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From the Editor
If you 've been reading the newspapers or watching the
television news recently , it probably comes as no surprise
to you to learn that our country has entered into yet
another economic recession . Although a lot of optimistic
things can be said about the recession-proof aspects of
the amusement machine industry , one should not be
misled into thinking business will continue as usual , and
we'll come out of the period relatively unharmed . That
may have hleen the case back in '74, but things are a
whole lot different today . Unless operators act now and
do something about the current economic crisis, the
recession of 1980 will surely take its toll on this industry.
Never before has there been such a need to
re -evaluate present commission arrangements and
pricing policies . Long gone are the days when an
operator could buy a new game for less than $100 . Long
gone are the dC'tys when friendly wagering fu eled the fire
and the cash bo .es of this busin ess. Gone are the days
when a new machine would pay for itself in a couple of
weeks . What's not gone , however , and what should have
been gone a long time ago is the 50/ 50 commission
arrangement .
The lucrative gaming machines of the past are extinct
and so too should be the 50/ 50 split. Games of chance
have been replaced by elaborate sophisticated games of
pure amusement , skill , and sport. The cost of such
equipment has soared to incredible proportions while the
useful life of these machines has dwindled . Amusement
machines by their very nature tend to lose their play
appeal after a relatively brief period of time . The
transition from gaming equip ment t.o a musement
equipment was indeed a two-headed serpent.
An honest appraise.! of this transition would have to
· c~nclude that operators missed the boat during that
period. At that point in time , this industry underwent
some drastic changes . Just as the entire nature of the ·
business had changed so too relationships with loca ·ons
should have changed . The location relationship should
no longer have been considered a partnership. Instead ,
operators should .have established themselves with their
locations as being professional service companies
supplying a unique form of entertainment o the
locations' customers.
Locations should have been told that if they can'
make it without the revenue from the machines they had
n.) business being in business. Tavern and restauran
owners should not be in the amusement business. and
amusement companies should not be in the ta\'em and
restaurant business .
.
The operators of America may have missed the boat
once , but the recession of 1980 has hit , and it has hit
hard. Equipment costs , labor costs, transporation costs,
and interest rates have soared to all-time highs. How
much more can the operator take? Something has to be
done . Until 'manufacturers can provide us with ·g ames
featuring multiple coin, adjustable credit systems, one
can go only so far in raising prices . The only real solution
is better commission arrangements.
In the past there were two main deterents to reducing
locations commissions . (1) Locations could threaten to
buy their own equipment, or (2) locations could threaten
to bring in another operator. Today the two deterents are
of little concern . Today's equipment is so electronically
·Sophisticated that locations would find them prohibitively
expensive and impossible to maintain .
Furthermore , any operator still operating on a 50/ 50
basis simply cannot be operating as efficiently as
someone who is operating with a better split. The
equipment has to remain on location longer, the service
. has to be slower, and earnings reflect that . Cutting service
calls to a Ipinimum , making collections and service
rounds once every .two weeks instead of once a week,
and other such practices are not the solution.
. What is actually happening is because the operator is
hemmed in by the poorer commission arrangement he
has had to cut his services-and thpt naturally cuts
collections since the machines go longer without being
serviced. Instead , they should be serviced regularly , just
as before -only the operator needs to be able to afford
that extra service . This is where the extra ten percent
commission split can help . It can mean that an operaton
on a 60/ 40 split can service his machines more readily ,
more fre quently , and better than an operator who is
working on a 50/ 50 split. It's simply a matter of
economics , and it should be shown just like that to the
location owner who balks. Lesser service means less in
the cash box. A 50/ 50 split means less money-to the
location owner!
The time to act is now . If yqp fail to act, you may not .
.be around long e nough to regret it. You're a professional ,
a businessman , a specialist in your field, and you deserve
a fair return on your efforts. You are providing a · service
o your customers and their customers . You should not
ha e to p ay so dearly that economically you have to
reduce the services you can provide as a professional.
After all, what other service business pays their customers
for doing business with them?
.
Ralph C. Lally II
Editor and Publisher ·
6
PLAY METER, June, 1980