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Issue Date: Vol. 51, No. 12, December 2011, Posted On: 1/6/2012


What Will Be The Most Important Amusement Machine Location Of The 21st Century?


by Kevin Williams
Kevin Williams, amusement business, arcade business, out-of-home entertainment, DNA Conference, arcade video game, coin-op video game, videogames, AMOA, Amusement and Music Operators Association, Digital Out-of-Home Interactive Entertainment, DOE, DNA, PowerSurge, InsertCoins, Videolounge Gamebar, Foursquare, Groupon, MobiPeels, LivingSocial


Everything is changing in the amusement industry, from the kinds of entertainment it offers to the types of location served by route and FEC operators. Even the language is changing. A recent newsletter from the Amusement and Music Operators Association noted that the familiar term "coin-op" is less and less applicable every day. Why? Because the industry is steadily shifting from coins to bill acceptors and cashless payments to actuate games and music devices. In future years, the amusement trade will almost certainly be defined by mobile payments supported by NFC smartphones and contactless cards.


Other language changes are also seeping into the industry as 21st century marketing programs and marketing professionals begin applying their concepts and lingo. AMOA's marketing consultant Brad Circone is introducing "distribution platform" into the trade's vocabulary; it defines the army of operators who deliver music and games to locations. He also talks about "branded two-minute excursions," denoting the kinds of fast fun that pay-for-play music and games can provide.

In short, there is a new language coming to coin-op these days. More importantly, new ideas and concepts are coming with them. That's why, perhaps, industry members had better start taking language lessons. If we want to compete and win in the changing marketplace of today and tomorrow, we need to be able to communicate with the next generation of business leaders who will increasingly define the market.

Some members of our industry actively resist both new terminology and new concepts. They don't particularly care for terms like "social entertainment space," for example. Why not just say "location"? That word has done the job for 100 years; why not simply keep using it?

These are fair questions, but it's important to realize some of today's new terms are not just trendy buzzwords. They stand for real and important changes, new facts and powerful trends in a business that -- at its best -- prides itself on defining the cutting edge of new technology and new entertainment trends.

This brings us to what some of us have been calling the Digital Out-of-Home Interactive Entertainment (DOE) sector. This term points to the fact that in the era of iPhones, Androids and other mobile devices with thousands of entertainment apps (including music and videogames), "entertainment is no longer location-dependent."

That was the central message from keynote speaker Randy White at last summer's Digital Out-of-Home Interactive Entertainment Network Association (DNA) Conference, held in London. Randy, a principal in White Hutchinson Leisure and Learning, is one of the industry's most astute observers of social trends as they relate to machine-based entertainment in public locations.

It's not news to Vending Times readers that today's consumers increasingly carry their own game arcades and jukeboxes in their pockets, everywhere they go. And, it's not news that traditional locations such as mom-and-pop taverns are disappearing at an accelerated rate ... and those local bars that survive are seeing significantly less traffic nationwide, due to ever-tougher smoking bans.

But it may still be news to some industry members that operators, distributors and manufacturers can do something about all this ... something more than simply keep doing what they've been doing for 100 years, and hoping to survive in a shrinking, changing market.

One of the most important things that industry members can do is keep abreast of changes in the location base that are being driven by digital consumer technologies. New stores that pop up in bellwether sites like Los Angeles and Las Vegas today could very well be arriving in Podunk, Arkansas tomorrow ... and influencing the rebranding of existing venues from Kansas City to Portland.

Accordingly, it's worth the industry's time to take a quick look at some of these new location types and how they are using videogames and music in new ways. Let's begin with what Randy White and others in the DOE movement call "retail-tainment"-- a trend toward new kinds of stores that offer digital fun as one of their draws to encourage repeat visits. A prominent example is PowerSurge, located at the Howard Hughes Center, an upscale shopping mall in Los Angeles.

Inside, PowerSurge looks like a very modern art gallery, but is actually a sort of "videogame arcade" providing dozens of hi-def video monitors mounted in the walls. Players pay $8 an hour for a consumer game system and access to the extensive game library.

From "retail-tainment," it is a short step to "eater-tainment" -- meaning restaurants that integrate digital games and music in innovative new ways. Like most daring new concepts, the early examples can easily crash and burn. Nolan Bushnell's uWink project, for example, put proprietary game consoles in every booth of a contemporary-themed restaurant. They opened three sites around California in the mid-2000s but all three had shut down by 2010 ... a victim of the tough economy, executives said.

Nevertheless, eater-tainment seems inevitable for a generation that spends half its walking time with eyeballs glued to video monitors ... regardless of whether it's a computer, a smartphone or a videogame console. One possibly successful prototype of the eater-tainment concept is the Insert Coins Videolounge Gamebar.

As the name suggests, it's a bar with games. Specifically, the 50-seat venue incorporates classic consoles and 40 arcade machines. Patrons can sit at the bar, play a game on a console there, and see the action on a big monitor mounted high on the wall behind the bar. Music is provided by a video DJ. Owners are aggressive about promoting themselves on Twitter and equally aggressive about tournaments. Youthful waitresses in sexy uniforms serve the drinks.

(By the way, both PowerSurge and InsertCoins rent themselves out for private affairs. Their trendy themes and locations lend themselves to upscale corporate events as well as regular birthday parties.)

If we are going to look at new kinds of locations, consider this: If entertainment is "no longer location-dependent," then what is it dependent on? It is dependent on the digital network. Therefore, the most important "location" of the 21st century may be cyberspace ... the Internet.

What does this mean for operators? Well, many of them complain that a growing number of people walk into their locations these days with mobile devices in their hands, and they are so involved with their favorite apps that they don't play the jukebox, pool table or videogames. But can smartphone apps be made to work for amusement operators and pay-for-play locations?

The answer is "absolutely yes" according to members of the DOE movement, who are strong believers in the philosophy that "if you can't beat them, join them." Let me explain.

Today's players are so excited about social networking that they are making increasing use of location-based services (LBS), using their GPS-enabled phones to track where their friends are ,and to let friends know where they are and what they are doing. A prominent example is Foursquare, a GPS-enabled smartphone app that allows users to update information about the location they are visiting and to share comments on their movements and experience. ("10:15 p.m., I'm at Blarney Stone, having a great time playing pool with two cute girls.")

This is a trend that cries out to be used by operators and locations to drive customer traffic into places where those consumers can play music and games. Foursquare's mobile reviewing utility has been calculated to have nearly 7 million registered users.

It should be easy for the amusements industry to leverage Foursquare, because app users can win virtual "Badges" for visiting specific real, physical locations within a given geographic area (a bit like collecting achievements in a console game). Some see this "badging" feature as a perfect example of the "game-ification" of non-entertainment technologies and customer services. When DOE movement members talk about how elements from the videogame world are increasingly being applied to non-game realms (in this case, smartphones and social networking), this is what we mean.

The amusements industry may not be focused on exploiting this type of technology just yet. But some very smart businesses, and even leading city governments, are getting into the act. Recently, Foursquare hooked up with American Express to give credits back to those AMX card holders who register location details via the service.

Last spring, New York City proclaimed April 16 as "Foursquare Day." Why? Because Foursquare promotions drive traffic into local stores and restaurants, which drives sales, which drives jobs and tax revenues. That's why the Big Apple was one of 13 American cities that have embraced social network services support of their merchants. If American Express and Mayor Bloomberg have figured out the value of Social Networking apps, maybe it's time the amusements industry does the same thing.

Here's another trend that's ripe for this industry to jump on: virtual sales tools such as Groupon, MobiPeels, and LivingSocial. Collectively, these services have tens of millions of registered subscribers who take advantage of their special offers to get discounts, "mobile coupons" or book group purchases.

The company behind LivingSocial last year acquired Urban Escape, resulting in a social adventure company now under the new name of LivingSocial Adventures. The service offers information and discounts in locations close to each user. This marks the first dedicated Social Network service to attempt to break into the attraction and entertainment facility market.

So far, the main users of these services appear to have been higher-end restaurants and certain kinds of upscale services (spas, yoga classes, whatever). Again, however, the relevance to the amusement industry should be obvious.

Imagine a user of the LivingSocial Adventures service who finds out that the nearest FEC has a great birthday party deal for his child, or that a close-by bar is running a glitzy tournament on a video golf game or starting a new pool league. With support like this, the amusements industry could start to recapture some younger, hipper customers who might begin to make up for the millions of smokers we've lost in recent years.

A pipedream? Not at all. In the next few months, the movie theater industry and other location-centric entertainment trades are expected to take a page from the fast-food restaurant business and apply V-Loyalty and the other player-based venue systems. If they can do it, we can, too.

If the amusement industry is looking for powerful new ways to drive traffic to locations, get customers spending and keep them coming back, the tools are here. We simply have to decide we're ready to use them ... and we must spend some effort dreaming up smart promotion and loyalty schemes that represent "value for money" in comparison to traditional entertainment. If we do this, the combination of traditional "pay for play" machine entertainment and DOE networking technology will keep our players playing ...and keep them coming back for more.


KEVIN WILLIAMS is founder and director of the out-of-home leisure entertainment consultancy KWP Ltd. His nearly 20 years of 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.


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