This September 5th marked 29 years since I first got “hired” into the business as a pinball mechanic. In that time which has passed so quickly I try to learn something new every day, I’ve made many friends, laughed and bled and have been fortunate to share what I have come to love and know as the coin-op amusement industry.
With that I have been asked by my friends at RePlay to pen some thoughts on a regular basis for the premier industry magazine. I am proud and happy to share my opinions, observations, musings and experience. I won’t have the same ax to grind every time and I have a great love and respect for the many individuals which make up our industry.
Most of my time is spent talking to customers making sales. Somewhere in there are the calls and e mails when I talk to other distributors, manufacturers, operators, programmers, designers, consultants, experts, princes and princesses of our industry, players and lovers of what we all do.
I get some calls from industry people who feel down sometimes and need a laugh. They know that I’m Mr. Positive, usually always upbeat and optimistic. My blood type is B Positive so it’s truly in my blood. I do not dwell on the negative or associate myself with negative people. If it cannot be done let’s figure out how it can be done. If it works, is there a way to make it better?
There’s a cabinet in our office and on it’s shelves is just about every issue of RePlay magazine since 1975. Sometimes we will take an issue and look through it at lunchtime. To read the things people said years ago, to see the games touted and see the pictures of how funny we looked. Those back issues offer an insight to the people who work with me and want to learn more. Are we in a growing industry or driving into a dead end road? Have we really turned the corner or have we made two left turns at once for a U turn? Here in New Jersey three right turns make a left turn.....that’s called a jug handle. Through many of those back issues the question is often asked and answered, where are we going as an industry? Some of those back issues point out the same problems facing us today as an industry which have not changed all that much.
Today we read and hear a lot about the “Three Tier System” I’ll call “TTS” of Manufacturer, Distributor and Operator. The lines are really blurry now. We have Manufacturers that Distribute, Distributors who manufacture, Operators who distribute, Distributors who Operate, and everyone sells to whoever can pay them at some point in time. Everyone is competing to make a sale to whoever they can make it to, wherever they can make it. Make the money while you can make it is the battle cry. I guess that makes sense. It’s a mess you may say but in talking to friends of mine in other industries we are not alone in this evolution based on market conditions and the Internet.
Is there still any loyalty to the TTS? A lot of operators now use eBay to sell their used equipment. They get cash and sometimes a few bucks more than they would on a trade-in to their local distributor. Other operators and even locations buy this used equipment online and that takes dollars out of distribution’s pockets. Distribution serves a vital role for many operators but everyone wants a break now and then. Some operators say that their distributors compete with them for locations. Others resent having only one local distributor who dictates prices and terms to them, so they shop outside of their area to an out of state distributor who is all to happy to sell to them.
Some manufacturers sell their products online bypassing and competing with the same distributors they sell to. Once in a while a manufacturer may try to promote a minimum advertised price or suggested selling price online but pretty much anyone can advertise almost anything at any price. They may not even have that item available but the mere listing will sometimes drive other dealers to follow and lower their selling prices. Of course the manufacturers can choose not to sell to that dealer but it gets technical after that. What manufacturer today wants to close channels of distribution anyway? A sale is a sale, maybe a lower profit margin for the dealer equals a better buy for the customer. Some dealers say “we’ll make it up in volume”.
There are some manufacturers that feel they are not getting their fair share of marketing and promotion from their distributors. Maybe that’s the root of the IT decision to sell direct to AMOA members. I don’t know enough about it. We all read that some distributors dropped the IT line to focus on other products from manufacturers that still support the TTS. Maybe other manufacturers will follow the IT lead and try it too. The cash box rules, if it fills up the game sells, no matter who built it and no matter who is selling it! I can understand the frustration a manufacturer has when a distributor is not fully behind their product especially when they support a competing product from another manufacturer. The entire industry now understands that Operators will no longer buy just a “good” game. Every game they buy now needs to be a great game or at least a piece of equipment with earning legs long-term.
Distributors cannot represent every product on the market either. They must also choose what they will sell, service and support and at what profit margin. When the fruit stand is only selling oranges and your customers want apples what do you? I would go find apples somewhere, maybe even invest time and money and plant my own apple orchard and be the only one selling those apples.
The industry as a whole cannot fault and punish each other at this point in time. In many ways it does cooperate, promote and market together through the industry’s associations. With a shrinking operator base caused by a shrinking location base all of the parts of the TTS are scrambling to find new ground to fuel the engine that keeps them going. Some manufacturers believe that a great game alone can drive the industry, look at Ms. Pacman, but great games are few and far between. As an operator from Brooklyn years ago I selfishly believed that the engine that drove our industry is it’s Operators. I believe that today too.
Today’s operators have a lot more advantages than I had and probably less competition. Maybe some extra headaches too like smoking bans and rising health care, fuel and insurance costs. Most are now larger and more established companies able to weather the storm. I remember being crushed at the Conrad Hilton trade shows years ago full of operators. Today many operators do not attend the trade shows opting instead to stay home and work the business. One great way for an operator to find opportunities is for them to visit their local distributors and learn. See what new products are making money. At an Open House you can talk to the factory reps there. OK they’ll tell you every game is making big bucks somewhere. Years ago my distributor would call me touting the latest video game that was making say $800 at XYZ Location, then ask how many do you want?. My wise guy answer was just one...the one at XYZ location. But you can sort out what’s real and what’s not. After you do that go out and visit as many of your locations as you can. Go at peak time for that location, not when it’s empty without customers, maybe even interact with them to get more insight. Go to your competition’s locations if only to see what they have. When I operated every other operator was a friendly enemy and we competed fiercely. Today many operators became friends, he stays on the east side of town and you stay on the west side. Good for you as an operator because you no longer “jump” each other’s locations but bad for the locations who have no real catalyst forcing an operator to buy anything.
New technology usually forces operators to buy. That happened with video games, solid state pinball, CD Jukeboxes, touch screen games and Golf games and finally downloading jukeboxes. Other equipment that may require some maintenance or attention gets bought as part of a mix of games in a street location and not usually the prime earning piece there but to satisfy someone’s request at the location. OK every game there can’t be the number one earning game.
The growing catalyst in our industry seems to be unhappy location owners with older games and declining revenue year after year. The many trade shows which have coin-op games represented for the locations and players to see along with the mess on the Internet now empower many more locations to buy their own games. Some businesses like Bowling Centers have a staff of technical and mechanical service people easily able to make repairs on coin-op equipment. As operators you must show your locations why they need you. Contracts alone will not do it for you. Keeping old-dirty-half-working games in their locations is wearing thin. Maybe some of those locations are no longer viable. Maybe some just need newer equipment. I’m sure the majority of operators have clean top notch working games out there. They don’t all need to be new but they need to work and players need to see what they are playing to keep putting money in them. This undercurrent will get stronger if operators do not reinvest in their businesses. The operators who do their jobs and prove their value will continue to grow in a declining marketplace.
So why does a positive optimist write about such realistic topics? To remind you that you can control most of what happens in your business. Whatever part or parts of the TTS you are in, remember that our end user, our customer is the player. We’re in the amusement business. That customer is paying for a bit of fun, maybe a prize, a chance to compete, smile and laugh. This is a great business to be in and when you wake up be proud you’re part of it.....I am.
Jack Guarnieri started fixing electro-mechanical pinball machines in 1975 and has been involved in every phase of the coin-op game business since then. He operated a substantial game route in Brooklyn, N.Y., developed amusement centers and was called in as a consultant to manage Mondial Distributing and State Sales in New Jersey. In 1999, he founded PinballSales.com to sell coin-op to the home market. In 2002, he founded ShuffleAlley.com and released the Parker Bohn III Pro Bowler game, reviving the shuffle alley. His positive attitude, honest insights and opinions have made him a popular figure in the trade. While managing and growing his businesses, he still consults inside and outside the industry, and his marketing, promotional and business management expertise are widely sought. He's very active in his church, community and charitable causes as well. You can learn more at his websites (http://www.pinballsales.com/ and http://www.shufflealley.com/) or by phoning him at 866/323-JACK. Email is Jack@Pinballsales.com.
© All contents of this page and the entire RePlay Magazine website at http://www.replaymag.com and http://www.replaymagazine.com Copyright 2003 RePlay Magazine. All rights reserved.