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Issue Date: Vol. 47, No. 3, March 2007, Posted On: 3/16/2007


EDITORIAL: Surprise! Industry Leaders Are Upbeat


Marcus Webb

Don’t look now, but rainbows are breaking out in the most unexpected places – namely, in many top echelons of the amusements industry. Medium-sized traditional street operators like Charles Rowland of Games People Play (Richmond, VA) report they are in the strongest financial shape in their history. Giant FEC operators like American Family Entertainment Centers say their “Wal-Mart strategy” of building multi-use facilities in rural areas is working beautifully. In between, the leading chains of pizzerias with gamerooms are also doing landmark business across much of the country.

Innovative manufacturers such as Sega, Fantasy Entertainment, JVL and others are enthusiastic about present success – and future prospects – with networked equipment. Don’t even ask about jukebox manufacturers and digital music platform providers. The latter are so excited about this year’s plans for advertising, new technology and aggressive financial incentives, they are positively fizzy. (And, given what we’ve been told about those plans, both on and off the record, this excitement could be entirely justified.)

This newfound optimism does not mean the trade has suddenly returned to Pac-Man level sales volumes, nor does it mean that a historic boom lies immediately ahead. But the upbeat attitude does signal that after a long, tough shakeout the industry finally seems to be regaining its confidence. This confidence is based on proven earning strategies and practical technology applications.

In other words, rainbows are appearing because hardworking trade members are proving that what has always worked in this industry, still works. Operators, distributors and manufacturers can enjoy prosperity by offering careful, well-thought-out innovation that serves ever-changing market needs, and that offers unusual entertainment options and environments that players can’t get at home.

The industry’s new optimism also signals a new maturity. The amusements trade has finally stopped waiting for conditions to improve by themselves. Leading companies on all levels of the business are cheerfully taking responsibility for creating new business, expanding their markets, and building better earnings based squarely on their own efforts.

Crucially, those efforts include an industrywide embrace of aggressive, modern marketing. Midwest operator Chris McSwain of A.H. Entertainers (Rolling Meadows, IL) put it simply: “I believe any machine in bar that is promoted will make more money than those that are not promoted.” He’s hardly alone in this belief. Leading manufacturers, distributors and operators alike now devote increasing time, attention, and money to marketing – from league and tournament programs for sports and video games, to dedicated websites and “cross-couponing” strategies for locations.

The still-emerging 21st century amusements business differs in other important ways from the shape of the industry during its last heyday. Today’s structure is both more diffuse (less committed to the three-tiered market chain) and yet simultaneously more consolidated (as mergers continue on the manufacturing and operating levels). In addition, financing is far more central to the business for today’s operators, distributors and manufacturers.

Another big change: networked technology has forced the industry to integrate more closely with major, mainstream entertainment providers, such as music labels. Networking has also prompted the industry to integrate better with locations (operators often bring the first high-speed lines into bars and restaurants), and with players (by providing more and more online “communities” and remote interactive play).

Another crucial change: the industry has come to terms with the fact that today’s players are far more fragmented than yesteryear’s. Even the kiddie sector has dissolved into a products range for four or five different, age-based sub-segments. As for the rest of the industry, it’s a long way – demographically – from Dave & Buster’s to a typical FEC, or even the friendly neighborhood tavern.

In short, things are looking up because leading members of the amusements business are learning the lessons of the marketplace, and applying them. It may not amount to a gold rush. But it does add up to a solid, viable industry that’s here to stay.

 


Topic: Editorial: Music and Games

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  • Lessons Learned From The Life Of The Mad Mogul Felix Dennis
  • Can Operators Cash In On Heavy Summer Traffic?
  • Are Vendors Adapting Too Slowly To Changing Retail Landscape?
  • The Dangers Of Binary Thinking In A Complex World

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