Filipinos seek redemption

Filipinos love to play games; a naturally gregarious race, they owe much to a blend of the Pacific’s laid-back fun tempered with centuries of Spanish drama. It makes for a potent combination and lays them wide open to the influences of games.
David Snook  Investigates.

IT remains, however, essentially a poor country with the great masses struggling by on a fraction of poker western news wages. There is, though, a growing middle class, made confident by relative (for the Philippines!) political stability and considerable investment. The lot of the average Filipino is unquestionably better than it was and while you can still see some evidence of dreadful slums, especially in and around the capital, Manila, there is also a degree of  disposable income for the first time. You can still find youngsters playing consumer games in the street with a timer on standby and paying a few pesos for the privilege, but not as much as, say, 10 years ago. At the height of the video games boom there was a substantial cottage industry in the Philippines, harnessing copied games- or even consumer games-on to motherboards and equipping them with cheap coin mechanism. That has mostly gone the same way as the video games boom and the advent of internet games has further damaged ailing amusement arcades business.

      But if you take trouble to fight your way through the throngs at a downtown Manila shopping mall you will still find the anchor stores and among them the entertainment complex. Within the entertainment complex you will also find a family entertainment center and inside that –like little Russian dolls –within-dolls – there is an arcade. It will be based on redemption, the modern coin-oponent phenomenon that has lasted. The redemption games are largely imported, from the usual specialists in that sector, but with a few locally made products priced substantially lower. There will be a few dedicated video games – sometimes very up-to-date one plus novelties, air hockey, table soccer’s and often coin-opponent karaoke players too. Filipinos before hordes of complete strangers. In that arcade /FEC you will also find bingo a pastime that is immensely popular with the Filipino.

It was quickly recognized for its potential and the Pacific Amusement and Gaming Corporation (PAGCOR) has the monopoly on operating. The company provides the license to operate and charges a franchise fee to any applicants- normally the mall operator or owner. PAGCOR also provides the staff who call the numbers in the games, but it is lucrative enough for the mall owner to go through the enormous quantities of red tape to set up a bingo operation. He must also obtain the approval of both the local authority to his bingo operation and of the local Catholic Church community. More on PAGCOR later. The Philippines went the same way as most other poorer countries in terms of coin-opponent 25 years ago. It was a ‘dumping ground’ for second hand products from various parts of the Far East and Austral Asian   and kept that way apparently without much hope of deserving or getting better. It was the growth of the middle classes and the shopping mall phenomenon that changed everything.

      The 1980s saw recognition of the advent of a modest quantity of disposable income that could be harnessed to that natural love for pleasure and relaxation, which is so much a part of the Filipino character. Developers saw the intensive activity in other countries in the region, notably in Thailand and Malaysia, with first small shopping centers and then very quickly a glut of the next stage in the shopping development malls. The experience in the US was followed, evading some of the pitfalls and mistakes and a string of locations in south – east Asia influenced the property   and retail business in the Philippines. Major chain stores provided the anchors and the inevitable entertainment area was built into the initial plans. The malls enjoyed varying degrees of success and the entertainment complexes the hook to which amusement poker machines and redemption were attached.
      The locations often involved considerable investment and the need for top-grade games was inherent, which tended to create a problem for operators, many of whom struggled to make the venture pay in face of average price-of-play of PHP6.00 (US $10c). The high cost of the overheads, rent, electricity and manpower tended to immediately make the coin-opponent venture questionable if  the main amusement product (bowling, etc.) did not attract sufficient numbers.

There remains as many as 50,000 video games in the Philippines, many of them old. The market is still dominated by Sega and Namco, but with newcomers like LAI with its string of south-east Asian arcades and strong novelty/ redemption product lines built in neighboring Indonesia influencing the market. There are perhaps 20,000 redemption games, another 20,000 ‘other novelties ’ of varying types and perhaps 10,000 kiddie rides which are hugely popular in the Philippines and largely supplied by a variety of small, local manufactures and now, increasingly, from China. The coin-operated karaoke machine has been popular in the Philippines for the past 20 years, effectively replacing the jukebox as the principal means for playing popular music in public places. There are a number of local machine manufacturers, mostly operating on a joint venture basis with the music producers. The most popular unit, currently, is the magic Sing, a machine that will accommodate up to  5,000 songs.
      Many of the other coin-op products in the in the Philippines are also locally made or imported cheaply from China or Taiwan. The bottom line is understandable it has to be cheap to buy and make lots of money. Perhaps that is the operators ’ bottom line all over the world?  In the case of the Philippines, this reveals itself mainly in redemption games that are played for tickers with increasing enthusiasm by Filipinos. So who are the operators who benefit from all this activity?  Australia’s time zone is there in some numbers   (owned  by LAI, the games manufacturer), with Taiwanese-based tom’s World, bondeal, Quantum, Worlds of Fun and G Box- also from Taiwan. Currently Tom’s World in Fill is the largest; indeed, some suspect it is largest amusement location in Asia. The Philippines has illegal gambling of course.

  Generally, most people do not have the means to gamble at least substantially, but there is a nucleus of well-heeled citizens who enjoy gaming as well as a substantial number of visitors to the country. Recognizing this in the early 1980s, the Filipino Government decided to harness the potential to itself, in common with various other governments around the world. The Philippine Amusement and Gaming Corporation was set up with a monopoly to create and run casinos in stragtic locations around the country.
      There is gambling beyond PAGCOR  of course, but that is generally limited to the Chinese extract population and their old number game Jueteng, and more recently some horse racing games named video Karera. The legitimate casino market yields handsome returns to the Philippines Government with 14 casinos raking in approaching PHP25bn. An online casino has inevitably been started by PAGCOR  and attempts to set up an independent casino within the Freeport-status Subic Bay – once a major Us military base- has been fiercely resisted. Internet gaming is blamed for attracting players away from arcades, especially those in the 15-23 years age group. The attraction is the diversity of amusement games on offer through the internet and also the fact that the better players make money by selling their ‘weapons ’ gained on the amusements to players of lesser ability.

      The interesting thing about it all is that PAGCOR  was founded in 1983 with a 25-year exclusive license. That expires in July of 2008, near enough for a great deal of background activity to be under way to break into the market. The odds are firmly on the Philippines Government renewing the license, but there is just enough area of doubt to encourage a considerable activity in the corridors of power where major international operators are seeking to work on any one of a number of variables : getting a stake in the market with its own license, sharing the PAGCOR  license, running gambling for the government instead PAGCOR  or gaining permission to open in Subic Bay or other ring fenced areas. At the same time the renewal of the license or issuing of fresh licenses will be an opportunity for the Filipinos to take a long, hard look at gambling in the country and how it should be run. Thee is always the possibility that some level of street operating could result, albeit at a very low level to protect the government’s monopoly in casinos. But at the very least, the ending of the PAGCOR  license opens up a wealth of possibilities.
      Those possibilities may be limited by the natural desire of the Philippines Government to keep what it has and only examine alternatives if they offer a realistic potential for increasing what it already has. Meantime, the Filipino’s natural exposure to redemption games.