Amusement machine industry not actually in shambles?

kiwasabi

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Amusement machine industry not actually in shambles?

So while talking with fellow klov member editor in the guitar hero thread, he pointed out something extremely interesting. The amusement/arcade industry is actually doing well, but is being ignored by the consumer press. Here is our conversation so far. Sorry this isn't better organized for those of you just joining in; I'll quote some specific comments that I found especially interesting in a reply.

I've always wondered how Chuck E Cheese is doing, do you have any links?

Also, one thing I always wonder about with someone like Dave n Buster's or Chuck E Cheese is that they get all of these machines with loan money, and then are able to post profits because they're bringing in more revenue than money they're spending to pay back the loans. But isn't this only temporary? It could take 10-30 years to pay the loans back, and by that time the machines have definitely stopped making as much money (and most machines have probably stopped making the majority of their money after the first, what, 3-5 years?). I mean by that point they've probably taken out new loans, bought new machines, and are then using the new loans/machines to continue paying back the old loans, but have they ever actually made much money off the machines? They have so many machines that cost $5,000-8,000, and I can only imagine that there are more than a couple that never come close to paying for themselves.

Sorry if I'm rambling, didn't sleep very much last night. Feel free to let me know if I need to clarify anything.



No - I think I got the jist of the point you were making.

Right lets deal with a link to the CEC profits:
http://arcadeheroes.com/2009/10/31/chuck-e-cheese-posts-profit-jump-in-q3-how-is-your-arcade-doing/
[Note - while there look at the Dave&Busters numbers]

Next to the point of loans. No your incorrect, what we see is a distributor agreement that leases the machines, and agrees a buy back for purchase of the next system. The big chains able to employ more buying power and diversity. The idea that the market is crumbling is wrong, but to be frank if I depended on the news for the consumer games media for info on amusement I would think its dead.

Some information (sorry to bore those not interested) - a amusement machine sells in the order of 100 to 2,000 units depending on success - average prices are between $6k and $14k. Machine sales are up on 80's numbers, but the number of manufacturers is way down (big slices on small pie). Machines are placed in venues such as cinemas, family entertainment centers, bowling, miniature golf, laser-tag, retail, sports bars, etc,. This is a diverse and complicated market - and has not depended on old style arcades since the end 89' (don't tell the consumer press!)

We have seen a major upswing in amusement machine interest in this 'recessional' market - though the skill and redemption machines have seen an even bigger upswing.

I can't put enough force behind this final point; the consumer game scene is not here to promote the amusement sector, so you will have to dig for yourself for accurate arcade news. Even when I write for the consumer media they edit my coverage (amusement seen as a competitor to their business, and difficult to cover).

(At this point I made an ill-informed point about the amusement industry being in the toilet, to which he corrected me)

Kiwasabi - where do you get the notion that amusement "is already mostly completely destroyed"??

It is this kind of ill informed statement based on no facts that perpetuates the myth and allows others to profit. As I supplied above - CEC is doing great guns, D&B doing great, and the cinema sector sees amusement as a valuable maximizer to their business. The bowling sector is phenomenally successful for amusement. That is not a "completely destroyed" industry by any perception... other than by a console fan boy!

All that said, amusement is hurting - we see an industry staggering to define itself in the new business model of public-entertainment. Products like the GamesGate and the new ZAZOOX system look at mixing consumer with public-space entertainment. But amusement still draws interest, especially with next years Metal Gear AM system wowing crowds.

Dear Kiwasabi - agree let take this off to another posting, did not mean to insult, or stamp on you, it is just that I get sick of hearing people claim my industry is dead, and then for them to have to think of a cleaver way to admit that there is some life!! Guitar Hero was a great example - first the consumer trade said it was not happening, then they suffered amnesia that they had claimed it would never come out or sell - now they just ignore it - and for the Konami announcement of Metal Gear in 3D, some sits tried to re-write the press announcement to cover their butts!!
 
"The idea that the market is crumbling is wrong, but to be frank if I depended on the news for the consumer games media for info on amusement I would think its dead."

"Machine sales are up on 80's numbers, but the number of manufacturers is way down (big slices on small pie)."

"We have seen a major upswing in amusement machine interest in this 'recessional' market - though the skill and redemption machines have seen an even bigger upswing."

"All that said, amusement is hurting - we see an industry staggering to define itself in the new business model of public-entertainment."
 
How do you account for the upswing given the currently terrible economy?
 
Araced - Such a Sambles?

How do you account for the upswing given the currently terrible economy?

First let me thank you for creating this thread and placing the information in a order to start the discussion.

Okay, I assert that the video amusement sector is alive and well - blooded by the erosion of the consumer game sector but still a functioning and vibrant market sector.

To answer the question - amusement is 'recessional' - meaning that in a "StayCation" market where people stay closer to home, but still want entertainment, the packaging of amusement is perfect for this penny pinching market. Also the elements of Social Gaming, Casual Gaming, Competition and Dedicated Interfaces, all attract the casual player base.

Just to reiterate, this is not the 'mum and pop' mall based arcade, but the amusement zone within a entertainment venue.

Well that is my comment -
 
I've never heard the expression "StayCation" before but that makes a lot of sense. Even when the economy is down, people still need entertainment. And possibly moreso if you've lost your job, had a pay cut, had your hours cut, etc. People need cheering up.

Regarding the following comments:
"...a amusement machine sells in the order of 100 to 2,000 units depending on success"
"Machine sales are up on 80's numbers, but the number of manufacturers is way down (big slices on small pie)."

First of all, when you say machine sales are up over the 80's numbers, I assume you're talking about the mid-late 80's and not the early 80's right? Nobody is doing Pac-man type numbers.

And aren't there less amusement games these days compared to the 80's (in terms of total number of titles developed, not in terms of number of units manufactured)? If each game is only selling 100-2000 units a piece, and there are less games being developed, how could numbers possibly be up over the 80's?

This is all starting to sound like some well-planned interview, but strangely enough it's not...
 
Arcade - Such a Sambles?

I've never heard the expression "StayCation" before but that makes a lot of sense. Even when the economy is down, people still need entertainment. And possibly moreso if you've lost your job, had a pay cut, had your hours cut, etc. People need cheering up.

Regarding the following comments:
"...a amusement machine sells in the order of 100 to 2,000 units depending on success"
"Machine sales are up on 80's numbers, but the number of manufacturers is way down (big slices on small pie)."

First of all, when you say machine sales are up over the 80's numbers, I assume you're talking about the mid-late 80's and not the early 80's right? Nobody is doing Pac-man type numbers.

And aren't there less amusement games these days compared to the 80's (in terms of total number of titles developed, not in terms of number of units manufactured)? If each game is only selling 100-2000 units a piece, and there are less games being developed, how could numbers possibly be up over the 80's?

This is all starting to sound like some well-planned interview, but strangely enough it's not...

Staycation - http://en.wikipedia.org/wiki/Staycation

Yes no one is doing 'PuckMan' numbers (US sales 98,000) - but that was a $3,000 unit - the market is much more devolved. The numbers of units sold in 80's went to a smaller but higher spend market. The current market is more diverse but slower buying period. The 80's had about 20,000 dedicated amusement facilities - we do not do dedicated, but we have over 250,000 amusement venues in the US.
 
Do you have any figures to prove that today's numbers are up over 80's numbers? What you're saying makes sense, that the 80's market was much more highly concentrated into a smaller set of venues, with cheaper units. I'm just curious to see the numbers.

Is it possible to have a Pac-man/Puck-man type of success again? If so, what type of game would it be?
 
Do you have any figures - Is it possible to have a Pac-man/Puck-man type of success again? If so, what type of game would it be?

As we run a consultancy, market information is sensitive, but I can tell you that 'Big Buck Hunter' has sold 10,000 units, while the new 'BB Safari' has sold 5,000 units (launched 2008). But you would never find a consumer game news site know this. Also there is the phenomenal success of 'Golden Tee Golf' in the sports bar scene that no one mentions either.
 
As we run a consultancy, market information is sensitive, but I can tell you that 'Big Buck Hunter' has sold 10,000 units, while the new 'BB Safari' has sold 5,000 units (launched 2008). But you would never find a consumer game news site know this. Also there is the phenomenal success of 'Golden Tee Golf' in the sports bar scene that no one mentions either.

I really don't understand the appeal of the hunting games, it seems like you get very little game for your 50-75 cents. How has Target Terror done in comparison?
 
Seems PM's would have been the way to go with this one. Or just left it in the guitar hero thread.
 
Arcade - Such a Sambles?

Target Terror is one of the best earning amusement shooting games still. While Big Buck is the most successful prize based gaming systems.

You have to remember that BB is aimed for the bar market and has a incredible following via it s prize tournament element. It is an aspect of the amusement scene that drives the console boys mad, that we are able to offer money prize tournament, while they have to avoid fraud and can only do points.

BB works well with a beer and your mates - totally different demographic - that is why the amusement (public-gaming) scene is much more complicated than just driving games and shooting games!
 
Arcade - Such a Sambles?

Seems PM's would have been the way to go with this one. Or just left it in the guitar hero thread.

We came here to avoid hijacking the GH thread - is there a problem with us talking openly here? Or is the subject uncomfortable?
 
Seems PM's would have been the way to go with this one. Or just left it in the guitar hero thread.

Sorry, I thought it would be interesting to people to hear that the arcade/amusement industry is actually doing well, contrary to popular belief. But I suppose this forum doesn't have much to do with business other than buying and selling arcade games.
 
Target Terror is one of the best earning amusement shooting games still. While Big Buck is the most successful prize based gaming systems.

You have to remember that BB is aimed for the bar market and has a incredible following via it s prize tournament element. It is an aspect of the amusement scene that drives the console boys mad, that we are able to offer money prize tournament, while they have to avoid fraud and can only do points.

BB works well with a beer and your mates - totally different demographic - that is why the amusement (public-gaming) scene is much more complicated than just driving games and shooting games!

I didn't know about the prize money aspect of Big Buck Hunter, they definitely have a big leg up over console games in that respect. That actually makes me want to find a BB tournament, haha.
 
I'm glad some people are finally mentioning this... Although Initial D and Wangan Maximum Tune should have a special place on that timeline.

Initial D was earning more than DDR at some of the "local" gameworks around here. Was always a Wednesday and Friday night group that would come and play it and race to keep cars etc.

Hopefully some of the marketing team will realize the potential for classicized modern games. Like how geometry wars is on the 360. It's basically a traditional 80's space ship shooting game but is extremely addicting because of it's ease to pick up and play.

Also a lot of the amusement centers have been bought out by the game companies. Namco owns the closest one to my house, and Sega owns Gameworks. So they get mad discounts on games I'm sure.
 
I run a small, dedicated arcade at a mall in West Valley City UT and I've been open for a little over a year and a half. We had to move locations to stay in business but once we did that, business has exploded. I have no ticket redemption and rely on nothing but videos for my income. We do have a small PC network but at the moment the arcade makes a good three to four times of what that does right now.

As I write this my place is packed with people and more are coming in. There is still plenty of interest in arcades and 2009 was a year full of great releases like H2Overdrive, Razing Storm, Tank! Tank! Tank!, Guitar Hero, BlazBlue and others.

To give you an idea of where things are for us, yesterday I pulled tokens out of my King of Fighters 98 machine and it was outearning our Tokyo Drift game which is generally our top earner next to Blazing Angels. Fighters are making a comeback and I have people asking for BlazBlue all the time. I would get it, if I had the available funds at the moment.

I know another operator who is in Utah and he tells me that his FEC location is doing better than ever this year. More arcade-only locations like mine are beginning to pop-up again, like ArcadeUFO, Arcade Infinity and I personally get e-mails from people every week looking for advice and information on starting an arcade location (I do the writing on Arcade Heroes).

The arcade industry is not dead - I know it's not like it used to be but we are certainly doing better than we were just five years ago. I believe that it will continue to improve in 2010 as there will be a number of cool games coming along. I would really like to see more than racing/light-guns (like I said, now is a good time for fighters thanks to Street Fighter IV) with developers approaching some concepts seen in the classics but they will make what the market wants at the end of the day.
 
We came here to avoid hijacking the GH thread - is there a problem with us talking openly here? Or is the subject uncomfortable?
It was just an attemt at humor as only you two had posted to that point.
Glennon
 
I found the discussion interesting. I hadn't ventured into the guitar hero thread so thanks for breaking this out into a separate thread. :)
 
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