The redemption market is currently booming around the world and manufacturers and operators are constantly on the look out for the next location for their machines. Helen Fletcher looks at which areas redemption is moving into and how the sector is growing
Historically redemption was the core business of seaside and fairground arcades, locations where the operators understood the customers’ needs and what appealed to the players’ sense of reward and pleasure.
However, operators of machines in locations such as bowling alleys and shopping malls also began to realise the potential of redemption and the importance of these machines in their game mix.
For Kevin Weir of UK distributor Electrocoin, seaside arcades that have tried redemption properly over the past year - those who have bought a good mix of equipment and put in the proper stock and staff controls - have seen that redemption adds to the family mix as they are games that everyone can be equally good and bad at.
"Bowling centres and seaside arcades provide the biggest opportunities in my opinion," he says. "Previously it was thought that redemption was mainly for the entertainment locations with repeat visit but the most popular items are always the day tripper stuff and for those visitors it is a novel group of games that uniquely, cannot be played at home in any shape or form."
In Italy redemption has been around in instant form since the 50s and it has been fundamental in the development of the country’s coin-op industry. Unfortunately in 1956 a law was passed prohibiting the prize machines, so for a long time instant redemption was unsuccessful.
However, according to Tiziano Tredese, of distribution company Elmac, with the use of Elaut technology and the success of television characters such as Winnie the Pooh and others, the instant redemption sector has regained its place within the market and is once again proving popular with players.
"Now, all the best arcades in Italy have a minimum of five different types of cranes," he says. "So the market is almost saturated even if new models are constantly replacing old machines and new FECs are opening."
The first ticket redemption machine was introduced in Italy around six years ago and according to Tredese almost immediately they received great interest from players and gave even greater satisfaction to the operators.
"We first tested ticket redemption in seaside arcades and bowling alleys," continues Tredese. "Immediately it was clear these games have great appeal - but to players that are already in the location - I don’t think that ‘alone’ they could attract customers."
Tredese also argues that although seaside arcades and bowling alleys are good locations, the best location to operate redemption in, in Italy at least, is the shopping malls that feature multiplex cinemas and where there is the possibility to go from the shops to entertainment areas using internal access.
"To get the maximum income the arcade must be located in the same area of the food court, bowling alley, children’s area or multiplex cinema," he says. "And this entertainment area must also be served by reserved parking and entrance for use when the shopping mall is closed.
"In this way the FEC is open around 15 hours a day - during the daytime the income is used to pay the expenses and in the evening the operators get their profit."
It would seem this is also the case in New Zealand with Greg Barclay, operations manager at Timezone, telling InterGame: "Casual leasing of mall space is becoming expensive, making it difficult to get a viable return on investment. However, cinema developers are now recognising the value of games and are setting aside larger areas for games when planning new complexes. Areas of 2,000 to 3,000sq.ft are becoming the norm rather than the exception for New Zealand."
Barclay goes on to say that the creation of atmosphere through lighting and theming inside FECs, bowling centres and cinemas also significantly helps redemption. "A dark atmosphere used to be the norm for arcades but no longer," he says.
"Now machines require lighter and brighter areas. These attract a wider audience which finds the atmosphere more comfortable and conducive for playing games, less threatening, promoting a fun and entertaining experience."
Although there is the argument that games perform best in locations away from commuter traffic and in areas where customers are browsing and have the time and space to play the game, Coincascade, which operates the Timezone branch in New Zealand, has found that exposing the game to the maximum possible footfall traffic generally results in much higher income levels. Games such as Stacker and skill testers are predominantly played on impulse, therefore exposure is critical.
Not only have redemption games themselves changed over the years but so have operators’ attitudes towards operating them and many now realise that they bring customer loyalty, which according to Colin Mallery of Harry Levy Amusements, makes them a good long-term investment.
"Redemption makes a great addition to other family friendly offerings within a large entertainment complex," he says. "But it can also stand up for itself as an attraction in its own right. The secret is getting the right mix of machines - a few classics - some good licences and a great variety of really attractive pieces."
However, redemption, it would seem, is not an easy product for operators - in the sense that it requires time and dedication in order to get it right. "There has been a growth in opportunities for redemption as it brings the family business, which has been in decline with the introduction of more gaming products," says Mallery.
"Of course in the US, they really value customer loyalty and have a history of redemption, but in Europe, it has been more of a slow burner.
"People have tended to look at it more as an accompaniment to a wider mix of machines. This is now changing - we have noticed orders from new, very professional locations in the UK and eastern Europe - and we have worked hard to promote redemption in those regions."
This element of player loyalty is reiterated by Adam Steinberg of Embed, part of the LAI Group, which manufactures debit card systems that have the capability of further promoting loyalty to both machines and locations.
According to Steinberg, the card system has great capability for monitoring and reporting on the income and payout performance of redemption games connected to the system.
"This information can be viewed per game or across an entire operation to look for trends and performance changes," he says. "For ticket games we have our market leading electronic tickets solution which eliminates the need for paper tickets and allows for easy banking of tickets and a paperless redemption process either over the counter or online."
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Embed is part of the LAI Group, which also has operations, in which redemption games account for a large proportion of the games and revenue.
For Steinberg, the fact that the arcades are placed in venues where customers are already in the mood to be entertained and not in so much of a hurry is part of the reason redemption machines succeed.
Steinberg also agrees that the number of entertainment venues suitable for prize redemption games has certainly grown but he feels the biggest change "has come from the proliferation of direct vend prize games like Lighthouse and Stacker that can also go as a single machine in smaller locations like convenience stores."
With this in mind, LAI Games has just released a mini version of the Stacker game that uses an even smaller footprint opening up even more possible locations.
The number of locations with redemption operating within them has undoubtedly grown and this for Holly Meidl of US-based manufacturer Benchmark is because redemption allows so many possibilities of operations and reward for the player "that it’s like a never-ending story."
"The player always expects to discover something interesting and new venues have that capability thanks to the rotation of new games and availability," Meidl says. "The operator always needs to reinvent their business in order to keep the player interested - it is a lot of work but it can be very rewarding."
But how can operators interested in redemption make the most of it?
"Of course the prizes themselves are of utmost importance," says Meidl. "The game itself and how it is played is important as well. The environment cannot be ignored either," she says.
"It is clear that the best redemption game with the best prizes operated in an unattractive venue with unfriendly staff won’t have a well filled cashbox."
For Laurent Van De Wege of VDW International, there are three top key operating guides - prize counter variety and display, game mix and layout, and maintenance. For Van De Wege, operators must provide players with prizes that are desired - it is the reason they play. The prizes must also offer variety for the entire customer base.
"Game mix and layout are also important to successful game operation," says Van De Wege. "Entertainment, variety and value will help pick the correct game mix while having a strategic game room layout that is rotated on a regular basis will help increase revenue.
"Game maintenance is vital," he continues. "A game that is out of order not only provides zero income but also portrays a negative image for the game room. Investing in a knowledgeable technician and a hearty inventory of spare parts will minimise out of order and shabby looking games."
From an operator’s point of view, Barclay once again reiterates the point, telling InterGame: "Relating specifically to the machine itself and not to any external influences, we would look at the following: customer demographics - the prizes put into a machine matches the type of customers in the location of the game; tune your prize/redemption game carefully to the average skill level of your customers; always keep machines clean and tidy on the outside - paying particular attention to the inside of games; keeping up with consumer demand and player trends is important as we are finding on games like Stacker, Lighthouse and crane games - it is important to merchandise relevant and modern consumer electronic goods and inventory stock doesn’t age."
This continuous updating of prizes might mean discounting older stock but, according to Barclay, it also allows operators to ensure the latest products are available to the customers to be won.
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"In New Zealand we are also trialling the use of gift cards from electronic retailers," continues Barclay. "Therefore we advertise an in-demand new model item and attach a gift card to the display, which is loaded to the value of the item.
"This means we are only carrying the value of the gift card and not specific stock, so if a stock item is unpopular we can change the display to something else."
Barclay also notes how it is important that operators keep a close eye on payout percentages and manage them to ensure customers are always receiving value for money, but that there is adequate return for the operator.
"Customers will soon recognise a machine is either too easy to win or too hard and returns will suffer," he says. "We find a payout of about 30 to 35 per cent to total income received is a good balance to achieve and maintain reasonable profit levels."
What is clear about redemption is that it attracts families as it allows them to play together and gives them the sense of value play. It is showing no signs of slowing down, and it would seem manufacturers are keen to adapt machines to suit any location in order to make the games profitable.
One company that is all too aware of the future of redemption is UK-based distributor Cosmic Video Amusements and this year will see the company start to distribute LAI Games’ products. "I don’t think the concept of redemption has changed over the years," says Cosmic Video’s John Farrington.
"The redemption market is a case of simple game play with measurable and immediate reward and fun - young and old players can enjoy the experience and reward."
And when it comes to suitable locations, for Farrington, it largely depends on the retailers - "there is no reason why bowling alleys and leisure centres shouldn’t operate more redemption as they have staff, a reception and so on that can handle transactions. With branded swag, why couldn’t they be successful?" he says.
With the continued growth of out-of-town FECs all over the world and shopping malls popping up all over territories such as the Middle East and India, redemption certainly has a future as long as the games are perceived as value for money by the player.
One of the advantages redemption has over other sectors in the coin-op industry is that there is no way it can be duplicated in the home market.
For Van De Wege, it is only a matter of time before ticket redemption centres start to pop up in locations where there is decent customer foot traffic and repeat visits. "Ticket redemption is not just for the kids anymore," he says. "As an industry we need to start thinking outside of the box and get creative."
For Meidl, locations considering redemption would also do well to consider a theme or feature that is easily recognisable to ensure the games fulfill their potential. "Fancy colours, attractive lighting need to make the visitor comfortable and willing to stay," she says.
"With the modern techniques of communication such as email and SMS, operators can also keep in touch with their players in order to inform them about any news related to the venue."
"Anyone wanting to attract families could do worse than think of redemption," adds Mallery. "Remember, when your customers are saving tickets for that top prize they will visit your premises time and time again."
