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Driving Ambition...

Posted On: 9/23/2005

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Distribution is on the brink of a radical revolution. Not distribution in the coin-op industry'distribution in the auto industry. But if you want a solid clue about the future of coin-op distribution, it's worth taking a gander at the future of automotive distribution. According to Bill Ford, Jr., CEO of Ford Motor Co., "The [automotive] business model really hasn't changed in 100 years." Sound familiar?

A century ago, as now, the auto industry's structure consisted of manufacturing that was performed in a few assembly-line centers, with sales handled through a nationwide network of dealers that offered showrooms, financing, parts and service. Does that have a familiar ring to it?

Ford says this century-old structure will soon shift to what he carefully describes as "a very different kind of future." That is a masterpiece of understatement from a CEO who doesn't want to scare the stockholders. What's coming to the automotive industry is a revolutionary shakeup that will result in a distribution system nearly unrecognizable from the traditional 1895-2005 model.

For starters, the Internet is about to become an extremely busy two-way street where car sales are concerned. In fact, it's about to become the main thoroughfare for auto sales. Buyers will initiate some of the dialog, increasingly making their purchases online, Ford says. At a minimum, car buyers will perform deep product research online and will show up at the dealership knowing more about the cars than Ford's salesmen do, he adds.

Conversely, Ford, GM and the rest will initiate other dialog online. Cars will become mobile wireless Internet access points so that commuting drivers can check their e-mail and be targeted with video, audio and text advertising' at least until state legislatures start outlawing all of this as too distracting and dangerous.

(Meanwhile ABC-TV is gearing up to create an entire TV series that is broadcast exclusively on cell phones. That's right - cell phones. Think that will have an impact on distribution and retail sales across every American industry some day? So do I. Cell phone broadcasting will also revolutionize gameplay, game billing and game design. This is, in fact, is already happening.)

It's not too big a stretch to believe that any fundamental changes that occur in the auto and cell phone industries will also trickle down and affect the coin-op amusements industry one day, too. After all, look how the online music revolution has impacted the jukebox sector and how cell phones are impacting home video and public vending.

So it's instructive to figure out why both the auto and coin-op amusements industries are in the doldrums. This summer, both are offering aggressive and highly attractive incentives to flog sales. It's helping move cars out of Detroit's door, although word on the street in coinland claims this summer is "very soft" where most machine sales are concerned.

Newspaper columnist George F. Will offers this fascinating analysis of Detroit's slump: "The loss of theatricality , today's seemingly random arrival of too many models, too many of them boring , is central to the domestic industry's decline."


Will quotes Robert Lutz, GM product development chief, as saying: "We're not in the transportation business, we are in the arts and entertainment business' There's a high emotional component to buying decisions."

Hmm, again'.

The best game and jukebox manufacturers have more respect for their customers than that. Most operators don't make decisions based on emotion, but on dollars and cents. Of course, "how" operators think about dollars and cents is very different from what many manufacturers suppose. Operators will sometimes pass up proven high-earning games or attractive locations because they won't add incremental income or may even trigger significantly higher overhead , another tech, another truck , that eats up most or all of the additional revenues.

Getting back to the auto industry, Will offers a two-part prescription. First, slash costs. "The other ingredient of revival," he says, "must be better products" , meaning, that both work better and are more fun.