Saturday, November 18, 2017 | Today's Vending Industry News
Tavern And FEC Customers Want To Have Their Cake And Eat It Too

by Kevin Williams
Posted On: 9/23/2011

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Kevin Williams, amusement business, arcade business, out-of-home entertainment, DNA Conference, Martine Parry, Parry Alexander Ltd. and KWP Ltd., UK Trade & Investment, American Amusement Machine Association, European Amusement and Gaming Expo, AlterFace S.A., Namco, Sega, Tran-Force, arcade video game, coin-op video game, videogames

In this column I have an important story to tell you. At first, this story may not appear to be about the amusements industry. But trust me, we will circle back around to amusements pretty soon. By the time we get there, I think you will agree that our seeming "detour" was actually not a detour at all, but a "wake-up-and-smell-the-coffee" kind of revelation that has everything in the world to do with how street routes and FECs are operated today -- and even more to do with how the most successful will be operated tomorrow.

Our story starts with an observation about today's consumer economy. It's a funny thing about consumers. They increasingly refuse to respect the commercial boundaries that businesses and industries try to set up.

For example, give the public a new, specialized pizza at a restaurant ... and the next thing you know, consumers want to buy frozen versions at the grocery store that they can microwave for themselves at home.

Give consumers comfy amenities and pampering at middle-class hotels and the next thing you know, they want ruffled curtains and breakfast croissants when they check into the hospital, too.

The same principle applies to entertainment. Give consumers iPod players at home and the next thing you know, they are demanding iPod docks in the dashboards of new cars.

That's why we see 3D movies already migrating from cinemas to living rooms. It's why downloadable edutainment software is crossing over from homes to schools. Try to deprive the consumer of these boundary-crossing goods and services, and you quickly discover that Joe Public isn't interested in your objections and explanations.

"Oh, no, Mr. Consumer, that's for the XYZ sector ... you can't have that here."

Anyone who tries to convince Jane Shopper to accept such limitations is going to hear: "Oh, yeah? Just watch me!" as she marches off to patronize some innovative business that is willing to blur the boundaries and jump over our self-imposed barriers.

The fact is, consumers don't know and don't care about the lines we draw. They cheerfully ignore our distinctions between commercial vs. non-commercial, for-profit vs. non-profit, real-world vs. virtual-world and at-home vs. out-of-home. In today's hyper-customer-driven economy, the consumer gets to "have his cake and eat it too" ... accompanied by 231 different customized flavors of ice cream.

How does this huge trend apply to the amusements industry? My company recently helped organize an entire conference that was intended, at least in part, to answer that question. Our answer for the amusements industry was: "You, too, will be radically redefined by boundary-crossing consumerism."

In fact, this redefinition is already starting to happen. Just ask a tavern operator who has seen his music and countertop revenues take a hit, because so many customers now walk into bars with iPhones that double as miniature jukeboxes and videogame platforms.

How can an operator defend his business against this trend? More to the point: how can forward-looking operators, distributors and manufacturers adapt their businesses to open up new levels of opportunity and revenue?

We tackled those questions, among others, at the first-ever edition of the Digital Out-of-Home Interactive Entertainment (DOE) Network Association conference, held on July 14 in London. We discussed these questions with a select audience of 100 industry executives, amusement experts, association members and media representatives.

We began by frankly admitting what everybody knows. The industry's current attempts to adapt 1980s-derived videogame products and thinking to today's market, simply aren't working.

Videogames, once the arcade's centerpieces, have been severely marginalized. They now represent perhaps 15% of the typical gameroom floor (which is dominated by redemption and prize-vending equipment). Videogames fare no better on the "great American tavern route," where a countertop platform is often a second- or third-tier product after pool, music and darts.

So, should operators throw in the towel? Should they say "Video is dead"... and write off their share of this enormous market?

A lot of thoughtful (and successful) leaders in our industry say that would be an enormous mistake.

They point to the fact that consumer videogames remain a robust $60 billion industry worldwide -- and growing (that's according to the respected market analysts at DFC). This makes videogames far larger than anything the "coin-op" industry has on tap -- including music, league games and redemption put together.

Instead of trying to decide when to run up the white flag, urgent questions should be:

1) How can the amusements industry find some way to let consumers have their cake and eat it too?

2) How can we find a way to provide "home or better" levels of videogame quality in street locations and FECs ... and cash in on our share of that $60 billion pie?

3) How can we leverage this "consumer crossover" trend to open up a profitable new range of hospitality venues -- including great places where we don't currently operate?

At the DNA event, we said that the future of pay-for-play videogames does not have to be a final, agonizing death. We said the future is a hybrid platform that gives consumers the same level of quality that they expect from their home game systems -- and preferably better.

In fact, we said the only way that digital out-of-home entertainment will survive and thrive in the hands of amusement operators and manufacturers is by offering what we call "unachievable @ home" levels of value and quality.

Unrealistic? By no means. Some leading companies are already doing it successfully.

For example, certain Sega and Namco games in Japan have made the first tentative crossovers to embrace "social gaming" (i.e., games that have tie-ins to social networks).

Now it's time for the industry to take the next step. That means linking pay-for-play videogames to smartphones for gameplay and payment options ... offering dedicated online support for players and operators ... and leveraging social networking to draw the "Facebook generation" to our locations.

But hybrid videogame technology isn't just about the Internet and smartphones. It runs the gamut from the very small to the very large. At the DNA Conference, Ernest Yale of Canadian manufacturer TrioTech highlighted both 3D graphics and audience interactivity with the company's XD Dark Ride.

Such attractions combine the entertainment value of theme park rides with the versatility of a digital, interactive game package that can be updated with new content at the click of a mouse. (Goodbye moving trucks.)

Additional hybrid technologies and platforms for midscale attractions were displayed or discussed at the DNA Conference by companies including AlterFace S.A. (manufacturers of the UK's first 5D laser ride) and Ireland's Tran-Force, whose interactive simulators inhabit both edutainment and attraction environments.

Now, why should relatively high-cost systems like this be of interest to the typical American operator? Simply put, because the retail environment is forcing us to "up our game"... and to increase our investments.

These days, everything from malls to restaurants are being "game-ified." Attractions are increasingly being installed at the local retail environment that once would have been confined to theme parks.

Unfortunately, too many operators look at this trend and say: "Oh, we tried that approach in arcades 10 years ago. It didn't work." This reaction misses the point. Several points, in fact.

Don't forget, 10 years ago the Internet was still in its infancy, tied to desktop PCs. Today it is mature, robust and universally accessible. Also, keep in mind that social networks, much less social gaming, did not exist 10 years ago.

Finally and most important, the techno-sophisticated, "have your cake and eat it too" consumer did not exist 10 years ago. If we want to capture these customers, we have to give them what they expect -- period.

The next two columns in this space will delve more deeply into the radically changing marketplace that faces today's operators, by reporting on various other lessons learned at the DNA conference. Meanwhile, I'm pleased to confirm that a DNA event will take place in March 2012 in the U.S. and that a new trade association is being formed as a place for those elements of the industry that are aboard this fast-moving train.

Author's Note: The DNA Conference was organized by Martine Parry of Parry Alexander Ltd. and KWP Ltd., with support from UK Trade & Investment, a government agency that promotes and aids UK-based businesses. Grateful acknowledgement is made to the many supporters, including the American Amusement Machine Association and the European Amusement and Gaming Expo.

KEVIN WILLIAMS is founder and director of the out-of-home leisure entertainment consultancy KWP Ltd. His nearly 20 years of experience in global video amusements and high-tech attractions includes top management and design posts, with a focus on new technology development and applications. He is a well-known speaker on the industry lecture circuit, and has authored numerous articles. Williams is also editor and publisher of The Stinger Report, a leading industry e-newsletter and Web-based information service. Go to to sign up for a free subscription.