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UNITED STATES MARKET REPORT
Kiddie rides: This niche market continues its decline due to a shrinking children’s audience. Kiddie rides are typically operated along with bulk vendors and cranes. They have often been relocated from the sidewalk to inside a retail outlet. Total 2009 revenue was $33m from 10,500 machines, each
generating $60 weekly. Amusements in parks: The International Association of Amusement Parks and Attractions (IAAPA) represents more than 400 amusement parks – many with on-site arcades – and traditional attractions. IAAPA recently released its 16th Annual State of the Family
Entertainment Centers Industry Report for 2010. Although it was an unscientific survey, the information was gathered from active members of the amusement parks/family entertainment centres category.
Statistics revealed:
61.3 percent owned their own arcade games. 16 percent had a revenue-share arrangement. 22.7 percent owned some games and participated in revenue- share for others. 66 percent said arcade games are less than 25 percent of their gross annual revenues. 38 percent operated their games primarily on tokens. 35.3 percent operated on a card system. 12 percent used quarters (25-cent coins). 24.8 percent of family entertainment centres’ mean total revenues are redemption.
Trends and opportunities Manufacturers, importers, distributors and retailers of
children’s products are now required to comply with new federal limits for total lead content in toys intended for children 12 and under. The regulations are part of the Consumer Product Safety Commission’s new guidelines. Lead limits have been gradually phased in since 2008. All toys manufactured since then must meet the new standards. A requirement for third-party testing will take effect on 31 December 2011. One business model attempted multiple times in the past 25
years may again potentially alter the operator/manufacturer relationship. Since Wurlitzer created sales dealerships for its jukebox products in the 1930s, the American protocol has revolved around manufacturers selling their products and parts to regional distributors, who in turn sell them to local operators. Traditionally, this three-tier dynamic was not just a buy-and-
sell relationship: it was a partnership based on mutual need. The distributor frequently delivered the machine, set it up and supplied the parts and repairs. Perhaps most importantly, distributors financed the equipment. However, the relationship has steadily fractured since the 1990s. Multi-location operators of family entertainment centres began buying equipment in bulk, toll-free numbers cut into established sales territories, and overnight freight services could quickly deliver parts to operators throughout the U.S. Now, a small number of manufacturers may be looking to
bypass the distributor and sell directly to operators. Although larger operators of family entertainment centres have established purchasing programmes, street operations may be next to eliminate the middleman. As most U.S. states face financial emergencies, many are
viewing the amusement category as another revenue source. Some want to co-opt it as an extension of their lotteries. Others are evaluating how amusement operators may become part of expanded money-earning opportunities, such as video lottery terminals (VLTs).
One example is Illinois, now confronting massive economic
deficits. After two uncertain years, the Illinois Supreme Court ruled 7-0 in July 2011 to permit amusement operators to participate in the VLTs program legalised under the 2009 Video Gaming Act. The state may launch its operator-run video-gaming programme in on-premise liquor locations. This should benefit the Illinois operating community for decades. However, operators still face several hurdles before debuting their games. The Illinois Gaming Board (IGB) must award a central system contract, and installation and testing will then take four to six additional months. There will also be time for public opposition. If all proceeds smoothly, the IGB will issue licences to
manufacturers, distributors, suppliers and terminal operators that have submitted gaming applications. In June 2011, the U.S. Supreme Court ruled unconstitutional a
contentious California law that restricted the sale or rental of violent video games to minors. The case, Brown vs Entertainment Merchants Association, was decided by 7-2 vote. A federal appeals court had already set the law aside. The Supreme Court likened video games to other forms of
children’s entertainment, such as books, plays and movies, that have long communicated ideas and social messages. The decision appears to indicate that video games will now enjoy protection as a form of free speech.
Industry associations The Amusement and Music Operators Association (AMOA)
was formed in 1948 to fight an attempted repeal of the jukebox royalty exemption. Although operator-focused, the AMOA also includes manufacturers, suppliers, distributors, the media and other affiliated groups in its membership. Its 1240 member companies represent a slight drop from 1254
in 2010. Operators comprise 84 percent of the total membership. Within that figure, 52 percent are smaller operations with one or two employees. The current AMOA directory lists 45 U.S. distributors and 40 U.S. state associations as members. AMOA’s operator members service a diverse customer base in
out-of-home locations. The bar/tavern segment remains the largest location type, but other sites such as family entertainment centres , bowling alleys and pizzerias have also emerged as profitable venues for coin-operated equipment. The National Dart Association (NDA), an adjunct of AMOA for
20 years, is a success story. It resulted from continued AMOA and dart machine manufacturers’ support, plus a dedicated player magazine and administration office. With international members from eight countries, NDA
sanctions 56,000 players each year. Charter holders conduct dart leagues and tournaments in more than 10,000 locations worldwide. League play culminates in the NDA’s annual international soft-tip dart tournament in Las Vegas, which is the world’s largest dart competition. The American Amusement Machine Association (AAMA)
celebrates its 30th anniversary this year. Founded by concerned amusement machine manufacturers in 1981, the AAMA actively advocates positive industry legislation, the development of promotional arenas, foreign business opportunities and more. The current 112-member AAMA roster includes: 15 allied members (providing goods and services). 16 distributor members (selling equipment and amusement machines). Two international members (outside the U.S. and Canada). 50 manufacturer members (producers of coin-operated amusement machines).
29 supplier members (parts suppliers). SEPTEMBER 2011 27
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