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Thank you for the music
Redemption remains the name of the game, but the boom in digital jukeboxes has helped breathe new life into the US market.  Alex Lee Reports

James Hills, formetly of TLC, who now has his own marketing poker business www.marketinghelpnet.com serving the US coin-opponent industry, gave Integrate his personal opinion on the current state of affairs in the US trade. “The coin-opponent industry in the US has been suffering for quite a while due to the slow but steady increase in ‘home entertainment’ as well as local anti-smoking ordinaces,” he revealed.  “However, there are a few bright points in the amusement sector today- pool, darts and jukeboxes.”  What unites these three areas is that they are not dependent on video game technology and, for the most part, they are more fun to play out-of-home than they are at home.

      “Pool and darts especially have been popular for hundreds of years in various forms and will continue to be in the future.  This is because they are not dependent on technology the way that video games are.  Additionally, while many people have online poker game rooms with a pool table and a dart board, these games are more fun to play with someone else.  Another aspect is they are extremely conductive to organizing tournaments.”  Tournaments and contests have always been the prime method of increasing play on any coin-opponent game, but in the US today they are essential. 
      “Whether national pool leagues like the APA, local dart leagues organized by operators or national online events organized by manufacturers, events drive amusement games today.  Probably the best example of an event organized by a manufacturer is the new version of Silver Strike Bowling that will feature a national sweepstakes each Friday evening to announce a prize winner.  In tests, Silver Strike Bowlers  Club 2007 showed a revenue generation increase of 40 per cent, due to this improvement as well as others that Incredible Technologies has made to the game by  connecting it online and making it more tournament friendly.” 

Jukeboxes also are thriving.  Hills explained that this is due in large part to the emergence of internet jukes with access to thousands of songs.  Because of this, they are smaller and customers always have access to songs they want to hear.  “for the US industry as a whole, there is no magical location where games will do well.  Even bars are now fading, despite the introduction of new games like Breeders Cup and Golden Tee Live, both of which employ sophisticated online tournament systems.”  One operator Hills spoke to, however, continues to see excellent revenue from truck stops.  Games that are successful for him include ‘adult redemption poker games’ where cherry-master style games return coupons for use at the location such as oil changes, truck washes and dinners.
      On a recent midweek evening, Hills visited a truck stop outside of Chicago and was amazed to see someone at virtually every game.  “This was the first time since my childhood that I had seen an arcade packed with people.  Games that appeared the most popular included shooting games including Big Buck Hunter and Target Terror.  But fighting game Tekken 5 also attracted a crowd.”  While the staples of pool, darts and jukeboxes will always be popular, Hill s predicts that the US is in the early stages of a video amusement growth cycle.  This time, the new technologies being developed by the consumer sector will return to coin-opponent as they become too bulky and too expensive for the average consumer to enjoy at home.

      Today, for instance, one can spend more than US $6,000 (Aurora ALX from Alienware )buying computing hardware that is generations beyond the Xbox 360 or PlayStation 3, which will debut this autumn at $600.  It is beyond even what developers are targeting and certainly beyond what consumers can afford – but not necessarily for a deluxe coin-opponent game of tomorrow.  The potential visual impact of these new consumer system is stunning.  In a market where consumers expect a $500 computer, only a small minority of the market will want or be able to afford gaming this way.  For game developers looking to exploit the widest range of possibilities and for video reeling gamers looking to enjoy the latest, greatest and most amazing graphics, coin-op amusement might be their next stop.  “But only if we hang on a little longer and make it happen,” concluded  Hills.

The Manufacturers

Redemption specialist Coast to Coast’s Gary Balaban told Integrate: “People like to get something for their money.  Redemption is very strong in the US.  If we didn’t have that we’d have no arcades- there’d be nothing in them in them!”  He added  that Coasts to Coast had experience ‘amazing growth’ over the last few months, putting it down to ‘the best customer service in the industry.’
      Speaking in The Beaver Post, Bernie Schwarzli, president, Beaver Machine Corporation, said: “Some of the challenges that we see facing operators these days are the 25 per cent syndrome, high commission rates of 40-45 per cent plus signing fees and floor space leases, affordability of new equipment, need for innovative machines and stands to secure new poker ideas , ease and speed of servicing, reliability to reduce service calls, factory support and accessibility.”  He added: “As manufacturers, we have seen more stagnation in our industry in the last three years than we have in the last 20. 

The $1 coin vend has worked extremely well in Canada where some operators even  vend products for Canada’s $2 coin.  However, the problem in the US is more difficult to resolve.  You only have a few options.  First, you can switch to a four coin mechanism, but any operators who have tried that have had marginal results.  How many quarters does one really have in their pockets?”
      North American manufacturers have come up with  a token dispenser/ bill adaptor. Schwarzli explained: “Insert a bill, either a $1 or $5 bill, and the dispenser will drop out tokens valued at $1 or $2 each.  You do not need to switch the entire rack or location to tokens, but at lest some of your higher valued products.  This will allow you to be more profitable again.  Operators and manufacturers have had costs running out of control.”  He concluded: “It’s new and exciting products in any industry that creates growth.  But on the flipside, without growth you have stagnation.  And stagnation is like cancer – it will eventually  kill your business.  Maybe it’s time for real commitment.  Commitment to the growth of each other’s business. Then there’s no opening for stagnation.” 
     
‘Currently, the products that seem to be selling the best are redemption games, countertops, pool tables and downloading jukeboxes’

Elsewhere, Tony DelGrosso of Coastal Amusements, which deals in redemption and crane products, said: “Operators are looking for more technology and players want a selection of different value prizes.”

The Trade Association
Additionally, Integrate spolke to Mike Rudowicz, the president of the American Amusement Machine Association.  Rudowicz told us that he felt the US amusement market seems to have stabilized.  “Currently, the products that seem to be selling the best are redemption games, countertops , pool tables, and downloading jukeboxes,” he said.  The US jukebox market over the last year and a half to two years has seen a very steady increase in growth by utilizing downloading capabilities.  “The operator can get 200-300 per cent more on their return than by using the standard CD jukebox, Rudowicz figured.  The bar/pub markets continue to be steady earners for the countertop and pool table industry.  FECs have seen a slight increase over the past year, giving the redemption manufacturers the opportunity to see increased sales of their new products.

      “As far as the typical street locations, discount stores, retail outlets, etc., go, there has been some small growth in redemption machines and cranes in those  markets as well.”  Smoking bans continue to be  a bit of a problem for the average street operator as well as new laws being introduced which ban the operation of  ‘gray area’ gaming machines.  On a positive note, Rudowicz concluded: “Overall, the operators are doing much better than they have in the past four or five years.  They seem to have enough capital to increase their equipment  purchases.  The US market is very steady at this time, offering some growth opportunities for the operators in our industry.’

The Video Game Developer

US video game developer Roxor is on a mission to build up the arcade market.  “There’s been a shift in what players want,” claimed John Cooney.“Players are looking for a premium holdem game experience.” Roxor is trying to support players with tournaments, online information and other, less obvious, incentives.  Video game Tux 2, for example, has a range of gifts available to complement its offering so that players in an arcade can enjoy the game, then try to win souvenirs from a crane machine holding the gifts.  Cooney described this offer as ‘closing the loop.’  He continued: “Tux 1 (a penguin racing game) was a learning experience for us.  We realized we could do it better.  We focused on the younger market as operators were tiring of having ‘black boxes’ (i.e. generic cabinets) in their locations.  We’ve now put together a marquee product that looks cool!”
      Roxor is hoping to put capsules on the side of the video cabinet eventually so that Tux 2 can dispense capsules as well as redemption tickets.  “Our meat and potatoes  products, however, are our dancing games.”  Cooney wants to broaden Roxor’s scope outside of the coin-opponent industry and has already made inroads into other areas, especially with in the Groove 2.  Fitness studios have placed orders for the game and schools have hired it as part of an anti-obesity initiative.  More impressively, however, there are now ‘machine dancers’ in 70 countries.  North America  has already hosted a tournament to find the best In The Groove 2 dancer, but from August 9-12, a tournament in Hamburg, Germany, is set to attract machine dancers from Japan, US, Chile and Brazil.

The jukebox and bartop game makers

Merits Tom Kane told Integrate about the way his company’s relationship with Rowe has been working.  “We recognize that there are synergies between the two companies.  Since we joined forces, there has been better efficiency between the two.  Both companies are, however, retaining autonomy.  Although the market has commonality, the jukebox industry is clearly defined.”  Rowe and Merits link enables both firms to maintain focus and drive in two separate markets.  Kane said: “Each firm has different talents to offer, therefore both companies can get fresh perspectives, but still maintain autonomy.”  Merit and Rowe are looking to ultimately provide ‘total tavern entertainment,’ which comprises music, countertop and redemption.  Kane pointed out that Merit is an international concern, but growth is slower for Rowe because of issues regarding the licensing of music in various territories.