So where are we today? You can get answers all over the board, but let me dare take a chance and give you my perception of various industry segments. It is very difficult to make statements about our industry, because it is so diverse. While one area may be booming, another may be in serious decline. The pay-for-play amusement industry is too vast to lump it all together.
But if I were to attempt to generalize, it's very obvious that there are fewer operators today than at any time in the last 20 years. Operators today are far larger than their predecessors, on average. This is due to attrition and consolidation (more on that next month). As has always been the case, the industry will be technology driven. Cash is absolutely king in all segments. A few categories in particular are:
Pool and Dart League Operators: From my vantage point, this is the quiet/lucrative part of the industry. The good operators that run pool and dart leagues are making a very good living, but you don't hear much. This statement has been true for over a decade. AMOA's finest hour was probably the National Dart Association. Think about it. A new pool table costs less than $2,500. A new dart game is probably less. And both of them have a longer life than that of any of the video or pinball product I buy everyday. This isn't rocket science is it? These operators are good at what they do, and they are sticking close to their business. You seldom see a successful league operator go off and open up a 5,000-square-foot arcade filled with simulators. Leagues and cranes are a lot alike to me. Both of them take a product that is a marginal earner by itself. By creating an environment where a player wants to use the product, develop league play for darts, or flash a crane with very attractive product, the demand for the product goes up exponentially and the marginal products become cash cows, but it takes extra effort.
Combining Vending with Amusement: This combination appears to work great because of the diversification, but you rarely see companies going from amusements to vending, it's generally the other way around. These operators have the base income to draw from that can carry you through the highs and lows of the video industry. Personally, the vending industry seems boring to me. I mean, you don't have to replace the machine every year and you generally know how much cash is in the machine based on its prior performance. People have to eat so you don't have to worry about buying a machine that no one will use. If they're hungry or thirsty, they'll come. So you say I don't know what I'm talking about with vending? Of course you're right.
Video Lottery: Are they still doing that? Isn't the percentage to the State about 110% by now?
Video Poker: The other night I saw South Carolina's Fred Collins, an AMOA past president, on the "Dateline" TV show. Are we in the big time now? Is anyone other than me absolutely amazed how long this South Carolina poker issue has gone on, and now there's more machines on the street than ever? I think the South Carolina operators should do an industry seminar on how to lobby at the state level.
Video Games: I've got a beef here. The product is now more appropriately priced. The operator has equipment he can get a decent and profitable return on, IF HE CAN GET IT. Why are the production runs shorter than I can ever remember on good equipment? Just when I'm ready to purchase more of a particular title, I can't get it anymore. Great titles like NFL Blitz are now available in kit only. Others (San Francisco Rush the Rock, Max Force/Area 51, Off Road Challenge sitdown) are not available. I'm sure the manufacturer's logic is to eventually train us like house pets into becoming more aggressive during our initial orders, or else we won't be able to get the product. In short, the video segment of our business is healthy.
Pinball: Not good. We've sold off a number of pins through our retail operation without replacing them. This segment is so cyclical. Next year it could easily be our primary product. It has been in the past many times. I don't fully understand the current downturn but I suspect that it has something to do with the competition from the great video titles available.
Our route has changed dramatically in make-up over the last six years of aggressive growth. We are purchasing more than ever and the equipment is earning very well. We're making more of our income in a fewer number of locations, and they are becoming "geographically diverse." In other words, they're a long way from home. However, technology is removing these geographic barriers rapidly.
All industries go through cycles, but do any do it with the frequency of ours? Sure. But, I'm not in those other industries...so I assume I've chosen the toughest industry in which to make a living. Naively, I say there must be an easier way to make a living! The only problem is that we really enjoy what we do on a daily basis. In reality, any industry is what you make of it...so bear down, be the best you can, and the rewards will come.