Every December we take a look back at the previous year. We assess the highs and lows and, when we’re feeling especially ambitious, we might even attempt to predict what lays ahead for the industry in the coming year.
We noted early in the year that while the volume of game sales has fallen dramatically since the video game or CD jukebox heyday, games remain a vital part of many aspects of the amusement and leisure industries. In February, IAAPA convened a summit of family center operators, who shared detailed insights in their sector of the industry. All in attendance at FEC Phoenix stressed the importance of arcade game revenue to their bottom line. Big attractions might draw the audience to the location, but video and, more importantly, redemption games keep them there and often constitute half of an FEC’s gross earnings.
Unfortunately, high redemption and merchandise game earnings don’t come without a cost, and that cost can be particularly high if the games are not operated in a reasonable and responsible manner. This “social cost” was exemplified by increased scrutiny from lawmakers and civil litigants concerned about the possibility of illegal gambling masking as an amusement attraction. In California, an administrative agency raised concerns about cranes, which prompted a national operating firm to pull machines from a regional grocery chain. Meanwhile, a patron of a well-known casual dining chain also filed a civil lawsuit against the restaurant alleging that the cranes on location violate state gambling laws.
In Florida, all-out war broke out between a group representing so-called “senior arcades,” which ran gaming style equipment for amusement purposes, and well-known FEC chains. The former sued the latter claiming amusement redemption games violated the same law that shut the senior arcades down. That law was passed to ban video sweepstakes, but done in a way that also limits the operation of amusement redemption. Finally, law enforcement in Arizona seized a number of high-end merchandise games, causing further concern across the industry.
The trade responded by beginning to raise money to achieve legislative solutions and defend against lawsuits. Also, several well-known factories began offering 100% skill versions of their popular high-end merchandise games. And in Florida, operators revived a defunct state association in order to begin dialoging with state lawmakers. Only time will tell how well these efforts fare.
For their part, street operators continued to generate good money from music and ATMs, and those with healthy leagues and promotions remain an important part of the health of their location hosts. Last month, AMOA hosted a two-day educational session designed to jumpstart street operators by helping them bring creative solutions to their increasingly mature trade.
One operator attendee put it best, when he asked, following the meeting: “Are we supposed to be in the marketing business? Is our job to bring customers to our locations? That’s a big question, and that really changes the way we think about our business. For a century, the value we brought was the split from machine revenue, but that’s not really enough any more. I have to take a hard look at what business I’m in.”
That sounds like the perfect New Year’s Resolution for all of us, to take a hard look at our business, regardless of our niche inside the industry. In the meantime, we hope you enjoy your Holiday Season, and we look forward to bringing you the news and features of the amusement game biz throughout 2014.
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