This educational post was provided by Bill Danclovic from Trifecta Management Group.
So, there’s a reason most entertainment centers today feature an arcade as a core piece of
the concept. It is the most profitable revenue center you can have, and if done correctly can
deliver a margin of up to 90%. If done incorrectly – “game over!”
Back in the 70s and 80s, video games were so new to the consumer that they were an
attraction in and of themselves. Find a box at a mall with enough electrical outlets, wheel in
the games, plug them in and away you went. Today, not so much. With video games
approaching their 50th anniversary, the popularity of home video games and competition
within the entertainment industry, there is a lot more to creating a successful arcade than
just plugging in the games. Let’s look at the many factors that affect success in today’s
marketplace, including the guest experience, technical considerations and cost
management.
The Guest Experience
Conceptually, with their flashing lights and neon trim, the arcade brings the sizzle of Las
Vegas to your venue. Where the game room is placed is critical to creating the WOW factor
when guests arrive through your front door. From the entry they should be able to see the
game area, with sight lines to major attractions such as Laser Tag or Virtual Reality arenas
and the redemption prize store.
It’s important to note that each game has an “attract mode” setting that makes loud noises
to attract attention, however when they are all turned on and set to high volume, as one
school of thought suggests, the arcade creates a cacophony of racket that most adults find
unappealing and intrusive, flowing into other parts of the venue. We suggest that the
attract mode be left off. The volume of the “play mode setting,” e.g., racing car motors or
bells and whistles, can also be controlled and we like to set that volume so the person
playing the game can hear it, but the person at the next game six feet away cannot. Unless
you are targeting a primarily adolescent and/or younger demographic, it is our philosophy
that music should be the primary audio element, creating energy and tying the arcade into
the other areas of the facility by providing a seamless auditory experience.
Second to where an arcade is located within the venue, and just as important, is how the
games are laid out within the arcade. There are many factors that go into this decision.
Games with high profiles should be placed along walls. Games with lower profiles should be
near the arcade entry so Guests can see beyond the first row of games. The main aisleways
should lead, both figuratively and visually, to major attractions and the redemption prize
store, while other passageways meander through the game room adding a sense of
discovery as Guests move through the arcade.
Games should be clustered by category, e.g., racing games in one area, shooting games in
another area, redemption games in yet another. This is a very important point regarding
redemption games, as people playing redemption games for points, move from one game to
another and should not be distracted by trying to find where other redemption games may
be located.
Technical Considerations
First, it is critical to ensure you have the electrical capacity to power the number of games
you plan on having. We typically recommend a minimum of 60-65 games with 75% of
those being redemption games (more on that later). You should have a 20amp circuit for
each quad receptacle on the game floor, and each circuit should be on its own
breaker. Along the walls, the outlets should be spaced six feet apart and a foot and a half
from the floor. For the middle of the game floor, you can use either floor receptacles or
drop outlets from the ceiling allowing for clusters of four games around each receptacle. No
matter which type you use, quad receptacles should be spaced about ten feet
apart. [Author’s Note: Floor receptacles cost more but give the arcade a cleaner look, while
drop outlets cost less and provide more flexibility.]
The second big technical issue is how you want to activate games? With few exceptions, the
industry has moved away from coin or token drops in favor of game cards and reader
swipes. Aside from resolving the security and labor aspects of a coin drop system, game
card systems provide a wealth of data, flexible pricing by daypart and credit awards, and
can store redemption points relieving the operator of the material and labor costs of
stocking, securing and managing tickets.
Cost Management
As I mentioned earlier, we recommend redemption games comprise 75% of the game mix.
There are multiple reasons for this.
- Cost – Many redemption games such as Skeeball are more mechanical than electronic, making the build out cost less and the games more durable. Many used games are easily refurbished and resold for a lower price than new ones.
- Replacement – Redemption games are played for points, while video games are generally played for the experience. The law of diminishing returns requires that video games be changed out on a regular basis to maintain the freshness of the experience. Because of this, redemption games are called ‘evergreen’ games as they generally do not have to be replaced.
- Incentive – Since the cards can collect points, guests are easily able to accumulate points for the big prize they want and will play redemption games each visit to earn those points.
That leads us to the next critical factor, the Redemption Prize Store, because prizes drive
play. Over the years we have transitioned from redemption counters to redemption stores
because:
- Redemption counters slow the pace of redeeming points for prizes by having the prize and the register in the same place. People stand and gaze, pick out a prize and then redeem it all while people behind them are awaiting their turn to browse. With the store concept, Guests can browse and select their prize before proceeding to the counter, thus increasing throughput.
- Prizes can be more effectively positioned and seen from a distance.
- A storefront and marque are more visual from a distance than a counter.
- An enclosed store provides greater security for merchandise.
How the merchandise is displayed also affects the appeal and incentive for play. In our
opinion, it is important to use a professional merchandizer to layout redemption product.
There should be a combination of low-ticket value items for quick redemption by children,
e.g., candy or toy soldiers, as well as higher ticket value items that Guests can save up for,
e.g., headphones, game tablets or beer steins that appeal to an older demographic. Prizes
offered should reflect each demographic you are trying to attract and the region the venue
is located, e.g., items that appeal to adults as well as teens and young children. If you are in
a beach community, offering beach amenities such as logoed beach towels and boogie
boards would be appropriate. Urban locations might offer electric kick scooters or
hoverboards. Other factors include grouping prizes by gender, age and genre.
To make it all come together profitably, one needs to recognize and manage the four levers
for cost of sales (COS): Price to purchase game, price to play a game, cost of game card and
payout cost of redemption product.
So, while it may look easy, it is not, and your success depends on the professionals you
work with in all aspects of laying out, setting up and operating a game room. If you don’t do
it correctly, you risk seeing “Game Over” flashing before your very eyes.
By Bill Danclovic, Regional Technical Manager
With almost thirty years of industry experience and a graduate of the DeVry Institute, Bill
Danclovic is a Regional Technical Executive for Trifecta Management Group (TMG). He
specializes in providing expertise and ensuring technological developments align with the
goals of clients and new venue openings. Bill began his career in the arcade business
with American Laser Games before moving into retail entertainment with Block
Party and Sega City. Bill joined GameWorks opening Uptown Alley in Surprise, AZ and
currently resides in Tampa, FL, overseeing Alamo Bowling Centers.