Mark Twain famously said that reports of his death were greatly exaggerated. Much the same can be said of amusement machine distributors, at least the ones that remain following a long period of painful consolidation. Unfortunately, RePlay has reported on the demise of dozens of distributors in recent years, and we hear that more consolidation may be on the horizon. But that doesn’t mean that distribution as a crucial category of the industry is completely done for.
This month, we conducted a brief survey of distributors, talked to a handful of operators and enlisted several of our columnists with experience in distribution to discuss the fate of the amusement distributor. The consensus among all three groups: There may be fewer distributors serving the amusement industry, but they still serve a vital function.
Distributors who participated in the survey reported overall sales volumes increasing slightly or remaining steady over the past five years, which is a positive sign considering the falloff in popularity of arcade videos that helped create a boom for distributors in the 1980s and ’90s. I’ve interviewed many distributors through the years who described operators lining up to buy the new video games (practically any games) when they arrived at the dealer’s office. These days, operators are more likely to take a wait-and-see attitude before buying a new game. Yet the ability to sell a broad portfolio of machines, including ticket redemption, prize games, ATMs, etc., has allowed the current generation of distributors to sell enough product to keep the doors open.
Parts and service also represent crucial elements for both operators, who need all the help they can get in this arena, and distributors, who generate 10 percent or more of their revenue from the sale of parts alone.
All of this is not to say that distributors do not face serious obstacles. They do. The Internet has further eroded the integrity of sales territories while opening the door to low-price game suppliers who supplant traditional distributors that shoulder the burden of stocking parts and providing service, parts and repair. Factories have also been willing to sell around distributors for certain national accounts, in effect keeping for themselves some of the better clients who can handle their own service and finance needs.
Yet even if all the distributors in business today were to suddenly vanish, longtime RePlay columnist Frank Seninsky says new distributors would quickly materialize to replace them. “Small parts and service houses would spring up to fill the void, and those business would ultimately become a type of distributor,” he writes. “In other words, you would see the whole distribution network spring up again because the industry simply needs the service and support they provide.”
Distribution continues to evolve, just like the rest of the industry, and it may continue to consolidate. But like the notorious writer who created iconic and original characters such as Huckleberry Finn and Tom Sawyer, reports of its impending death appear to be overblown. We look forward to reporting on the continuing transformation of amusement distributors.
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