Redemption has become a 'buzz word' in the industry and its popularity with both operators and players is continuing to grow. Through this extensive report InterGame will look at what's currently trending around the world, what new licences are available at the prize counter and what operators really think of the products out there.
EUROPE
While not considered the biggest market for redemption, in comparison to other markets, such games have been popular with players in Europe for many years with business remaining relatively stable. In Italy for example all the best arcades, bowling centres and FECs have an area featuring ticket redemption.
Elmac is a leading supplier of redemption games to the Italian market and the company’s Tiziano Tredese told InterGame: "This year we have introduced a number of new redemption machines into the market and all of them are performing well. But it is important to get the type of location correct. Wheel Deal Extreme for example is best suited to the large FECs; Operation and Sharky’s Treasure are best suited to children’s areas within larger locations and Red Hot and Jam Session are suited to small seaside arcades.
"We also supply the prizes to our customers so get the opportunity to find out how they are performing so we can pass the information onto the manufacturers to enable them to adapt the US redemption machines to the different tastes of the Italian players."
For Martin Riley, Sega’s European sales manager, there has certainly been growth in redemption for most countries across Europe and while some of the major markets have levelled out a little, there are still many untapped markets for growth.
"Operators want an attractive and reliable game that continues to excite the whole family," said Riley. "Our customers want variety and they talk more and more of having new centrepiece redemption games. Sega’s core business is still video, however the inclusion of redemption and novelty games is set to increase year on year as determined by our customers. Redemption has a major position alongside video in all new locations - it is a must if you are going to offer amusements for everyone."
While redemption remains stable in many countries across Europe, there are markets such as the UK that have only recently begun to embrace redemption, compared with more established markets and are now experiencing some growth. Companies such as Harry Levy Amusements and UDC have enjoyed many years of success within the sector and Sega Amusements’ rather recent interest in the sector, which has seen its product portfolio grow from including one or two machines to 20 plus, is another sign of the interest surrounding the product type.
For UK distributor UDC, redemption games represent 75 per cent of its sales and according to Michael Green, operators in the UK tend to like higher percentage payouts so games get more replays and subsequently enjoy better revenues. "Redemption machines have become a way of life in the UK and have continued to show strong growth over the last two years - they will continue to be included in many more locations that currently don’t have them," he said. "They appeal to just about everyone and at the beach locations appeal particularly to families."
Harry Levy of Harry Levy Amusements adds to this, telling InterGame: "More operators are considering redemption than ever before in the UK. I believe this is due to the relatively poor performance of other types of machines and a gradual realisation that good business can be done from these machines.
"We have something for everyone at the moment including Sharky’s Treasure, Operation and several high performing models of our own such as Gold Mine, X Quacker and our latest piece Temple of Tickets, which was introduced to fill a gap in the market brought to our attention by the demand for our old range of second-hand three-player games, which we stopped producing in 2007."
Having since introduced single players such as Pieces of Eight, Aladdin and Freddie, which, in a lot of cases, have been more popular than the old three-players, Levy knew that a new generation three-player, with a premium price tag, would be a big ask.
"With single units that earn as much as the old three-players, any new three-player offering would have to beat three of them," he said. "The design team took their time and eventually Temple of Tickets was brought out for testing. Early results on a number of sites showed earnings between 150 and 200 per cent of three single units and payout percentages are stable at about five per cent less than the singles."
For Namco Europe’s John Brennan, there is a saying that stands up particularly well in reference to redemption: "Winners makes players," he said. "We call the genre ‘play to win’, that is games which deliver a great experience but where the ultimate objective is to walk away with a quality prize and feel the experience has been both entertaining and successful.
"Operators, likes players, want variety from the product mix. They want games which attract a broad spectrum of players and age group and which provide compelling but harmless fun. With the right equipment such as the Deltronic ticket eater and Embed’s management system, operators recognise that a successful and busy redemption area can be very straightforward to run."
With an increased interest in redemption from operators, Embed’s Adam Steinberg recently relocated to the UK to further promote the company’s debit card system throughout the UK and Europe. Steinberg told InterGame: "With locations now looking to broaden the family appeal of their entertainment offering, it has become a key component. Good operators are learning that by using high quality prizes that are attractively merchandised, they can attract customers and drive income from their games. Of course running a good redemption operation is hard work and more complicated than other amusement categories, which is where Embed’s systems can greatly assist to control inventories and make the customer transaction process as enjoyable and efficient as possible."
As mentioned earlier, the growth of redemption, particularly within the UK, is further enforced by Sega Amusements’ recent move into the sector. Traditionally known for video, the company has grown its redemption product portfolio from including just Pigs Might Fly and SpongeBob to now representing 40 redemption products.
"There is more reliability in the machines that are coming out at the moment and there is more creativity in the design and concept," said Sega’s UK sales manager Aaron Gilbey. "There is a new era of redemption that has come to the forefront, more adults are now playing redemption, so operators are looking for products that are going to attract a wide demographic of players."
For general sales manager, Justin Burke, as a starting point, good redemption machines go down one of two paths - quick play, which rewards the player with a lot of tickets or game play, which doesn’t reward as many tickets but gives the player a longer time on the game. It is essential, however, that all machines provide value for money, interesting game play, produce a good ROI and are fun.
"The role of redemption will continue to grow," continued Gilbey. "One of the things that operators have fed back to me is that if they are doing it well it becomes a destination. You could put amusement machines in a location and people might come in and play but you might not see them again until they are next in the area. With redemption, people are going to the site, playing the machines, getting involved and then they’re going back and adding to it."
"If an operator is struggling to make redemption work then they’re not doing it correctly," added Burke. "They have to be prepared to manage their machines - you can’t just plug in the machine and leave it - operators have to be prepared to look at it in detail and really focus on the prizes - the way they are priced up, the payout and the machine layout - you’ve got to really work at it - it’s hard work but worth it."
"The prize desk is where I’ve seen the biggest shortfall," added Gilbey. "Presentation is key - you’re retailing the stock to the customer and no matter what corner of society they are from, customers are still savvy to advertising and those must have goods such as iPods.
"Some locations are now including loyalty cards and promotion nights where the players can get double tickets in the week and the sharp operators are beginning to look at the benefits of loyalty cards. People are familiar with the concept so there’s no reason why it can’t work in amusement."
US
Redemption has long been a staple in US amusement operations, especially in the amusement parks, carnivals shore parks and resorts, but it has grown exponentially according to Embed’s US general manager Ted Parsons, as route, FEC operators and other venues have embraced the segment and have seen how it can complement and build their existing business.
"Procurement, pricing and selection of both equipment and prizes can be a daunting challenge for inexperienced operators," said Parsons. "Guest expectations are much higher - a couple of ticket games at the side of the room and a 6ft counter with some candy, bug rings and stuffed animals won’t cut it. Good education from organisations such as Foundations University can help operators maximise their potential with redemption and of course a full featured redemption system such as ours, either as a standalone product or along with a card system, provides a comprehensive yet easy to use management program for running a redemption centre including guest service, ordering and inventory control. These are the tools that smart operators are using to capitalise on the growth in redemption."
Harry Levy Amusements, in the UK, has amassed a huge amount of experience of what works and what doesn’t when it comes to redemption, thanks to its close working relationship with its US partners. "We are constantly searching for the best redemption machines from around the world and have found some great games from the US recently," said Levy.
"Jam Session from Bay Tek is one of those machines that has something for everyone. Players can roll coins down the neck of a guitar into a moving target. It looks and sounds great - the same goes for the Batman whacker from Coastal Amusements, which sees players don the giant Batman gloves to deliver retribution to a series of villains who pop up out of the playfield."
Bay Tek’s 2008 release of Big Bass Wheel and its 2009 release of Big Bass Wheel Pro have proven to be the manufacturer’s most successful launches to date and according to the company’s Holly Miedl, these games are breaking revenue report records across the globe. "We introduced Jam Session at IAAPA of 2009 and it’s been a very successful quick coin game, however with many locations moving to a card swipe programme in the US, the quick coin games often under-perform," she said.
Miedl added that in her experience, for operators, cashbox is king, however they also need headache free games that provide value and entertainment for their location. "Ninety per cent of our product line is ticket redemption," said Miedl, "the rest are prize redemption games or attraction pieces like NASCAR Showdown, which can also be a ticket redemption game.
"While the US market is pretty stale, with not much room for growth, redemption is going to continue to be a growing market globally. With the evolution of home console video games the coin-op video game is dying - more and more consumers are adding bars and game rooms to their homes in the US, as smoking bans and legal limit alcohol levels lower. This is hurting game categories like pool tables, jukeboxes, dart boards and so on - ticket redemption is a unique category that cannot be duplicated anywhere else."
According to Miedl, the game mix in a location is very important and two-fold, telling InterGame: "First the mix is important for providing enough entertainment value and variety for the entire family from two to 82 and then it is also important for proper payout. The average game room should aim for 30 per cent payout. Different game categories will provide different payout percentages due to the entertainment they provide."
Benchmark Games is one of the market leaders in the redemption sector and for company founder Al Kress "redemption is most certainly where it’s at. If you expect to stay in the business you better learn how to operate the games," he said. "In the US, at most shows, there are seminars on how to operate the redemption games and which games are the work horses and I strongly recommend any operator that is struggling, to attend these seminars - just the new ideas you will pick up will be well worth it."
Benchmark has seven new games for this year and recently showcased Trap Door (see this month’s product pages for more information). "It is a very interesting game and has the ‘I want to play again and beat the machine’ feature," said Kress. "Finally operators around the world are learning the better the prize the higher the income and the better the payout the higher the income. They are also realising that they already own the location so why not maximise it.
"The most important point in producing a successful redemption machine in my experience is that it must have the ‘Oh, I just missed but I’ll get it next time’ element. We have been pioneers in making the very large games such as Slam A Winner Extreme and Pop It For Gold Extreme in 11ft cabinets that give the operators the wow factor when someone walks into an arcade.
"Redemption traditionally made up 30 per cent of the games in a room and took in around 65 per cent of the money. Operators are now putting in more than 50 per cent in the US and I have seen some places with no video games and all redemption."
For Satinder Bhutani of Andamiro USA, in any successful redemption machine, there has to be a unique feature that stands out and attracts both players and operators. Attractive design, unique consistent game-play and easy maintenance/hardware integrity have to be the key points in producing a successful redemption machine. "Ticket redemption has shown steady growth in our territory," he said. "Many FECs are incorporating more ticket redemption machines in their location to encourage players to invest more in a particular location under the same operator. About 70 per cent of our product portfolio are redemption machines and they deliver about 80 per cent of our overall business.
"Redemption machines play a vital role in all locations - catering to consumer’s tastes and effective placement of machines can enhance a stagnant location into one of the most thriving locations by inviting more players. Operators and distributors essentially have the ability to make a massive impact in their location with other surrounding businesses."
For Bhutani, it is essential operators tap into the mainstream and figure out what consumers will want to see in the prize cabinet. "Be willing to invest a little more and go for the prizes that are highly desirable," he said. "Also evaluate the location - is it thriving? Are people noticing your machine? Be creative and think of alternative ways to make your machine attract more players. Don’t be afraid to incorporate and implement new ideas to enhance your redemption machine."
ASIA PACIFIC
Part of the Timezone Group, which has significant experience in the Asia Pacific region, LAI Games has had global success with its redemption machines, particularly with its range of instant redemption Stacker machines. According to international sales manager Marshall Ashdown, the new Mega Stacker game has attracted a lot of attention since its launch at the DEAL show in April this year. It incorporates the best of both worlds in that players win tickets for the minor prize levels and attractive premium prizes for the major prize levels.
"This combination of ticket/prize redemption together with fun game play and a stunning physical presence gives excellent cash box returns," said Ashdown. "Operators are looking for games that generate a fast ROI and are reliable and easy to service. The games have to be compelling so that players receive good entertainment value from repeated play. Prize redemption is also very important for many operators that don’t have the space for prize counters or staff to manage a location. Our Stacker game has helped to extend the appeal of redemption into a vast variety of non-traditional locations. We have taken this even further with Mini Stacker, which has all the playability of Stacker but with a smaller footprint so that even space-restricted locations can now benefit."
According to Ashdown, as more operators are entering the redemption market the science of redemption management is improving. Operators are raising their game to compete with retail and with each other.
"Merchandising of prizes is improving and we are seeing less ‘tat’ and more quality prizes like higher end licensed plush and other desirable items," he said. "Operators are beginning to understand that if they can convince players that they can have fun and get prizes for not much more than buying the same items at retail, then the profits will flow.
"We sell redemption games into many markets and we are definitely seeing growth as more venues are moving away from traditional driving/shooting games which find it hard to compete with the home and online game market. We are also seeing redemption expanding into more non-traditional locations such as family restaurants, shopping centres, food courts and cinemas.
Also part of the Timezone Group, Embed’s managing director Mark Easte told InterGame: "Redemption has enjoyed a strong and loyal customer base across the Asia Pacific region with operations in countries such as Australia, Philippines and Indonesia setting very high standards for quality game selection, operation and optimal payout management for many, many years. Leading operators in the region have utilised technology such as our debit card system to improve the management of the games, redemption payouts, prize inventory and efficient redemption counter management with great returns on their investments.
"In these mature redemption markets the customer demand for branded and higher value products continues to grow across all level of redemption value. While there is still a place for the bouncy ball and the cheap widgets of the past, modern customers are now increasingly seeking known brands and higher value products, making the operation of a quality inventory management system an essential part of the management systems in these facilities."
MENA
The MENA region has been attracting the attention of manufacturers for some time now and with a strong focus on family entertainment, ticket redemption is proving extremely popular. UK-based distributor UDC has held a strong position in the territory for some time and recently introduced a number of new games including Galactix, Tickety Boo, Flip 2 Win, Roll 2 Win, the Prize Cube and E-Claw, which are all among the top income producing games in the MENA FECs.
According to UDC’s Mark Horwood, who spends a lot of his time travelling around the region working with operators, it is essential ticket redemption games need to balance the cost of the game with return on investment as well as giving customer satisfaction and fun for the family. The trend in the MENA is to aim for the younger market between the ages of four and 12-years-old, with interactive and quick coin games proving popular.
"You must keep games simple in order for them to be a success," Horwood told InterGame. "Ticket redemption is continually growing and the quality of the games has improved, adding to their strength - it is the backbone of the FEC throughout the Middle East. The operator needs to analyse cost of playing a game to ticket payout ratio and see if they are giving value for money in order to make redemption work - they must also review the prizes on offer to ensure they are attractive. If you’re struggling to make redemption games work, listen to advice given by suppliers and remember that the cheapest option is not always the most profitable."
The Middle East is unique, with its clear divide in demographic, appealing to both high-spend tourists looking for a day out while also offering loyalty and repeat play to its local customer base, according to Embed’s Middle East general manager Luke McKimmie.
"It is well known for its large-scale FECs, fitted out with high-end rides and attractions," he told InterGame. "But in recent times, redemption has gained a lot more of the operators’ attention. There is a definite shift in focus, as operators look to increase earnings and follow the trend of overseas markets, by providing high value redemption stocks, encouraging customers to ‘play to win’.
"The move by many key sites to convert paper tickets to electronic tickets on players cards is enhancing loyalty and long term relationships with the local customer base. Customers are taking to this and consequently demanding higher value prizes at both the machine and redemption counter. This in turn requires the operators to pay attention to their payouts, machine condition, and prizes on offer to ensure they stay the "site of choice" for the keen and ever growing local youth market.
"There is a lot of promise and opportunity throughout the region and some larger operators have taken to this by offering exclusive "self-branded" plush, toys etc to differentiate themselves and create a strong point of difference from the competition."
