The oft-quoted definition of insanity is: "doing the same thing over and over and expecting different results." Doesn't that sound a lot like what our industry video game manufacturers have been doing over the last decade? The games haven't changed with the times for these companies. If you accuse me of "piling on" with these comments, I would be guilty as charged. Hindsight is always 20/20! Look at these titles dating back seven years: Midway (Cruis'n USA, Cruis'n World, Hyperdrive, Hydro Thunder, California Speed, Off Road Challenge, Cruis'n Exotica, Arctic Thunder, Road Burners, San Francisco Rush, San Francisco Rush 2049, San Francisco Rush the Rock, Vapor TRX); Sega (Crazy Taxi, Daytona USA, Indy 500, Manxx TT, Motor Raid, Touring Car, Outrunners, Sega Rally, Super GT, to name a few). That's a lot of "steering wheel games," 22 in fact between two manufacturers over a seven year period, and they haven't changed fundamentally since the original smash hits, Daytona, Cruis'n USA and Cruis'n World. I think we learned how many times you can remake a game under a different title with success. Not as many as some very smart industry people thought.
The distribution methods are also as traditional as ever, with one great change. A few short years ago distributors felt threatened by the manufacturer's exclusive product representation policy, which prohibits them from selling outside of a certain "approved" geography. I remember one distributor had to put up a sizable bond that would be forfeited if he were caught selling outside of his restricted territory. Distribution competitors were finding games and pulling them out from the wall in locations to "seize" the sacred serial numbers. This game could then be traced to its distribution origin, unless the distributor had gone to the extra measures of deleting the serial numbers so they were not traceable, which was common practice. Today you can practically buy anything from anybody, and the manufacturers encourage it. In the past, manufacturers spent time on issues such as enforcing restrictive sales territories rather than reacting to the slippery sales slope that was giving way all around them.
There's an argument here that can't be missed. Laying all of the blame at the feet of the faltering manufacturers may be somewhat misplaced. Our industry is not going through a temporary change in habits. Rather our entertainment industry is evolving at rapid speeds all around us. We all now realize the coin-op industry is a mere bit player in the entertainment big picture. More than one industry veteran has made the case that we spent so much time focused inward on our own little industry, that we missed the bigger land shift that was occurring all around us. I think of the following analogy and wonder if it doesn't apply to us. All of the business gurus in the world wouldn't have been able to keep people away from airplanes as opposed to passenger trains earlier in this century. The transition in transportation from trains to airplanes was a market evolution. With the massive impact of the Internet on this generation, and other forms of entertainment we're now competing with, I feel a little like the man on the back of the caboose waving to the passing crowds.
I've been a huge fan of risk-sharing relationships in our industry for many years. Are there manufacturers out there throwing out the old distribution molds and trying radically different methods of distributing their product (other than selling locations direct)? A few, but not the mainstream. It's called a revenue sharing relationship. Revenue sharing the high-cost, high-tech video games, in some form (call it something else if it makes you more comfortable) is going to drive this industry in the future. It's not worth explaining the program again; it's been discussed so many times in this magazine. In short, as long as the manufacturer has all of his money (give or take 90 days) when the machine is transitioned to the distributor and then to the operator, the risk reward scenario that drives so many parallel industries does not exist in ours. Under the new model, the manufacturer's reward in any given produced game must be highly correlated to the cash in the machine. It will be and it must be. Someone is going to revolutionize our industry systems and make a ton of money in the process. The technology is here today. Look at what the digital jukebox Touchtunes has done already. Using a similar model, they've established a sizeable market share and it is growing. Another example of this kind of thinking is Arcade Planet. They have gone far outside the box in our prospering in what others say is a downturn period.
The industry is in danger of permanently losing two of its major suppliers of coin-operated video games. The laws of supply and demand are a wonderful thing. Our economy will not allow for a vacuum to exist for very long. I hesitate to suggest that this major shake up of our manufacturing companies may, in the long run, be a very good process for our industry to go through, but it very well could be. Others will fill the pipeline. As operators we will have to have something to buy to keep our customers happy.
By the way, we have a new arrival at the Chilton household in Colorado.
My wife and I (OK, more my wife than I) gave Ben Chilton, now age 2, a little
sister on March 15, just before midnight. Kathleen (Kate) Tevis Chilton
was born six pounds, eleven ounces. Everyone is doing just fine, that is,
as fine as you can do when sleeping 60 minutes at a time.