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EDITORIAL: Deluxe Crystal Ball Edition

Posted On: 12/11/2007

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This issue contains our "Forecast 2008" feature story. Several leading operators go on the record to reveal what they see for next year and beyond. The piece also includes three momentous predictions made by informed sources who did not wish to have their names published. If you want an advance jump on what the entire industry will be talking about next year, be sure to read this story.

My own crystal ball predicts that next year will see the start of the biggest revolution in music and amusements since Charlie Glass first launched the industry by putting a coin mechanism on an Edison Dictaphone in 1887. A revolution of payment transaction technology is on the way. TouchTunes' PlayPorTT and Merit's Firefly can be used to add the cost of music and amusements to the patron's food and drink bill, thus removing cash from the equation and rendering the payment transaction "invisible."

Prediction #2: Full implementation of such POS functions will take years. But it will happen because consumers want it. And when it arrives, it will totally transform the operator's financial relationship to his locations, to his manufacturer, and in some cases, to the government.

Prediction #3: Many operators will resist this revolution on those very grounds, just as some are resisting the digital music revolution now. But sooner or later, this revolution must and will take place if the amusements industry is to survive and successfully adapt to the changing marketplace. Operators in the coming decade or so who don't switch over from cash to transparent, noncash payment for leading pieces of equipment in top locations (think chains to start with) will gradually be superseded by new operators who do. Or, the routes owned by diehard traditionalists will be purchased by existing, forward-thinking operating companies who embrace the noncash revolution. Precisely the same dynamic is happening now with digital music operators and CD holdouts.

Prediction #4: As street operators continue losing bars to urban renewal and smoking bans, they will increasingly turn to restaurants (that also serve liquor) as their top location type. Street operators will find that music and games are more than welcome (think PlayPorTT and Firefly again). This type of technology, again with an "invisible" payment transaction, can easily facilitate nationwide networked pool and dart tournaments as well. Street operators should start keeping an eye on the restaurant sector, because it will increasingly be a big part of their future.

Prediction #5: For the fun center industry, I predict that standalone FECs will increasingly face competition from full-blown, lavish facilities that are integrated into bowling centers, water parks, casinos and upscale, mixed-use retail environments. This trend is already well underway, but the future implications are that standalone FECs will increasingly face deep-pocketed competitors who purchase more lavish equipment, install fancier theming, offer higher quality food and perform more extensive marketing. In many cases, these future competitors will also offer the prestige of major brand names, or the appeal of an "anchor" activity that attracts more to moms and dads than standalone fun centers can manage. So, as fun centers become more popular, existing site owners will find the bar is raised higher and higher.

Prediction #6: State and federal officials will insist on more government regulation of theme park rides. This has already started to happen in a handful of states; momentum for Congress to get into the act appears to be gathering. The results will spill over into the fun center industry. Frankly, it doesn't take a crystal ball to see that IALEI and IAAPA should begin working closely together immediately to forge a proactive policy and create a joint lobbying effort in Washington, DC, rather than waiting and reacting after onerous new laws are passed.

Some industry members may feel these predictions are mostly negative. I think they're positive, but I suppose that depends on whether your crystal ball is half empty or half full . . . BY MARCUS WEBB