tapping the huge replacement market discussed earlier.
Distributors' issues
The following two issues refer specifically to
distributors.
The flood of new games has put a strain on the
financial resources of distributors just as it has the
operators. As we all know, the prime rate is hovering
around 20% which means that borrowing for most is in
the 21% and higher range.
As a manufacturer who is also a major distributor and
operator, Sega/ Gremlin is sensitive to the financial
pressures of distributors. Distributors are being
squeezed from both sides: the manufacturer with ever
increasing R&D and normal inflationary factors
increases its prices, and expects the distributor to take
large inventory positions. On the other hand, the
operator wants price relief from the distributor. More
about this subject later.
Distributor complacency. Lastly, with the industry
issues just discussed, it is obvious this is no time for
distributor complacency- not a time for believing that
record sales levels will continue indefinitely without
returning to the basics which have, made distributors an
integral part of the industry.
The handwriting is on the wall for anyone to read: If, in
the long run, distributors do not provide a method to
satisfy the critical "trade-in" problem, the operator will
find and develop alternatives that may be less than
desirable to us all.
It bears repeating that the real fuel of our industry's
growth is player revenues. Without the revenues, the
operator cannot buy new equipment from the
distributor- and on up the ladder.
If player revenues are to continue at the record levels
we all enjoy today, the player must be offered a
continuing series of new and interesting games. We
cannot return to the past where simple cosmetic
changes or rotation sufficed.
Our UNIVERSAL-FOUR
coin chute - a Greenwald
design -
lets you Increase prices in
seconds
from 25e to $1.00, without changing coin chutes.
.....
GREENWALD INDUSI"RRES
O<"'·•IO<'Iot.,•l'••,..tC:o~•"r WO(
1340 METROPOliTAN AVF. .• BROOKlYN, N.Y. 11237 • TEl. 212 45&-8800
TElEX 1-2281
CABLE AOORESS GAEENCOINS NY
Operator's dilemma
When faced with a decision to purchase a new game,
an operator, therefore, has three options: (a) buy the
new "hot" game, (b) refuse to buy the game, or (c)
bootleg the game.
It the operator chooses to bootleg a game-that is to
say, bring in an illegal copy- or if he refuses to buy the
new game at all, both the distributor and the
manufacturer lose out.
On the other hand, an operator's decision to buy a
new hot game today is a real economic problem to him
because eight months from now the game may have little
trade-in value.
This is the type of problem that faced operators in
Japan two years ago.
Sega/Gremlin system
For the past two to three years Sega/Gremlin has
been working on a concept which is founded in the real
economic needs of distributors and operators. During
the past two years, in coordination with Sega Japan, we
taken this concept and put it through the tedious
of implementation and field testing.
remlin has studied, reviewed and analyzed
characteristic and trend from both the
the distributor and the viewpoint of the
Japan being both a distributor and
mber 15, 1981
"And here is one of our really high- class
machines ... "
11