only a business, but the person who ran it.

Today, those lines are becoming increasingly blurred. Is an amusement operator who makes a foray into cranes and then bulk vending still an amusement operator? The answer is perhaps not as important as the phenomenon itself. It would seem that these are the waning days of the coin-op specialist.

Operators polled by V/T cited many reasons for equipment diversification, including the rising costs of "traditional" coin-op amusements, such as videos. Also fueling diversification is the easy transfer of skills from one endeavor to another; merchandising and inventory controls required for cranes can be applied to bulk vending.

However, the overriding reason was common to all: maximizing income per location. For many operators this has taken the form of increasing revenue from an existing location base. That is to say, even as the number of locations remains constant, the pieces of equipment per location have demonstrated growth. As one operator said, "It boils down to making optimum use of the real estate available at each location."

An operator in the mid-Atlantic region has been running amusement equipment for 20 years, during which time he built up a medium-sized route.

"About two years ago we were referred to an account for games and cranes, and were told the account also had bulk," he said. "The person who gave us the tip said, flat out, that if we didn't do the bulk we were 'idiots.' He reported it was steady money, it was good money and it was money that was still going to be there long after the video games had depreciated and nobody wanted to play them anymore."

The investment, the operator explained, was minimal compared to other entertainment devices, such as videos. He took a chance, installing both sticker machines and traditional bulk vending heads into the chain of eateries. "I guess the main thing that struck me was that my entire investment was paid for in six months. It was a quick payback and we didn't get many calls for service," he said. "So it was a quick payback and low maintenance."

There was, he admitted, somewhat of a learning curve after installing the new equipment. "Merchandise has been a real education," he said. "Some of the items we thought would sell, didn't sell. And items we weren't sure about sold great." He also realized that the location was more or less a "zero sum game" when it came to bulk. Once particularly hot "Pok©mon"-themed item required buckets to empty the cashboxes, but these sales were made at the expense of other items on the rack.

However, the trend also runs the opposite way. Fred Simon, president of the Amusement Factory (Van Nuys, CA) and president of the National Bulk Vendors Association, operates bulk equipment in 26 states. While still primarily and solidly a bulk vending operator, his operation also boasts a healthy mix of other equipment, including cranes, video games and kiddie rides, as well as various pieces of hybrid equipment, such as Sammy USA's "Sports Arena."

"If you look around now, you would be surprised at the fact that most bulk vendors are not pure bulk operators, but operate other types of equipment; and I would say the same thing for music and game operators," said Simon. "The people that I talk to are all attempting to operate different types of equipment. I would say that it's more prevalent than you think it is...and it's going to be even more so as the years go by."

Many, like the previously discussed operator, were gently prodded into diversification, though others now see it as a matter of survival. If an operator can't be a one-stop shop, then he runs the risk of losing the location to someone who can provide the services.

"Things over the past five years have changed as far as our customers' needs are concerned. They are busy, probably busier than they have ever been, especially with a growing economy like this," said Simon. "They would rather not deal with five different operators, but would prefer to deal with one. If you can convince them that you can take care of all the different kinds of equipment, they are more likely to want to deal with one vendor, rather than five or six."

The need to retain a location always represents a strong incentive for adding new equipment, according to Simon. However, the operator also benefits. "If you are able to send a route driver out to collect more money in each location, then there is an economy of scale that you reach that makes your company more profitable," he said. "There is less travel time, fewer expenses and more money collected. Plus, the route driver is feeling better because he's not exhausted from running around doing 12 or 15 stops. Now he only has to do four , much more difficult stops , but he doesn't have the driving time and stress related to that."

Norbert C. Meunier of King Pin Games (Poynett, WI) classifies his company as a "ma and pa" operation, though Meunier's route stretches throughout central Wisconsin and includes several high-profile, upscale accounts, such as resorts catering to the area's vibrant tourist trade.

"The biggest reason we went into bulk vending is the shortage of actual good video entertainment and the onslaught of home game systems," said Meunier. "We had to look for different avenues of revenue and bulk vending seems the best way to get that added revenue. We already have the game rooms...right now bulk vending is probably 20 percent of our gross revenue."

Meunier's crossover or, rather, integration of bulk vending into his route began with Mayoni's "Big Top Mini Pinball" and racks of traditional bulk heads from nearby supplier Toy 'n Joy. Like Simon, his routes also includes Sammy USA's "Sports Arena" units as well as crane machines. However, Meunier pointed out that most of his capsule dispensing machines are in locations with 10 or fewer machines and grouped together away from the videos. This, he said, is because his larger game rooms are primarily located in water park type locations where broken or discarded capsules represent a foot hazard.

"Being a newcomer to this business, I personally don't see where all the doom and gloom is coming from," he said. "I see it as a land of opportunity. The opportunities are out there for the people who take the time to search out those opportunities, especially if they already have the locations secured. The operator shouldn't be out there trying to expand his location base, he should be trying to increase the revenue of his location base."

This type of careful planning, Meunier reported, is the key to integrating new types of equipment into his music and games route. One example of this is the fact that a variety of his locations feature redemption games, of which some have been perceived in the past as conflicting with bulk venders. "Bulk does not take away from redemption," he said. "Absolutely, one does not take away from the other. However, we do try to separate the products we put in, so we don't duplicate the products in redemption and bulk. We try to keep that different, for obvious reasons."

Meunier does offer a word of caution to those operators who don't do their merchandise homework. "If you are not going to spend the time merchandising, you are not going to get the results you need," he said. "The amount of money you are going to make on the equipment depends on how much time you put into it. It's that simple."

His strategy is simple: quality products in well displayed and well-maintained machines. "If anyone were to ask me the key to success in what I call a 'prize dispensing machine,' I would say, the product you put in it," Meunier explained. "Everything should be a name brand product, an upscale product, absolutely. Examples include Beanie-type products and licensed products like "Scooby-Doo" and "M&M" plush. We go out of our way to find those types of products to put in our machines."

As operators have evolved in their equipment choices, manufacturers have not been far behind. One of the coin-op success stories of crossover equipment in the last few years has been Sammy USA's "Sports Arena." A hybrid piece that combines a skill-stop concept with upscale crane-type prizes, the "Sports Arena" has been widely accepted by both amusement and bulk vending operators since its introduction in 1997.

"I think the industry at first was a little skeptical. It was a crane, but it wasn't a crane," said David Cane, Sammy's vice-president of prizes for the "Sports Arena." "The first operators to adopt 'Sports Arena' were crane operators and some bulk operators , the first guys to run with it were really crane operators'they know how to merchandise and warehouse products and service electronics."

Regardless of who first adopted and ran with the concept, it has been phenomenally successful. So successful, in fact, that Sammy USA has introduced several new versions of the original concept, including "Sports Arena Bulk," "Mini Sports Arena," "Music Arena," and "Super Sports Arena."

WINNING VALUE

"Look at the state of the industry; we need something new. We need something else...we need something to revitalize the industry," said Cane. "Operators are open to new concepts'we saw that with 'Sports Arena.' That's one thing we witnessed. You need to be a progressive operator and think outside the box. Because, you know what? Someone else will think outside the box, so you have to be a step ahead."

Laurie Jezuit, marketing manager for the "Sports Arena" prize division, sees the quality of prizes as at least partially responsible for the success of the unit.

"The prizes that we sell for 'Sports Arena' are unique," she said. "We try to bring in as many unusual prizes as we can, things you wouldn't be able to find in a crane or bulk vender. We have Harley Davidson motorcycles; these are die-cast models. You have to go to a collector's shop for that. We sell them in 'Sports Arena.' We sell bronze sports coins; you have to go to a sports memorabilia shop for those. It's not just a 20-cent piece of plush. We find unique things."

According to Jezuit, unique is defined as prizes worth winning. Prizes which may have a retail price range from 80 cents to $55.00.

PICTURE PERFECT

In one of the largest Asian book stores in Manhattan there is a coin-operated photo booth. The fact that a photo booth exists in a retail establishment catering to a largely Asian clientele is not in itself unusual...but in a bookstore? On any given day, teens are lined up at the booth to have their pictures taken. If the idea still sounds strange, then how strange would a double caffe latt© and scone served in a bookstore cafe have sounded five years ago? If so-called "quality coffee" can invade the bookish domain, then why not quality coin-op?

The man to thank is Alan Weisberg of Apple Amusement Corp and Apple Photo Systems (The Bronx, NY). One of the premier amusement operators in New York City, Weisberg has rejuvenated the photo booth industry as exclusive North American distributor for SNK's "Neo Print" system. And, while the photo booth in the bookstore isn't his, he does have the unique perspective of seeing the world through the eyes of both an operator and a supplier.

Weisberg's inspiration has been a long time coming. In fact, it started when he was five or six years old. "My father had taken me to a distributor called Albert Simon on 10th Avenue in Manhattan," said the second generation operator. "I remember going there with my dad and walking into the distributorship, and being totally overwhelmed by the games that were there and the flashing lights. And Albert Simon came out, and said, 'Kid, if you want to be in the vending business, this is not where it's at, let me show you where the money is.'"

Simon led the young Weisberg to the elevator and down to the basement, where the the legendary "Auto-Photo" booths were manufactured.

"This is where the money is," Weisberg remembers Simon telling him.

"It stuck in my head how he operated all over the country with those photo booths," said Weisberg. "Then about four years ago I noticed the industry was changing. It was not the same anymore. I remembered the photo booth; it's not something that's been explored recently. Not widespread and not a lot of competition out there. So I went looking for a photo booth. Nobody was making or selling one here in the States."

It was a short time later, after Weisberg had begun planning his own photo booth, that he discovered the "Neo Print" at an IAPPA show, and the rest is history.

"The new novelty arena, whether it be a 'Neo Print' or Sammy's 'Sports Arena,' or a 'Neo Messenger,' which dispenses talking key chains, these are all new ideas," said Weisberg. "What I call, 'interactive products.' Products you can't get from a video game in your home. And can't get from a computer in your home."

While Weisberg is far from sounding a death knell for video, pointing out continued earning power of such games as "Air Hockey," "Harley Davidson" or "Top Skater," he does stress the need for operators to expand their horizons with new types of equipment. "I would say that a lot of video game operators and bar room operators missed the boat with crane machines and allowed the specialty operators in because they didn't want to stray from video games," he said. "Now those specialty companies are operating video games."

Weisberg also pointed to the expansion opportunities available to operators willing to feature new types of equipment. "What it (the "Neo Print") does for your typical street operator is that it opens up a whole new area of income," said Weisberg. "It gives you the ability to find new locations. It gives you an entrance into a new location. You may have never put a machine in a clothing store before, but if an operator has an open mind, he may say, 'I'm going into this clothing store and put a photo booth in there,' and guess what? The next thing is the machine is doing $300 to $400 a week because the clothing store caters to women and females like to take pictures. Next, you may have a crane in that store or a bulk vender."

Weisberg estimates his biggest customers for the "Neo Print" to date have been amusement operators looking for something new. This would make sense, since the unit's footprint is comparable to that of an upright video cabinet, and the age demographic for both units is the same.

What, then, defines an operator? Clearly, it probably will not be a specialty or even expertise in one type of equipment. The equipment itself, through adaptation and adoption of new technologies, is changing so that many of the old classifications no longer apply , "Sports Arena" being the prime example of this trend.

And equipment once deemed too complex or cumbersome to service for all but specialty operators , such as photo booths , is now viable for new types of operators.

Operators also are diversifying their skills. Operators of cranes are transferring their expertise to bulk vending, just as some bulk vendors dabbling with electronics are becoming more comfortable with circuit board technology.

"What's an operator's most valuable asset, day to day?" one operator asked. "It's real estate. That vestibule, that storefront, that corner of the bar. How he develops that is what will determine how well he does."


Topic: Music and Games Features

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