The economies of this industry continue to get tougher with every passing year. The average age of the equipment on the street is a bigger number every year. The profitability of these old pieces in many cases is non-existent, and the condition of these machines are proof that no one cares and many old games are simply taking up room. No one wants them, not even the owner really, and it is a major black eye for the industry at large. "Junk operating" is a small percentage of our industry. Successful operators learned long ago that fresh and clean machines lead to profitable operating companies.
Can I make a suggestion that operators cull their routes and take some of this old equipment to the dump? I mean, you can't be proud of it. When your friends go to one of your locations and see that you own the machines, do you burst with pride that the beat-up old Karate Champ video game is yours? Where's the pride?
In many cases, I'm quite sure that the establishments' owner insists on having three games when one would suffice. I'll show him. I'll give him the Golden Tee 2002 that earns well, and then throw in a beat-up Joust and broken-down Donkey Kong. I've an operator friend that echoes the sentiment of many in the industry when he states: "If that piece makes $5 a week, that's more than it'll make in my warehouse."
One of the best seminars I ever attended was a financial seminar at an AMOA show years ago. I'll never forget the tomato analogy: "When the tomatoes go bad at the grocery store, they don't box them up and set them in the warehouse hoping for them to get better. They throw them out or slash the price to sell them. Get rid of them at all costs. That's how we should look at our old video games." Too many operators have ended up with warehouses full of old, rotten tomatoes. I think old tomatoes have a higher value than old video games. I've always had a guideline that I can't touch a game and make a profit for less than $25 per week just to cover the service costs.
Our industry has an image problem since its inception. Mafia, gangsters, you've heard it all. The problem with this perception in the early years was not that it hurt the industry's image, it's that the perceptions were true in many markets! That's long gone. If I've ever met someone in organized crime, they've done a great job of hiding it. The closest thing I see in our industry today is gangster wannabes, but that's about it. I figure they've been watching too much TV. Even Tony Soprano has found an easier way to make a living.
Over the last 20 years, the industry has evolved and has made major inroads into the negative perception our industry combats. Our industry has been politically active locally and in Washington. Our industry efforts in Washington, D.C. have largely combated the images of our industry. We've got industry members talking to U.S. Representatives both in the Congress and the Senate. Our industry's political accomplishments include working with officials regulating video game content and being a player in getting the Golden Dollar put into circulation. Obviously the dollar bill still needs to go, but maybe that becomes our next political accomplishment. Our industry has scored numerous local victories, from sales tax abatements to IRS rulings and many others. All contribute to validating our industry and its members.
The advances in technology with online tournament games have positively influenced the public's perception of our industry. As an operator, you can't participate in these tournaments without opening your books and location lists to those who run the tournaments. Much has been written about what companies can and can't do with this information, but the fact that we're even having these discussions with manufacturers is ground-breaking stuff for this industry. Clearly, this is the segment of the industry that is prospering. There are new entrants into this segment of the industry every year. This appears to be the growth area for the decade ahead.
There are examples of operating companies that are very non-traditional. Dave & Buster's and Sugarloaf Creations are examples of two companies in the industry that have entered the public trading arena. For those of you who think running online Golden Tees exposes you, run a publicly traded operating company. You're trying to please analysts who know little or nothing about your business, while simultaneously posting your balance sheet and income statement on the Internet every quarter. A few shareholders do read this information, but it's mostly read by your competitors trying to figure out how you're doing and how you're doing it. Sugarloaf is now privately owned again, and that's wonderful news to me.
I was in Montana recently and was reminded of the role that gaming plays in our industry. I saw some of the best-operating and cleanest slot machines throughout the state. Now that I think of it, I don't remember seeing one slot machine that wasn't in perfect operating condition. Conversely, I don't remember seeing a decent non-gaming video or pinball in the same location during the same tour. I know that competition will make us do strange things at times, but can't we at least clean these old machines?
Why would anyone want to be labeled as a junk operator? In my history, when times were lean and money wasn't available to buy the new equipment, we worked even harder to keep the older titles clean and presentable. There's no money in junk operating. Why wouldn't you just go do something else? In today's Internet economy, there's no fooling the customer any longer. You know it's junk. They know it's junk. What are we doing? I fear it will only get worse for those that find themselves in this operating model. But that doesn't need to be the case. You can fix it.
Can we at least clean the monitors on these old games? I've seen pinball machines that haven't had the playfield wiped down since Pac-Man was released the first time. If you're going to operate the older games, and we all do to a certain extent, can we at least keep them clean, with buttons that work, with monitors that we can see, with control panels that don't have old cigarette butts under the buttons? Can we do something about the graffiti on the sides of our cabinets? A funny thing may happen. Besides feeling better about your routes and standing a little taller in the community, they may even increase in earnings. I've walked up to many a game and the message is: If the owner doesn't care about this game, why should I?