Tuesday, September 26, 2017 | Today's Vending Industry News
Now I Get It'

Posted On: 10/9/2003

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By VT's count, the U.S. coin-op amusement industry today includes approximately 41,000 networked video games and jukeboxes, operated by something like 3,000-plus operators representing a solid majority of the operating community. Visitors to AMOA International Expo 2003 in September saw all four leading jukebox manufacturers and five leading video game manufacturers put the spotlight on downloading machines and/or networked equipment.

What does this mean? We have reached a major turning point, a true watershed moment for the industry. For several long years, the power of online promotion and online content refreshment - in both the video and music categories , has crept up on a (largely resistant) amusements industry. But this fall, it seems somebody suddenly turned on the light switch in the minds of a majority of industry members. Suddenly, online operating is becoming a mainstream phenomenon.

"Operators kept coming up to us at September's AMOA show , and to other manufacturers of online equipment at the show , and saying, 'Now I get it'I finally understand why I have to be online,'" reported Bob Mills, vice-president of networked business for Merit Industries. Mills continued: "We have added a huge number of operators to our online community just since the show."

What made the difference? Why have operators suddenly jumped onto the online bandwagon now? Money, of course, is a powerful persuader. Operators are finally getting the message that online jukeboxes earn from 40% more, up to 250% more, than CD boxes (in the right locations and with the right location split). Operators are finally hearing and believing what countertop manufacturers (and leading-edge operators) have been saying for years: that good games earn 25% to 35% more online, than the identical games earn offline. During tournament periods, the increase in the cashbox of online videos can go even higher.

But money is not the ultimate persuader. After all, these financial facts have been on the table for at least 18 months, maybe longer. So despite what we usually hear about how "the cashbox is king," the fact is that mere earnings alone are not enough to give operators confidence in new technology. Another factor in the industry "turning the corner" with online equipment this year, is simply that enough equipment has been on location long enough to reassure anxious operators that, yes, this phenomenon is for real and no, the leading companies behind it are not going away.

"Operators these days are so cautious about buying new equipment, most want to wait six months on every new title , even from established sources , to make sure somebody else is making money with it first," Merit's Mills noted. "In the 1990s, we were dealing with video games that had a relatively short lifespan, so if you waited six months you missed the real profit opportunity. But today with staples like touchscreen games and redemption [he might have added jukeboxes as well], you're not frozen out by waiting."

Manufacturers of cutting-edge machines may point out that operators who hang back (and hang back, and hang back) before jumping on new trends are surrendering dominance in their local markets. That's true. Such manufacturers also feel over-cautious operators are leaving lots of money on the table from higher earnings that they forgo. That's also true. But let's remember that manufacturers have gone through a tough learning curve in recent years, tweaking their technology and business models to find the proper balance between player appeal and operator requirements.

It hasn't been easy. But at this juncture if the Merits, Incredible Technologies, TouchTunes, and Ecasts of the world feel like sitting back for a moment and crowing "I told you so," who could blame them?