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EDITORIAL: How To Transform The Industry

Posted On: 9/22/2006

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The heart of this industry's problems today is not a lack of new technology, lack of aggressive marketing, nor the negative elements of its history. The heart of this industry's problems today lies in its widespread public image as a lower-class, or at least "less classy," services provider.

Every time a branded chain says, "Sorry, we don't want your equipment; it is not consistent with the image we want to project" -- this industry pays a high cost for its image problem in real dollars and cents, and loses vast potential machine sales. These opportunity costs grow worse each year as mom-and-pop taverns vanish, replaced by upscale, mixed-use leisure/retail developments.

What is the basic source of the industry's "undesirable," blue-collar image? First, let's eliminate the usual suspects. This image problem is not derived from the fact that trade members of past decades were generally people with high school educations. (Besides, many of today's industry members have college degrees.)

Second, our image problem has zero to do with the nature of our equipment. Downloading jukeboxes are vastly more sophisticated than iPods, the hottest consumer products of recent years. Pool tables grace the drawing rooms of the world's richest and most cultured individuals. Video games are universal fixtures in private homes, regardless of income or other demographics.

The basic source of the coin-operated machine industry's image problem is the sheer, naked visibility of money. Cash -- and the open exchange of cash -- has been considered crude and embarrassing ever since the New Testament condemned "filthy lucre" 2,000 years ago.

Today, Americans love capitalism, but still hate to admit the reality of the economic exchange that takes place. Fast-food (low-class) joints hand you a bare cash register slip. In middle-class and upscale restaurants, both the bill and your payment are hidden inside a leather portfolio. A century ago, field hands, coal miners, and other manual laborers lined up weekly at an outdoor table, where the boss counted their bills and coins into their hands...and even announced the amount aloud. Today, employers arrange for discreet electronic deposits so that nobody actually has to touch the "filthy lucre."

Here's a simple rule: the farther removed the payment is from the delivery of the product or service, the classier the transaction is perceived to be. The closer the payment is to the delivery of goods and services, the more "low-class," crude or undesirable it is perceived to be.

So, in the eyes of many, even the most technologically sophisticated, beautifully designed, superbly manufactured coin-operated machine is a borderline cultural embarrassment by definition, because its cash transaction is so naked -- be it coins, paper currency, or even credit card swipe slots.

Modern marketing programs and Fortune 500 affiliations can certainly help polish the industry's image, and should be employed. But the basic solution to the industry's image problem lies in upgrading the reality of its products, by hiding cash transactions insofar as possible.

Operators love their cashboxes. But this industry must realize that the more desirable locations increasingly have an invisible sign posted on their doors. That sign reads: "Hi-Tech Entertainment and Communications Are Welcome...But No Coin Mechanisms or Bill Acceptors Need Apply."

Kyocera gets it. The company says its new wireless payphone technology means "Consumers no longer need to dig for change if a cellphone is not handy or if the battery [of their own personal cellphone] is depleted." The store or restaurant can discreetly add the phone charge to the customer's bill. Sayonara, coin-op payphone.

It's time for the amusements industry to face this problem squarely. Obviously manufacturers can't, won't and shouldn't eliminate the physical cashbox overnight. However, if the industry desires to transform itself for the 21st century, and to break into the necessary real estate, then industry members must begin thinking hard about how future music and amusement machines can offer transparent payment transactions.