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EDITORIAL: The 'Can-Do' Industry

Posted On: 3/18/2008

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The global amusements industry is not panicking, but it's wearing a more worried face these days. From Tokyo to London -- and from Bentonville, AR, to Columbus, OH -- the first quarter of 2008 has not been reassuring. First, Sega and Namco announced they were closing 160 arcades in Japan and would lay off hundreds of personnel. Then London's ATEI Show saw attendance plummet nearly 9%. Next, the president of the British trade association, BACTA, warned that as a result of the UK's restrictive new national gaming regulations, "half of the [British amusements] industry could be out of business this year."

Meanwhile, the U.S. amusements industry has had its share of discouraging news as well. Profits are down at Chuck E. Cheese's. Wal-Mart has given walking papers to many operators. Dave & Buster's is apparently on the auction block. It seems every month another state government passes a smoking ban, or cracks down on gray-area games.

Yet there's plenty of good news, for those who care to see it. Both online and non-networked technology and promotions steadily improve for both games and jukeboxes. The leading music platform providers continue to grow their networks, improve back-end support and expand song libraries.

On the video front, game fans mobbed new titles at ATEI (Namco's Tekken 6) and at Japan's more recent AOU Show (Capcom's Street Fighter IV). Global VR's Blazing Angels, Coastal Amusements' Sea Wolf, Raw Thrills/PlayMechanix Big Buck -- Safari and Incredible Technologies' new Silver Strike Bowlers Club 2009 (backed by an ambitious tournament program) also promise strong U.S. videogame earnings this year.

Against this "good news, bad news" backdrop, where is the amusements industry going next? Prominent U.S. trade leaders like AAMA president Mike Rudowicz and AMOA past-president Frank Seninsky have said it is "in a holding pattern" -- waiting for the next big idea, or the next exciting technology, to spark another boom. They're absolutely right...but it's been a heck of a long wait.

Meanwhile, the industry is also fighting the usual suspects: home videogames, legalized gambling, smoking bans, DUI laws, vanishing neighborhood bars and several others. On top of these challenges, the overall economy has Americans worried. Never mind that many key indicators (job growth, industrial production, etc.) are trending positive (despite mistaken early reports to the contrary). It's the negative economic news that has monopolized attention from Main Street to Wall Street.

As a result, many consumers are cutting back their entertainment budgets. That means both fun and food. Restaurants' gross volumes have dropped an average of nearly 10% in recent months. Some upscale sports bars say earnings on pool and darts have taken an even sharper dip.

Where is this all going to end? First, it's crucial not to join the Chicken Little crowd that claims the sky is falling. The sky may be fact (as one AAMA member said at a board meeting), it may be raining...but it's not falling.

Fortunately, most American tradesters seem remarkably calm, reasonably confident and above all, extremely determined. In the last several months, VT has published profiles of many operators who are aggressively promoting their businesses, building customer loyalty and expanding into new niches and ancillary markets. Operators are also strengthening state associations and achieving notable successes in state legislatures -- and in local courts.

The U.S. industry also is populated with manufacturers and distributors who are equally calm and determined to prevail. "There's a vibrant market; it's still healthy," insists Global VR president Jim DeRose. And Sega's team points out, "In OutRun 2 you can sit in a life-size Ferrari. You can't do that in your living room."

U.S. amusement professionals at all three levels are used to working hard without complaining. They have decades of experience getting through tough times. This is a remarkable industry, one with an understated -- but very real -- "can-do" spirit. Don't count it out.