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Last rites for UK AWP?

The lat reviews of stakes and prizes for AWP  games was five years ago.  In the meantime, the business  has struggled against more favoured competitive elements.  It is a ‘Government plot?’ David Snook investigates

The country which gave the world the AWP (amusement with prizes) machine, is rapidly turning into the Sick Old Man of Europe  in AWP terms.  With governments apparently more acutely aware of the value of the low-stake low-prize machine in so many other European countries, British operators are now feeling very much left in the cold.
      Spain has the best AWP  laws, most concede, but the British would probably settle for the better parts of the Dutch law, or even the new German law.  The Italians, who specialize in applying new laws in the most chaotic manner imaginable, still provide a better deal to their AWP operators than British legislators.  It is not that the Gambling Act 2005 has legislated against AWO operators, but by  missing the regular review of the price-of-play and top prizes, and combining that with opening up alternative forms of coin machine gambling, the legislators have created a playing field which is by no means level.


      A man who could play an AWP in a pub five years ago for 30p (42 eurocents) with a prize of £ 25 (€ 36), can still only play at those levels today.  In the meantime, he can now walk into a bookmaker’s shop (where players can Betfair’s on horse racing ) and play a roulette game on a video screen for a £ 500 prize, betting for higher amounts.  This has created major problems for AWPs in pubs, with average cashboxes down by 30 per cent, resulting in operators cutting back on their buying or doing a deal with a manufacturer to ‘green’ his old machines.  This is a modern term for refurbishing, converting an old game with a new program and cleaning it up to make it look like a ‘new’ machine.  A few years ago the aristocrats of the UK machine manufacturing business with their dominant position in both the home market  and lucrative export sales, would have turned their noses up to any thought of greening machines, but it is now more than 50 per cent their AWP production.     

The other effect of a lack of buying is that manufacturers have savagely cut their research and development budgets.  And in turn, that means that they are not investing in export products.  The British have therefore surrendered their lucrative overseas sales business to the aggressive manufacturers in Spain, the Netherlands and Germany, all of whom have a better balanced gambling industry at home as a basis.


      Some elements in the UK trade firmly believe that it is all “part of a Government plot” to eradicate the AWP industry, to get machines out of pubs, close down arcades and keep gambling to the National Lottery, to the incoming casinos (which form the majority of the new Gambling Act) and to the fixed odds betting terminals (the roulette games in bookmaker’s shops, FOBTs).
      They believe that the refusal to apply the Triennial Review in 2004, was also part of this ‘plot’.  The UK looks at the levels of stakes and prizes every three years and the Government takes advice from its Gaming Board (replaced by the Gambling Commission in 2005) on what the new levels should be in pubs.  The last review was in 2001; it was due to be revised in 2004, but with the coming of the new Gambling Act in 2005, the Government decided to leave the issue for the Gambling Commission to sort out once it was in business.  The problem with that is that the Gambling Commission has had far too much setting up to do, although it originally projected to sort out the stakes and prizes issue by September of 2006.  By common agreement, if that was to happen then there would be little left of the AWP industry by that time.
      Ironically, one of the last jobs the old Gaming Board undertook was to recommend to the Government new stakes and prizes of 50p and £ 35.  If that had been taken up two years ago, the predicament of the AWP industry would have just been rocky, rather than disastrous.  Whatever happens, the imbalance between the gambling facilities offered in pubs and those offered in bookmaker’s shops in the same street (AWPs versus FPBTs ) will probably never be overcome.

      There are now talks taking place between the Gambling Commission and the industry representatives to try to sort out the mess well ahead of September 2007 but still be too little, too late.   Meanwhile, there are also those in the industry who do not subscribe to the view that it is all a ‘Government plot.’  Basically, they don’t credit the Government with the industry awareness to develop devious thinking!   It is probably more akin to the Italian situation, where bungling by those in authority creates imbalances in the market place.
      Is the AWP still pertinent in today’s market?  It is a question that perhaps should be looked at.  In 1968 a protectionist  Government sought to create a level of gambling in pubs and arcades which would not become compulsive, but which neatly balanced the stake and the prize at a point not too high but high enough to entertain without fleecing the player of all he has, and at the same time introduce an element of excitement through a minor gamble or ‘flutter’ as the British put it.  The AWP has traditionally held those values.  But does the player need protecting these days?  With casinos in the UK no longer requiring membership and a 48-hour or 24-hour cooling off period before you can play, plus the ability to walk into a bookmaker’s shop and gamble everything you have on a video roulette game in minutes, then the protectionist elements in rigidly setting stakes and prizes might be out-dated anyway.

“A few years ago the aristocrats of the UK machines manufacturing business with their dominant position in both the home market and lucrative export sales, would have turned their noses up to any thought of greening machines, but it is now more than 50 per cent of their AWP production”

If, however, the UK Government does want to keep an AWP industry and importantly, keep that industry in pubs, because alternatives may be less acceptable- then it needs to address the outdated stakes and prizes issue urgently. And perhaps also address the imbalances in the high street (again , the AWP versus the FOBT), which is so imbalanced that it has become ludicrously distorted.

Australia: a decade of contraction

David Snook finds that the amusement business Down Under has suffered, but it now seems to have ‘bottomed out’

Australians are the world’s  most prolific gamblers.  That is not big news- it has been a statistic for years.  The culture of ‘pokies’ (poker machines, slots played with card symbols) is as embedded in Australian culture as the can of beer and the country has 250,000 of them, installed in international-standard casinos right down to hotels (pubs) and even the machines in pubs have an infinitely higher stakes and prizes level than the average AWP machine so familiar in several European countries.


      But what of the rest of the traditional coin-op industry?  What about darts games, touchscreen games, pool, novelties, video games, kiddie rides, installed in arcades, FECs and other street locations?  Does the iconic Aussie still play or has he abandoned the industry in favour of the competitive attractions of gambling and all of the other elements in modern society which has had a combined suppressionary effect on the traditional amusement game?
      In truth the later is very much the case.  Whether it is because of the spread of legalized gambling is debatable.  “Amusement machines rarely do well in locations wheel there are pokies,” said leading operator Malcolm Steinberg.  Thee is no doubt that gambling HAS spread dramatically over the past 20 years, from a base of 50,000 pokies  mostly confined to sporting clubs in the bigger cities, to a business four times its size as casinos have opened in every state except the Northern Territories and all states except that same territory and Western Australia have opened the doors to gambling machines in pubs and clubs.

      But the purist will always argue that the people who play pokies are not the people who will play amusement machines.  What has badly affected the games business Down Under is all the same influences which have combined to deflate the business elsewhere: consumer games, mobile phones, other forms of amusement and demands upon leisure spend.
      It has been a profound effect, whatever its source.  The enigmatic Steinberg, once the dominant force in Australian games; the biggest distributor and the biggest operator with over 100 of his Timezone arcades dotted all over the country, now has just 14 left.  Main rivals Village and Galaxy are the only other substantial arcade operators although AMF Bowling must rank as a substantial operator and of course there are the well-known Hankin family who have their own outlets and Tunza Fun.  The ever –Sharp Steinberg long since recognized what was going to happen to Aussie amusements and shifted the emphasis of his business outside of the country.  Now his Leisure and Allied Industries is a major international manufacturer of amusement novelty and redemption games with an extensive factory in Indonesia and Timezone operating outlets across south-east Asia, specializing Indonesia, the Philippine, Singapore and Thailand.
      He now reckons that Australia only has 70-80 arcades left out of 200 10 years ago.  His best bet is that less than 10 per cent of games are now housed in arcades. Additionally, there are amusement devices in numbers in about 100 tenpin bowling centers across the country.  The business has moved into a wider-based appeal for families, just as it evolves in other countries, with as many as 20 family entertainment centres now operating in Australia, offering a broader span of attractions such as skating, bowling, park rides and food areas.  But against the international trend, they are stand-alone structures, not housed in shopping malls as entertainment anchors to supplement the shopping facilities.  This is because rents in shopping malls tend to be beyond the reach of operators.
     
‘The redeeming feature for just about everyone is the fact that redemption games are either permitted in most jurisdictions or are at worst tolerated with merchandise prizes as the draw’

As for distributors in this depleted market, there are only two majors remaining, AMD in Sydney and Zax Amusements in Melbourne, and also competing in this depleted market are Gamemasters, Escape Electronics, AMARDA, George Campbell, Reflex Games, Highway Entertainment and Big Top Amusements.  The redeeming feature for just about everyone is the fact that redemption games are either permitted in most jurisdictions or are at worst tolerated with merchandise prizes as the draw.  Pushers and cranes are also allowed, with the tokens used for pushers redeemable for the merchandise.
      At AMD Bruce Colbourne has no doubts that the reduction in the amusement industry in Australia had much to do with te rise of gambling machines.  “When each state government set the regulations for the operating video poker machines in hotels (pubs) approximately 10 years ago, the amusement industry was severely affected.  In most states the publicans buy and operate their own machines.  Our market has now settled down and amusement game income in bars is once again at acceptable levels.  But to compete with poker games operators have to promote and operate all games in order to be competitive for player spending.”

‘Pool tables remain fairly steady, concentrated in pubs and clubs, although the suppliers often appear to give a high percentage of income to the location.  Juke boxes are also steady’

Steve Patan at Reflex Games, based in Melbourne has been distributing amusement equipment in Australia for almost 30 years, concentrating mainly on used equipment in recent years, buying from and selling to operators all over Australia.  “The industry has shrunk significantly over the last few years but appears to be stabilizing,” he said.  “Most of the business is now concentrated in arcade, pubs and clubs, movie theatres, bowling centres, shopping malls and holiday-based locations.”  He said that the only area of growth currently is in prize redemption machines.  Cranes, chocolate cranes and games like Stacker, he said, have performed well, mainly in arcades and shopping centres.  “Pool tables remain fairly steady, concentrated in pubs and clubs, although the suppliers often appear to give a high percentage of income to the location. Juke boxes are also steady.  There has been a reasonable flow of digital boxes into the market, mainly in pubs, but most would be conversions from CD juke boxes.
      “In the video game sector, gun games have probably supplied the best returns over the past four years, with games like Big Buck Hunter and Extreme Hunting doing well in street locations and games like Ghost Squad and Time Crisis 3 and 4 performing in arcades.  Golf games have also done reasonably well in pubs, although they may have started to recede recently.  Touchscreen games have also improved in certain pub sites, mainly due to the popularity of Texas Hold’Em.”


      The problem for Australian arcades with video games is the same as anywhere else.  Big names like Maximum Tune, Mario Kart and Initial D are good performers but mean some delicate calculations by operators to compare incomes with high initial cost.  New joystick video games are likely to be found only in the occasional arcade where they may earn enough in a short space of time to justify their purchase.  Ticket redemption remains the backbone of most arcades, but has to be supported by a prize counter with a good range of quality, ever changing prizes.
      Of the individual style of non-gambling machines, pool tables remain the strongest single sector, always popular in hotels and bars with a strong supporting leagues and poker tournaments structure.  Surprisingly, jukeboxes are strong in Australia.  Surprisingly because in almost every other sector of the international market the jukebox has been very much the ‘poor relation’, made unattractive to operators by high installation costs and crippling performing rights dues.  Australia has some indigenous manufacturers of the phonograph, which of course helps to keep purchasing costs down.  Equally surprising kiddie rides is a small sector, despite a young population and the ready availability of low-cost rides from a welter of south-east Asian producers.  Pinball is also strong in relative terms and while the numbers of coin-op video games make it one of the larger sectors, in reality coin-op video is a pale shadow of its former self.  What helps to support pinball sales is the strong resale value to the ever-increasing home sales business as they are now regarded as collectable.

  ‘Pinball is also strong  in relative terms and while the numbers of coin-op video games make it one of the larger sectors, in reality coin-op video is a pale shadow if its former self’

at Austral Amusement Co., Shane Dove, one of the directors, commented on the recent trade show held in Sydney by the National Amusement Machine Operators Association in conjunction with the Amusement Machine Operators Association of Queensland and the Australian Vending Association.  “It could be said that it was not one of the best trade shows ever held in Australia, with the absence of names like Zax, Gamemasters and Win and Grin, who would have brought along twin driving games, shooters, dedicated video games and redemption pieces which were not there as a result.  They did not show for a ensure that Australian operators get the chance to see all of the available new product, without which the industry cannot thrive.”
      He added that pubs and clubs were “doing OK business where there are not too many poker machines.”  Unlike their cousins in the UK, poker machines are owned buy the pubs and clubs, not by the operators, and are linked to government monitoring sources to ensure that the authorities get their ‘cut’ of the machines take.  There are two big markets in Australia – the bar market and the arcade market.  These are completely different from each other.  For one, there are 10,000 bards in Australia, but only 40 large, profitable arcades, including those that are part of cinema complexes or bowling complexes.
      InterGame spoke to Australia’s largest distributo9r, the Melbourne-based Zak Athanasiadis, managing director of Zax Amusements.  His firm serves large cinema chains, bowling centers and hotels, is Global VR’s distributor in Melbourne and Golden Tee Live’s in Sydney.


      Currently, the bar market is being dominated Big Buck Hunter Property.  Athanasiadis reckons it outsells the next closest machines, PGA Golf, by up to four times.   As it is quite an expensive until, there are only around 150 pieces in the market, but Athanasiadis is convinced it will continue to Seller until the end of the year.  Depending on whether the location is Sydney or Melbourne, where there are slight differences in sales, the next four popular machines in the bar market after Buck Hunter are Silver Strike Bowling, PGA Golf, Golden Tee Live and Extreme Hunting.
      Athansiadis puts Big Buck Hunter Property’s popularity down to the fact that players are guaranteed a certain amount of ‘play time’ on the game, regardless of their ability.  A game like Time Crisis 4, which does exceptionally well in arcades, can’t compete as novice players soon find themselves facing a big on screen ‘Game Over’ sign.  “Australia is the second largest Big Buck Hunter Pro market in the world (behind the US),” he told us.
      Clearly, Australia’s drinking culture has a big bearing on what video games gain popularity in its bars.  “With Big Buck Hunter Property, which is a singe player game, people can have a beer in between,” revealed Athanasiadis.  In addition to the above-mentioned games and Big Buck Hunter: Call Of The Wild, Merit’s touchscreen games are ‘everywhere’ in bars, but SWPs such as Who Wants to Be A Millionaire are only legal in two states as the other five states ban all machines that incorporate a hopper.
      When asked about the penetration of darts in bars, Athanasiadis was unequivocal in his opinion.  “Shocking.  Maybe 20 years ago, when every bar in Melbourne seemed to have a dart board, but not any more.”  Pool, conversely, remains an Australian bar staple.  “Every bar has a pool table,” claimed Athanasiadis.  These are made relatively cheaply RRP AU $ 1,500 (US $, 148) on Australian shores by a number of different manufacturers as they are too expensive to import, given their size and weight and Australia’s remote location.
      In terms of video games, Time Crisis 4, while not pulling in the pub punters, is going great guns in the arcade market in Australia.  Nomco’s Maximum Tune 2, Sega’s Ghost Squad and Initial D 3 follow close behind, then the four-player World Combat, from Warzaid.  Need For Speed and the motorcycling sum Fast and Furious both do well, but the income they bring a lot of money too.


      “There’s  a fundamental difference between the two kinds of distributors in Australia,” Athanasiadis told us.  “The ‘A’ grade operators of the major FECs will gladly take on new machinery and make good money as a result, whereas ‘B’ grade operators will wait two years or more after a game’s launch before they’ll take it on.”
      Australian operators tend to struggle unless their arcade is part of a bowling complex, cinema multiplex or is positioned in Chinatown (there’s one in each major Australian city).  In Melbourne, for example, only two arcades that don’t fit into one of the above categories have survived.
      Athanasiadis had some controversial words to say about Australia’s trade body, the NAMOA:  “The members of the board have been around for so  they’re out of touch.  The machines they’re moving around should have stopped circulating years ago.  Time Zone, the second-largest arcade group after Village 9 Leisure, don’t even bother attending he meetings they’re  waste of time!  However, NAMOA  is good at sorting out insurance premiums and representing our cause when it comes to dialogue with government.”
      In Australia, operators tend to stick to either pool and jukeboxes or video games and amusements.  The ones who try to straddle both areas tend to specialize heavily in one area and merely pay lip-service to the other.  “Every second person is making their own jukeboxes these days,” said Athanasiadis.  Bytecraft, which bought out Pioneer Jukebox rental, is a major player in the jukebox market and the likes of Wurlitzer and Rock-Ola are still going strong.


      Although Sydney and Melbourne are by far the busiest cities in Australia, recent domestic trade shows have been less than inspiring, Athanasiadis told us, with  this year’s Sydney event ‘poorly attended.’ The middle of 2007 will see an expo in Melbourne, due to pressure from Melbourne-based operators, manufacturers and distributors.  Australia doesn’t tend to export amusement and entertainment equipment as manufacturing cists are high, especially compared to China and Taiwan.

‘In Australia, operators tend to stick to either pool and jukeboxes or video games and amusements.  The one who try to straddle both areas tend to specialize heavily in one area and merely pay lip-service to the other’

      “To promote new products, the best market is the bar market,” said Athansiadis.  By way of an example, when Extreme Hunting came out, it sold over 500 pieces, 95 percent of which were in bars.
      The market Australia has unquestionably contracted over the past 10 years or so, probably because of the growth of gambling machines, but also through the same effect which have eroded the business elsewhere in the world.  It appears to have ‘bottomed out’, however, finding a new level which demands a high quality environment and a wide diversity of attractions in order to appeal to the widest-possible clientel.  No-one wants to be drawn on where Australia goes from here, but the universal resort to cynicism certainly leaves the observer uncomfortable

 

 

 

 

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