Commentary

Pandemic unhinges amusement supply chain, spurs QR code adoption

Many new operators and existing chains are moving to buying direct and maintaining their hardware themselves. The pandemic has spurred this change, along with a demand for contactless payments such as QR codes.

Image courtesy of iStock.

September 6, 2021 by Kevin Williams

As the amusement and leisure entertainment sector slowly re-engages with the audience after the long lockdown following the global health crisis, there are the first indicators of major fracture lines in the traditional business, and indicators of major changes in the industry as it adapts to the new realities.

One of those fracture lines has been seen in "distribution" — the traditional amusement trade has depended on the operation of distributors who have evolved from the early coin-operated amusement days. They offer a means for operators to purchase/lease hardware, receive supplies and maintenance support and, in a changing landscape, even utilize these distributors to design and develop facilities.

More direct buying

For manufacturers, the distributor has offered a sales agent means to sell into territories and promote their products and service systems in the field. But 2021 sees cracks in this symbiotic relationship.

The new generation of facility operators, entering the teaming waters of the current entertainment facility business, seem less enamored with the option of utilizing traditional methods. Many new operators and existing chains are now moving to buying direct and maintaining their hardware themselves.

At the same time, several of the leading hardware providers are looking less and less at an exclusive sales agent relationship and rather at non-exclusive sales agreements. The disruption in the international supply lines by the impact of the pandemic has meant that distributors are also looking at constrained supply of hardware and spares, thus adding to the questioning of their value in the supply line.

Shipping delays and price hikes

An example of the constraints being felt was illustrated recently by a customer letter that was sent by Warehouse of Games, one of the prominent United Arab Emirates based distributors. Stating "unprecedented supply chain disruptions," the operation warned its customers of significant delays in deliveries. They were warned of price increases, with more changes to possibly follow. This is the first distributor to go on record, publicly, to speak of impending price hikes and supply shortages. However, it has been reported in confidence that sales of second-hand amusement equipment, internationally, have skyrocketed as demand kicked in following the reopening of business. The preferential position that some distributors held with some suppliers are now abandoned, on a "first come, first served," basis.

Shipping conditions following logistic chain blockages range from the impact of the pandemic to the blocking of the Suez Canal, and have all added their impact. But also, it has been charted from sources that supplies of amusement pieces and support hardware have been impacted. There is a run on second-hand amusement, particularly redemption pieces on the market. And with the news of new facilities planning to open next year, manufacturers are in a precarious position to meet orders and plan for a surge in business.

QR codes gain traction

The way the industry presents and promotes has been another aspect of the post-pandemic landscape. Our readers will be familiar with the inroads that cashless payments and e-payments have achieved in the COVID environment. But there is another technology that has received a rapid adoption in the West.

Charted as far back as 1995, the technology of the QR (quick response) code was first deployed in Asian amusement adoption. The ability to link smart phone users to a web page or download an app, just by capturing a coded image, was a revolutionary marketing and promotional tool at the time.

The Asians' advancement in mobile apps meant that it was embraced as an obvious utility, and the Western amusement scene was slow to adopt.

Fast forward to the post-lockdown landscape and the "frictionless" economy has quickly embraced the utility that QR represents. Numerous countries have embraced the ability to direct health information, such as in the U.K. vaccine procedure, not only with leaflets but also with QR code direction, to government information webpages. And with this, the hospitality industry has followed suit, employing the "NHS COVID QR" to capture patrons' details on the Government's Track and Trace app.

The Japanese amusement trade has continued to be a great supporter of QRs — all the ALL.Net, NESiCA, and other amusement network community/distribution systems have supported the app, as has much of the Japanese transportation and vending, concession scene.

This is seeing players using the QR code to jump to a league web page and membership stats. The app has proven a strong tool incorporated in printed signage, and even digital displays. Now the Western industry will have to evolve to adopt this versatile promotional tool.

Now from necessity, the technology has become utilitarian, and the entertainment industry can now take a second look. We have started to see, across the board, several marketing and promotion schemes in the amusement and attraction scene embrace the use of QR – also seeing more advertisements.

In an additional element to the adoption of QR codes, news was released from Germany that they were rolling out a scheme called "CovPass" that would see a special QR code being displayed through an app to confirm the full vaccination status of the user. This is currently being evaluated by European health ministers and could be employed as a "Digital COVID-19 Vaccination Certificate" towards allowing entry and travel. A few days after writing this, it was announced that the European Parliament gave approval of the certificate. This will be like the system employed in China and the World Health Organization (WHO) vaccination certificate.

The realities of the post-pandemic amusement and entertainment landscape are becoming more apparent.

(Editor's note: Extracts from this blog are from recent coverage in The Stinger Report, published by KWP and its director, Kevin Williams, the leading interactive out-of-home entertainment news service covering the immersive frontier and beyond.)

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About Kevin Williams

Along with advisory positions with other entrants into the market he is founder and publisher of the Stinger Report, “a-must-read” e-zine for those working or investing in the amusement, attractions and entertainment industry. He is a prolific writer and provides regular news columns for main trade publications. He also travels the globe as a keynote speaker, moderator and panelist at numerous industry conferences and events. Author of “The Out-of-Home Immersive Entertainment Frontier: Expanding Interactive Boundaries in Leisure Facilities,” the only book on this aspect of the market, with the second edition scheduled for a 2023 release.

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