Endgame – September 2019

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AdamPrattCircleFrame

Where Should the Small Operator Go?

Frustrations Rise From Being Shut Out From Buying Certain Games

by Adam Pratt, Game Grid Arcade & ArcadeHeroes.com

I was wondering what the theme should be for my Endgame column this month when I got a call from a fellow arcade operator that lit my mental fuse. He was facing a problem that I’ve dealt with frequently, although from an angle I hadn’t given much consideration to – lack of access to a particular avenue of amusement games – a subject I feel may be too taboo to talk about.

As we all know, good games provide the bedrock of the amusement business. While we game room operators might do well with birthday parties, customers don’t come to our venues just because we have a party room. We have to have fun things to do in addition to serving up cake and ice cream.

Operators are generally at the mercy of what the manufacturers produce when it comes to what games they can offer on location. Sure, we have 50 years or so of games to choose from, although realistically, we tend to stick with currently produced to fairly modern titles. After all, those are the machines that tend to bring in the big earnings.

When it comes to a pay-per-play model (as opposed to the free play model that many classic arcades are using now), old stuff just doesn’t earn. I have a couple of those ’80s/’90s games that only make $40-$50 a year. They’re fine for filler if I’m in need of that, but otherwise, it’s better to sell them to someone for their private collection.

With approximately 20 new video games released a year, the pickings for everyone is limited. Not all of those games are guaranteed winners, and fewer are perfect for all locations. It has been apparent for the past few years that FECs are driving development, leading to more elaborate and expensive cabinets. What would have been classified as a “standard” game cabinet 10 years ago has become a rarity among new productions, that style of cabinet being phased out in favor of “deluxe” (which translates to “big and expensive”) and “super deluxe” (bigger and even more expensive).

I know many street operators are content with keeping the “Old Faithfuls” going on for as long as is sanely possible, but eventually, the costs of keeping a consistent oldie going become too much and it’s time to update (if anything comparable is available when that old Crazy Taxi finally gives up the ghost).

So, back to that phone call mentioned at the beginning of the story. My friend runs a fantastic location, with an impressive array of games. It would not be considered an FEC like a Dave & Buster’s, Round1USA or Main Event, but they find ways to keep their scene vibrant and customers happy.

As certain FEC chains continue their explosive expansions across the country, this has become a bit of a concern to many smaller operators like my friend. For myself, a giant FEC is under construction inside the mall that my business has called home for 11 years. (It might be open by the time you read this, but it’s always hard to say with these big construction projects.) All around us small fries, large and elaborate locations are muscling their way in, so the question facing many of us is: How can we really compete when companies with far more capital and resources are vying for the same entertainment dollars as we are?

This leads us back to game availability, and another problem that goes beyond the type of cabinet that may or may not be available to us. The fact is that there are a number of new games that we simply can’t get. Now, I’m not talking about games from the manufacturers we deal with here in the States that go through standard distribution channels for sales. I’m talking specifically about some Japanese game makers that don’t have dealer relationships here and sell their equipment direct to the buyers, a seemingly small, clubby group that excludes smaller operators like the guy who called me.

Here’s his story: My friend went to IAAPA 2018 and ran into the huge annoyance I think a lot of us smaller operators have experienced at trade shows. It’s what I call the Exhibitor Head Fake and subsequent Voicemail Void. The friend saw a game at the Taito booth he was willing to buy with cash right then and there. Instead of claiming it had already been bought by one of the big operators before the show, they said that they couldn’t do a deal right on the floor, but that they would be able to work something out afterwards. They gave him a business card and said they would call him, but as always seems to happen with these, no call nor email came. He tried following up himself with calls and emails, but no reply ever came.

This is not the only instance of a small operator being blocked off from a new game. Any of us can go and visit a Round1USA right now and see a plethora of games we simply cannot buy. Some of you have probably tried contacting Konami to buy the latest version of Dance Dance Revolu­tion, which is available to locations across Japan, as well as in Round1’s U.S. stores. Fellow operators have told me they get one of two answers: either participate in some secretive “group buy” or an outright “no.”

Sometimes there are licensing concerns at play, although if a game with a license or licensed content (songs, cars, etc.) is available at a chain, then that just looks like a poor excuse to me. There are other games (primarily from Japanese game makers, but not exclusively) that also receive a similar treatment. Other times you attempt contact, you get the Voicemail Void, sending emails and calls to a salesperson at a company, only for them to always be on vacation or simply ignoring your inquiry because you’re not placing an order for a container load.

The amusement industry is the only one I’ve ever encountered where certain manufacturers make a concerted effort to NOT sell their products to interested buyers. Of course, it’s not everyone that does this, but I’ve run into this among more than Japanese game makers. When I myself worked in sales and distribution years ago, I would occasionally come across other equipment makers who were not only adept at the Voicemail Void, but would block access to their equipment by refusing to answer calls and emails about their products.

Look, I understand that a salesperson wants to get the big score by selling a container or more to a chain, but the “small sales” do accumulate rapidly. I used to sell dozens of official Pac-Man and Golden Tee games every month to smaller operators. Had I passed those up because each was “just” a single sale, I would have easily sold 60 percent less than I did.

I consider this behavior to be creating an anti-competitive atmosphere in which small operators are treated like some untouchable caste that should be ignored until they just go away. But these actions don’t necessarily shut us down. We find ways to adapt – perhaps by focusing on games that are outside of the “cookie cutter” selection, finding a niche with budget-minded attractions like tournaments or escape rooms or parties as ways to bring people in. Or to the taboo thought that popped into my mind during the phone conversation based on an off-hand comment – piracy.

I am not condoning piracy at all. I’ve always believed that getting pirated games was a total waste of time as it wouldn’t be worth it in the long run to buy something that wasn’t legit to begin with. I’ve also been contacted by more Chinese companies hawking pirated games than I care to count over the years. But I came to realize why some operators would actually consider it in this day and age – due to increasingly denied access. Many (if not most) operators I know can easily afford genuine titles, and they do spend the big bucks on real games frequently.

This leads us to the question: What happens when an operator knows exactly what he wants –– and has a competitor down the street that can buy it because they’re a mega corporation –– but is given dubious reasons (or enter the Voicemail Void), blocking him from getting it? That sure seems monopolistic to me.

To be fair, there are instances where there are legitimate reasons why we can’t get a title. It can be due to a special worldwide licensing problem (rarity) or in those few instances where an operator/chain has funded their own titles for use only in their locations. Dave & Buster’s, for example, has expended tremendous resources to do this with the likes of Rock ’Em Sock ’Em Robots, Marvel: Contest of Champions and other exclusive content for their locations. It would be great if more small fry operators could pull a Netflix or an Amazon and fund our own exclusive games, but that isn’t feasible.

The issue comes back to these excuses and what I feel are underhanded methods blocking access to some games while selling them to others. It is possible that I’m missing part of the equation here and am way off base. But, the conclusions I’ve reached so far are based on observations and experiences over time, various conversations I’ve had in person and online with other operators, with some added pondering thrown in. It is too bad that this isn’t an open forum, as I would enjoy hearing opinions and feedback on this – so feel free to discuss this if we ever meet up in person or send me an email at [email protected] arcadeheroes.com (I promise it won’t go into the Void).

What’s the solution? With the right and ethical business practices, pirated games should forever be obsolete. But we have improvements that need to be made. First, stop treating potential buyers like imbeciles. If they are willing to buy, but there is something like a licensing issue at play, then explain that and help work toward a solution. Also, street operators need more standard/ upright pieces. This might be rectified by the upcoming Exa-Arcadia system, if it can get out the door and fulfill the promises it has made.

Arcade bars and retrocades need more multi-player pieces that are reasonably priced, which could be fulfilled by many of the up-and-coming indie game companies out there. FECs? Well, let’s be honest, you’re pretty well covered by the current direction of this industry. We just need that direction to also work for the independent operator and not just the big corporate game zone.

 


Adam Pratt is the owner and operator of the Game Grid arcade near Salt Lake City, Utah. He also publishes the Arcade Heroes blog site and serves as an advisor for the web-based game supplier BMI World­wide. He can be reached at  [email protected].

 

 

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