KEVIN WILLIAMS is founder and director of the out-of-home leisure entertainment consultancy KWP Ltd. His many years in the global video amusement and hi-tech attractions industry includes top management and design posts, with special focus on new technology development and applications. A well-known speaker on the industry and its technology, he also pens extensive articles for leading trade publications. Williams is editor and publisher of The Stinger Report, a leading industry e-newsletter and Web-based information service that can be found at thestingerreport.com.
LONDON — It has become a mantra in this industry that “Networking and online tournaments will bolster the cashbox for a strong game, but they will not rescue a weak game.” This slogan is absolutely true. But it’s just half the story when it comes to networked video games today. The second half of the story is that all games and equipment increasingly require strong promotions and marketing to ensure the longevity of their appeal and earnings power; online connectivity is the most obvious and most powerful technology that can be utilized to provide appropriate promotions and marketing.
It’s important to note that the expectations of video game players are shaped by the consumer market, not by the arcade industry. The reason is simple: the size of the home game industry now dwarfs that of the coin-op video industry by 10 to 1. Several million people worldwide pay $10 or $15 a month to play at home such online games as “Everquest” or “Worlds of Warcraft.” Many U.S. operators may not realize it, but video game networking is becoming a standard feature of consumer video gameplay. Home consoles by Microsoft now offer online game play capability, and dozens of games for the Xbox Live segment are coming out for the 2005 Christmas season. Sony has had networking capability for some time.
Competitive manufacturers (and forward-thinking operators) are keenly aware of all these facts. That’s why just about every video game company in the U.S. and Japanese markets now has networking capability, or is rapidly moving toward it. And it’s why leading operators are embracing networked systems whenever good ones are offered. Networking “is” the future for amusement video in arcades and on street routes alike.
But it’s not some far-distant future. The networking train is already pulling into the station; in Japan, it has already left the station. This column will review where the amusements industry stands today, in the U.S. and in Japan, regarding networked game capabilities. Also covered will be what is being done to bring more American operators on board. Finally, the emerging threat of competition from the casino industry – which is keenly observing trends in the arcade sector, and rapidly stealing our best innovations – will be discussed.
In the coin-op amusements industry, game manufacturers have learned from painful experience that many U.S. operators remain skeptical of networking programs and capabilities. The attitude of many operators amounts to saying, “First prove to me that it makes more money, then I’ll be interested.” Unfortunately, the paradox is that higher earnings potential cannot be proven until the system is tried – not just by the individual operator – but also by a sufficient base of operators in order to create a viable competitive environment.
To resolve this Catch-22, manufacturers and network service providers such as Merit, JVL, UltraCade, Ecast and others are increasingly offering a variety of incentives. Depending on the company, these incentives may include free Internet installation, assistance with broadband setup, free tournament capability for an introductory period (or free if no demonstrated increase is seen in the cashbox), and the like.
But what about manufacturers and operators who are already convinced of the value and importance of networking? To stay current with industry trends and technology, these forward-thinking industry members face four related issues: coverage, connectivity, convergence and customization.
“Coverage” means expanding a player-wide tournament infrastructure to include every machine that is connected on your network. Getting it right can prove an arduous and complex balancing act for manufacturers. It can be a chore for operators, too.
“Connectivity” means networking issues within a single location. These include the risk of plugging too many products into the site’s phone line, especially if it is dedicated to ATM usage, and the question of who pays the bill for broadband service.
“Convergence” is mainly a manufacturer issue, meaning that game designers and marketing teams must find creative ways to merge their particular video amusement games with the culture of networked prize tournament systems. It is frequently a very difficult undertaking.
“Customization” means that manufacturers must make it possible for players to be able to modify individual game or tournament elements to their liking; and operators must embrace and sometimes facilitate these system capabilities. This enables the industry to offer a much more compelling experience to the player, and bonds each player more closely with the game and the program.
A powerful example of how all four of these issues may be embraced fully – and handled successfully – is provided by Incredible Technologies. The company, a leader in connectivity and tournament applications, focuses on the same core market as the U.S. street operator: namely, the hospitality (club and bar) scene. With more than 35,000 connected amusement machines internationally, IT offers an attractive package that has generated both a loyal following among hard-core players, and a strong appeal to impulse players. Operators have seen increased cashbox and swallowed the connection charge as a necessary expense to generate greater revenue.
Following the success of earlier golf simulators in the same franchise, IT this year expanded its system with “Golden Tee LIVE.” The product features state-of-the-art graphics and provides a sophisticated evolution of the prize tournament model. As a constantly-connected amusement piece, “LIVE” machines contain technology that will eventually permit credit card payment (and will provide detailed operator control screens for same). A growing base of players and operators are migrating from the older “Golden Tee” games and upgrading to the new level of connectivity. IT has also applied its tournament infrastructure to the sports shooting genre with the “Big Buck Hunter” brand in alliance with developer Play Mechanix. These connected amusement pieces now create player account systems, viewable on the Internet by players at special player-oriented websites. Tournament play is linked to the use of player membership cards, and casual players are being turned into dedicated and regular patrons.
Global VR has developed its own range of video games that bring the latest computer graphics and gameplay from the consumer sector, tailored for amusement application. “EA Sports PGA Tour Golf Challenge Edition,” “EA Sports Madden NFL Football” and “Need for Speed Underground” are all supported by nationwide tournaments with prizes of $1,000 and more. Operators also have the opportunity to set up local league experiences in some cases. A new retail marketing program launched this fall utilizes a points-based voucher program, enabling GVR game players to purchase brand-name merchandise from Internet stores.
Another important GVR online marketing tool is player VIP Cards. This tool creates a credit-card style player account system. The game playing profile of each card-using player is stored on the game’s central servers, and is activated by the network whenever they play. This system has boosted the cashbox for “NFS Underground” thanks to players who opt for “career” mode, taking a basic vehicle and then customizing and accruing points toward building a super-vehicle, and then taking on the best of the rest. Collected points may be “spent” on improving one’s video vehicle or on prizes.
UltraCade Technologies has moved aggressively into networked video promotions for its “Breeders Cup – Championship Tournament Edition,” a horseracing video satellite game system. Immersed in the popular genre of “breeding, training and racing,” the player amasses a stable of thoroughbred horses. UltraCade offers player cards and also supports the game with local and national prize competitions. A $100,000 tournament was held in late October – a day before the 22nd running of the Breeders’ Cup World Thoroughbred Championships – at Belmont Park race track in Elmont, NY, in which the grand prize was a Dodge Viper. Additional operator support is a key incentive within the UltraCade model, including free Internet installation and free tournament service for the first three months.
In the touchscreen, multi-game cabinet sector, Merit Entertainment’s TournaMAXX now offers local and national tournament capability. Long focused on national point-score comparison, the program now permits individual operators to tailor and run unique, proprietary tournaments for their facilities only. JVL Corp. continues to enjoy success with its iTouchNET tournament, which awards prizes on a sweepstakes basis for its touchscreen line. JVL’s Seamless Integrated System allows the operator to accept downloads from JVL of new trivia, pictures, games, patches, etc., along with the capability for remote control of countertop tournaments via their desktop PCs. It also gives operators tools to manage their entire network of JVL machines from their PCs, including statistics and reports from machines on location. Coastal Amusements recently joined the parade of manufacturers that offers online capabilities with its new “Nexus Multigame System.” This touchscreen platform is Internet-compatible so presumably the company is working on plans for networked tournaments in the future.
U.S. machine manufacturers who don’t yet have their own proprietary online networking capability are now being courted by TLC Industries, which is offering the Amusement Tournament System – an independent, open tournament infrastructure. (Disclosure: TLC is a client of KWP, which helped develop the ATS.) ATS will allow third-party manufacturers to focus on creating a strong game, leaving the network infrastructure and administration to TLC. The goal of ATS is to offer all of the benefits of prize network tournaments and machine connectivity, simply and easily. To showcase the benefits and capabilities of ATS, TLC Industries is utilizing the ATS for its new “Texas Fold’em” game.
Two prominent names are missing from the U.S. networked video game sector: Sega and Namco. Both companies remain in a reorganization mode following their respective mergers (Sega’s merger with Sammy Corp. occurred last year; Namco’s merger with Bandai was consumated several weeks ago). In Japan, both companies have embraced an open network system called ALL.NET, which stands for the Amusement Linkage Live Network. ALL.NET was jointly developed by Sega, Namco and Sammy. In addition, Japanese manufacturers have turned creating advanced memory cards into a fine art in recent years. (They are called IC – or integrate chip – cards). The Japanese industry’s combined promotional infrastructure – blending online fiber optic game networks and advanced IC cards – makes for a powerful one-two marketing punch.
But the Japanese market is very different from the American sector. To begin with, both Sega and Namco own large arcade chains in Japan (whereas Namco’s U.S. operations are now more street-based than arcade-based, and Sega’s GameWorks chain remains relatively small). Another key difference is that Japan’s basic communications industry infrastructure runs a far more extensive fiber optic network than the U.S. does. Finally, Japanese cell phones and Internet wi-fi services are considerably more advanced than U.S. models, both in terms of individual phone capabilities and network reliability and strength. In Japan, for example, you can use your laptop on a moving train – without losing your connection when going through a tunnel. Building on this advanced backbone, Japanese video game manufacturers now offer networked tournament play opportunities in their home country that are promoted with special websites and managed by players themselves from their mobile phones.
The question is, when will Sega and Namco launch a serious video game networking program in the U.S.? Both have experimented with proprietary networking systems and with advanced player cards in the States; but neither company has seen results that justified rolling out this capability to anything like the degree achieved in Japan. Namco’s American release of its hit video upright, “Tekken 5,” included the IC card component, and a championship tournament proved a profitable draw. However, the connectivity and player Web service was not adopted for the U.S. In the well-worn journalistic phrase, then, “it remains to be seen” precisely how the two giants of the pay-for-play video game universe will eventually utilize online networks in the U.S. market.
Even when manufacturers achieve the right mix of marketing, technology and gameplay with networked video systems, the result is still challenging for some operators to embrace. But over the years, countertop and upright video games increasingly have been connected through phone lines, while downloading jukeboxes continue their push with phone or broadband connections. As a result, the U.S. operator has become evermore accustomed to performing his functions in this respect.
In addition, locations have become more and more acclimated to working with phone-connected equipment. This began with credit card verification devices and later expanded to ATMs. Broadband connections for TV sets in bars, or satellite connections for background music services, are increasingly common in U.S. retail venues as well. So, many locations now have a reference point and a certain familiarity with connection issues, and are more accepting as amusement equipment is being added to the program. As an aside, it’s worth noting that the availability of broadband in U.S. locations has grown dramatically in the past two years, significantly exceeding expectations (although the U.S. is still a long way from catching up to the level of connectivity penetration seen in much of Europe and Asia).
The amusements industry has really just begun to wake up to the broad range of benefits offered by a strong networking “culture.” For the operator, it is obvious that online networking of music and amusements means new ways of acquiring updated software, advanced methods for managing his equipment remotely, and new ways of achieving higher revenue and repeat revenue. But there is much more.
Game connectivity also offers a powerful monitoring capability. Manufacturers and operators can track everything from the way players play the game to how certain operational features of the machine work. The industry can also perform “data mining” to learn customer profiles of players, their habits, likes and dislikes. This information can help programmers target the next generation of games more accurately to player preferences. Perhaps even more importantly with connected machines, e-payment (credit cards) can be adopted – changing the demographics of the impulse buyer. And, when a sufficient base of games is plugged into a single network, the profitable possibility of advertising looms.
The vending and casino industries have already begun to apply the benefits of connected systems in the field to chart player trends and habits. In my view, the appropriation of networked tournament technology by the casino industry represents a growing worry for the amusements segment. For the past few years, slot machine manufacturers have sat on the sidelines, watching and waiting to ascertain if the video amusement application of tournament promotions will succeed in a big way. Now they are getting off the bench and into the game.
In September, the Global Gaming Expo overlapped the AMOA Expo in more ways than one. Both expositions took place at the Las Vegas Convention Center; both shared at least one day of exhibits in common; and both shows had exhibitors that featured networked, tournament game-play capability. To cite just one example, at G2E, Astra Games Corp. displayed its “Tournamania” architecture, which can link up to 150 slot machines inside a single casino, enabling top-scoring players to share winnings. This is more than the traditional “progressive slot” concept; it is a clear use of skill-based tournament play and psychology in slot machine operations.
As such, it represents the high point – so far – of a troubling trend that is seeing the casino industry swallow up many of the elements that once made the amusements industry stand apart with a distinctive appeal all its own. To cite another example, many of the new casino venues have now adopted card-based player loyalty systems. Central accounts for all player members are maintained and tracked through the use of player membership cards. If it sounds familiar, it should: the amusements industry pioneered this technology.
Online, networked video games offer the amusements industry a chance to expand the player base and the industry’s bottom line as a whole. This technology also represents a danger if used “against” the amusements industry, as well as if the amusements trade fails to take full advantage of the concepts and technologies that it created. The choice of which future we get is up to us.