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 Features
Developing
Games For Coin-Op
In the US alone, coin-op game owners own nearly 2.5 million games in more
than 1,000,000 high traffic retail locations. Intel estimates 1.2 million
of those games are video machines, with the world wide coin-op market
four times larger.
There are two categories of locations in our marketplace, destination
based and convenience type locations. Large arcades, family entertainment
centers, location based entertainment centers, and theme parks fall into
the first, and the millions of games that are in every convenience store,
bar, airport, and other type of retail site fall into the second.
The US market has an existing customer base of approximately 88 million
players, who spend approximately $6.5 billion dollars a year on coin-op
games. Our players are primarily young males between the age of 12 -24
years, dictated by the fact that the software written for our industry
is designed for that audience.
We believe the total US audience for games could be 180 million players,
based on the fact that state lotteries sell approximately 400 - 500 billion
dollars per year in game play to people between the ages of 30 to 70.
Coin-op equipment owners have approximately $5 billion dollars invested
in games, and another $1/2 billion or so in plant and equipment to service
the games.
One of the most important features of the coin-op market is the fact that
many of our players do not own and do not have to own computers to enjoy
the games they play. We make our living supplying those computers to our
players, one quarter at a time. Our willingness to install PCs in public
places immediately opens your market to every person in the nation instead
of the limited percentage of the market that have state of the of the
art computers.
We intend to take the system we are describing here today to our sister
trade organizations in other parts of the world, opening the entire global
market to you with this program.
Because we are in the business of supplying state of the art computers
to our players we are very interested in seeing the best games you make
on the machines we own. For that reason have worked closely with Microsoft
and Intel to establish a reference platform that puts very powerful and
predictable equipment in the field, so that your games will look better
in coin-op than they do in the home.
Another very significant and stabilizing feature of our market is the
fact that we believe our members are in the broadcast entertainment business.
The millions of coin-op game screens people walk by every day are really
the equivalent of a broadcast system, and we have therefore initiated
a project with EDS to create the system needed to deliver and manage digital
entertainment on the millions of screens we own. The National Amusement
Network, or NANI, is the subsidiary of the AMOA which is responsible for
building and managing that business.
Why Coin-op Wants PC Game Developers' Games
Coin-op game owners want to buy the games PC game developers make, for
a number of reasons:
We lease the space in the 1 million retail sites our games are in, and
pay the rent on these space leases with game play revenues. Because our
rent is always due we need a continual flow of new games to make our rent
payments.
Unlike home game buyers who buy games on a whim, we invest in games in
order to make a return. We are the closest thing to a perpetual games
money machine you will ever see because if your game is good we can immediately
begin turning it into cash and get a tax deduction for buying it. We will
therefore never run out of money as along as game players like your games.
In our industry, games are like movies. When we play games in a location
they draw customers. For that reason our locations constantly want new
games.
At the present time, many of the games sold in the amusement industry
are designed for a young, mostly male audience, and are built on proprietary
computing platforms. Microsoft recently did a report for our industry
on the impact proprietary computing platforms have had on our business.
That report noted the fact that coin-op is rapidly losing market share
to other entertainment venues because proprietary game platforms and limited
content have killed innovation. We need your games and your ideas to make
our industry grow.
We also want to buy your games because we need your expertise in writing
games that adhere to standards such as Direct X and the Intel platform.
If you think about our business for a moment you quickly realize that
we are little like milkmen. We travel around the country all day long
on routes fixing joysticks, emptying coin boxes, and cleaning cabinets.
If each of the games we visit had different joysticks, different coin
boxes, and vastly different software and operating systems we would be
forced to carry hundreds of different types of parts and have SEs in each
truck, which would be very expensive. For that reason, the less parts
we have to carry and the more standardized the systems are the better.
By working with you we know we will get support for hardware and software
standards because they let you be more productive in your core business,
which is writing game software.
Another reason we need PC games is to change our financing model. In our
existing business model we pay $4,000 for proprietary games in firmware.
If the game does poorly, which 7 out of 10 do, we are stuck with $4000
worth of plywood and firmware with little residual value. Banks won't
finance these games, which forces us to borrow from high cost lenders,
compounding our financial problems. With you writing software for us we
will buy our computers from Dell or NEC with financing from the banks,
and lower our cost of operation so we have more money for content.
The last reason we need PC games is to get out of the moving business.
In our existing business model manufacturers force us to buy new hardware
in order to get new games. When a game is no longer popular in a location
we can't just erase it and install a new game, we have to get a pickup
truck and go move it. As you can well appreciate, moving 300 pound games
around the country is very expensive. Many of our operators tell us that
moving a game from one location to another three to four times per year
with refurbishing costs added in can add 25% to the price of the game.
We therefore have to go to a software model to reduce these costs.
The PC in Coin-op
The PC coin-op platform we are supporting, has been developed over the
last year by Intel, Microsoft and the AMOA. Not surprisingly, it uses
Intel processors, Microsoft Direct X technologies, and off-the-shelf PCs.
The key components of the coin-op platform include:
- The use
of off-the-shelf, state of the art Intel based PCs, such as the NEC
PowerPlayer. Intel just released a spec for the coin-op PC.
- Microsoft
DirectX 3 technology today, and DirectX 5 when it ships
- A set
of six standard control panel layouts the AMOA approved with Microsoft,
along with I/O cards made by various suppliers and VGT to connect the
peripherals that are needed. We went to standardized control panels
on the mass distribution model of the Public PC so that we could meet
our members' requirement that more than one game be on a PC, and to
meet the lottery laws that govern skill games.
- The DirectArcade
SDK, and The AMOA Arcade shell.
This shell
is designed to address two major problems that face our industry. One
is the fact that coin-op games cost too much to play, and the second is
the fact that our players associate our games with our hardware. As stated
earlier, we want to get out of the moving business, and therefore want
to install more than one game on a machine, which requires an entirely
new view of our hardware. To do so we are turning games into entertainment
on a channel, in the same way Microsoft has done with MSN, and are using
an advertising model to lower the cost of play.
Ads, including full motion video ads with stereo sound, can be attached
to any part of the game or any other content on the system, in the same
way ads are tied to TV shows. These ads can be linked to web sites and
dynamically changed, based on the demographic of the player.
To manage these ads EDS with the help of Microsoft created a content management
system to manage games and other digital content on the network. This
system not only connects directly to the Public PCs on location, it will
also connect directly to point of sale networks.
Unlike the Internet advertising model, which is off to a slow start, we
think ad revenues will underwrite the cost of play in our industry starting
this year. The reason for this is very simple. On the Internet, people
have been receiving services for free for years. They view attempts to
get ad data from them along with usage fees as an invasion of their privacy
and reduction of their right to free access, which they are. However in
our industry, our players are paying roughly $14 per hour to play games
and are paying too much. If we can reduce that cost to $5 an hour through
advertising they will love us. Perspective is everything.
As good an idea as the Public PC is, manufacturers of proprietary hardware
systems and console games hate it. Many of them compete with our members
in the location business or would like to control the content we buy (and
not surprisingly, the games you write) and are therefore are spreading
a lot of uncertainty about the coin-op model that I would like to deal
with briefly so that you do not get trapped in a proprietary model that
is doomed to fail.
Existing coin-op manufacturers will attempt to tell you that coin-op is
about hardware. However, those of you that have been to Japan know that
the Japanese use primarily standard game cabinets in all of their locations.
The same is the case with all of the slot machines you see in casinos.
Other than a few cosmetic differences, they are pretty well all the same.
Now think about PCs. Can you imagine what would happen to your business
if you had to write games for 150 different keyboard layouts? Obviously
the hardware argument is baloney, although there is a place for highly
specialized equipment like Wave Runner. You must also remember the fact
that cabinet size equates to floor space, and in 95% of the locations
we are in floor space is limited, so the bigger the box is the less locations
it fits in.
Existing coin-op manufacturers may also try and tell you they know more
about our business that the guys who actually operate it. At the last
CGDC conference NANI handed out 6,000 copies of the DirectArcade SDK in
everyone's conference bag. This SDK enables anyone to begin immediately
writing games for coin-op. The SDK on the CD is based on designs requested
by hundreds of our members over several years of design sessions. If we
don't know our business, who does? .
I do not want to belabor this point too much, but you should understand
that the future direction of the games entertainment industry is at stake
here and the proprietary model, closed systems guys are doing everything
in their power to kill off a move to open PC platforms and the AMOA model.
In fact two of the biggest proprietary platform companies from Japan have
pulled out of our trade show to try and break our back for supporting
the PC. However, the PC model you are hearing about today is showing up
the proprietary model for what it is, an anticompettive and destructive
system designed to defeat your and my ability to make a living and enrich
a just companies. In the case of coin-op, for those of you that study
the psychology of markets, I can tell you we have been held captive by
proprietary systems for so long we are suffering from the Stockholm syndrome.
When we get free from this captivity the frustration our members feel
for proprietary platform companies may seriously damage them, which may
not be good, although it poses an absolute opportunity for PC game developers.
If you don't believe that, I suggest you ask Microsoft what their surveys
found about the attitude suppliers and buyers in our industry have toward
one another.
The Coin-op Market - Game design issues/features
I would now like to briefly touch on the concepts of designing games for
our industry. I will highlight some of the key points and concepts now,
and strongly recommend that you talk to the guys in our industry who have
been buying games for three generations to find out what makes really
great games in our business. They can tell you what has made a good game
in the past.
Our trade group is very interested in insuring that you get as much help
as possible in designing games for our industry, and for that reason has
set up a special developers row in our annual trade show, the largest
trade show of its kind in coin-op, to give you a chance to meet directly
with the buyers of your games. This year our show is in Atlanta in October,
and we urge you to come to our show in one of our developer booths or
as an exhibitor, and talk to our people. At first you will have to help
us learn to talk to you, because our existing suppliers have made it a
practice over the years not to listen to our opinions so they can jam
product down our throats, and we may appear shy. However once you open
us up I am sure we will be successful together. We also urge you to help
us bring our people to your show, because they are just like you, small
business people trying to make a living in games, and we both have a direct
relationship with players that we need to discuss.
One of the most basic characteristics of coin op games are an ability
to adjust the speed and difficulty a game plays at so that the amount
of time a player gets on the machine can be limited. From our perspective
this feature will continue to be important into the future for those time
periods in which our games get the most use, where one person playing
the game all the time might turn other players off.
If this seems like an unreasonable limitation in our market, do not be
disheartened. We recognized that this was a limitation several years ago
and took steps to support a time based model. The math will tell you why.
Divide $6.5 billion in revenue by 35 cents per play average, multiply
it by a minute and a half which is the average time per play, divide that
by the 2.5 million games in the market, and by 365, days in the year,
and you get the number of minutes in a day that our machines are working.
As you can see, a coin-op game works less than an hour per day to bring
in its share of the $6.5 billion we do each year. There are tons of hours
in each day in a location in which we can sell time based play, which
we could do until the technology we use in NANI came along. Now that we
have that technology, we are supporting time based play in our shell.
If you have a robot or episodic based game like Warcraft you would like
to sell us, we would love to have it.
Another characteristic of coin-op games has been the ability in amusement
mode only to computer assist the player if he or she is losing too badly.
Because our players may not have seen the game before, if they lose too
badly when they first play it, they could be turned off. For that reason
the good games in our market include modes to computer assist players
that do not play well.
A third feature of coin-op games historically has been the use of short
segments that a player travels through in the game. Again this approach
has been taken historically on the assumption that we can charge more
for the game by selling multiple segments. While this all may be true,
we know players are willing to pay more to stay on the game for longer
periods of time if they were not interrupted repeatedly.
A fourth characteristic of traditional coin-op games has been the use
of replays and timed interruptions called continues to ask for more money.
Williams for example, as an outstanding ability to use this feature.
While there are many more technical things you will want to know about
designing games for coin-op, let me cover several other concepts that
should excite you. While all of you are extremely talented and creative
people and love designing the grandest of games, we have had to learn
to make money with all types of games, including some of the lowliest.
Big and photo realistic is not always better. To give you some examples
of what I mean, Virtua Racing was a beautiful game from a realism perspective,
but Williams Cruisin' out earns it five to one, and costs one third less.
And while Mortal Kombat was a hit in our market among young boys, and
sold roughly 55,000 copies as an upright, PacMan, which is a much simpler
game and had broad appeal to women, sold 250,000 copies.
One of the strongest earning games in our market for several years was
Windows solitaire, which sold for $2500 and could earn anywhere from $150
to $600 per week. And one of the top sports games in our market is a golf
game, which is no where as complex as the products you sell in the PC
industry, yet in its base form it can do 200 - $600 per week. If you have
any golf, bowling or other sports games you would like to sell us please
let us know.
The point I am making here is the fact that our business reaches such
a vast and diversified audience, you can make games of all levels and
be successful. If those games happen to be simple, 2d games that only
cost you a hundred grand to write they could potentially generate millions
for your company. Coin-op gives you the opportunity to fill your product
line with a line of simple games that are easy to write and make millions
of dollars, which will fill the gaps between the 3D blockbusters you are
writing. Grandma plays games too.
Another concept I would like to deal with is creativity for its own sake.
Your greatest strength is your creativity, however it is also your greatest
weakness. Take bowling for example. Bowling is a game of balls, pins,
and lanes that generates billions of dollars every year and barely changes.
In fact bowling would not work if it changed frequently, because players
could never get good at it. You don't have to continually create new games
to win. Think of some of your games like they were bowling - they don't
have to change much and can be played repeatedly over the years. If you
can come up with games that fit that description, our members have been
running pool, dart, bowling, pinball, billiards, and other types of continuously
playing games in league format for the better part of this century. We
have locations in every corner of America and would love to have games
that we could run for years with little change. We would both make a fortune
off of them.
Another concept I would like to discuss is the lose your butt and recover
quickly strategy developed by our industry. As you well know, there is
no guarantee that a game will be a hit. We have bought so many dogs over
the years that we have had to develop methods of dealing with the problem.
For that reason, we have come up with concepts like giving people tickets
they can redeem for merchandise when they play a game, promoting leagues
so that a game that earns poorly otherwise can be made into profit centers
for us and our locations, tournaments for prizes so we can make the game
earn longer, and now advertising, couponing, and internet connectivity,
so we can lower the cost of play and add value to the game playing equation.
Under this latest addition to our industry, we can tie a game to a promotion,
and give every person that plays it a buck off gas, which lowers their
resistance to playing. We can also play the game for prizes and make it
more playable that way. While we would all like to own a constant stream
of hits, the reality is that most games will not be. Therefore, as prudent
investors in games, we must constantly find ways to move them in the market,
and that is really what coin-operated game owners do.
Another feature we support in the AMOA shell is save game. We have the
ability in our network to save everything about the game a player just
played, can store it centrally and let the player retrieve the save state
for play later. A player can pick up a game in any part of the nation,
no matter where he left off.
We also have the ability to play games, in score, head to head or save
game mode, support LAN based play, and can offer prize events that comply
with state gaming laws, which we believe no one else can do. If you do
not believe the part about compliance, get an attorney's opinion on operating
Internet games in Colorado. As a footnote, please remember I am not saying
we can run net games everywhere, especially for prizes, because you cannot.
To give you a clue to what I mean, get the answers to the following questions.
- If I
ran a golf course and promoted a tournament in which half the players
played with clubs 30 inches high, while the rest played with a normal
club, would I be a tournament organizer or a felon?
- If I
ran a tournament in which a bad player was allowed to play a pro, would
I be democratic, or willfully violating sate gaming laws so that I could
make a profit
- And
if I ran a golf tournament in which my golf course crossed into a state
in which skill games for prizes is illegal, would I be a victim of circumstances,
or bait for Gtech.
- How
does the Johnson act work?
While there
is a lot more to discuss in this section, that part of the business is
being adressed by our organization, so I will move on.
Profiting From Coin-Op
You can profit in coin-op in a number of ways. I have itemized a few
for your to consider:
Currently, we buy 200,000 proprietary game machines or kits per year,
under extremely unfavorable circumstances. However the economics of the
Public PC are so favorable, I believe it will replace the sale of proprietary
machines very quickly and grow to a base of somewhere around 500,000 to
a million machines over the next five to seven years. Unlike a proprietary
game, I think games on the Public PC will turn over faster, and you should
see 5 to 20 copies of game rotating through the machine each year.
Because the PC software used in coin-op will be used in a public performance,
coin-op machine owners expect to pay more for it. Although I cannot tell
you exactly what the market will be, we see a number of models emerging.
One will be a model in which we pay you a flat, one-time license for the
game. That may be as little as $100 per copy and as much as $500. Another
alternative will be a scenario in which you will find an ad sponsor for
the game and sell us the game on a royalty basis, say for two cents a
play. A third alternative could emerge in which you give is the game for
a larger percentage of revenues with no up front fee. And then a fourth
scenario may occur with especially hot titles, in which we are willing
to pay a combination of all of the above. While I am not sure that any
of those alternatives will dominate, our members are willing to try them
all. You do the math.
If you design your games to connect to NANI using the AMOA shell, you
can use the all of the functionality I described in my session, and a
new ad based revenue stream is available. In addition to the ad streams
we can generate, if you design your games to support home to arcade play,
we can show yu how to create transaction revenues in the home, after you
have sold the CD.
In addition to the game playing functions listed above, the NANI network
supports connections to merchandise servers. If you have merchandise you
want to sell, we have put a system that can process pay for and manage
those orders. We would hope that you have a branded merchandise adverting
strategy in your future.
As an aside, we have a system in place that can track the copies of the
game you distribute to us, and will be able to electronically track and
redeem payments to your bank later this year, so you do not have to worry
about getting paid for your royalties. This payment system is being maintained
by EDS, and they will be wholly responsible for making sure you get paid.
GT Interactive recently announced support for the Public PC and coin-op.
If you have titles that you would like to publish for coin-op, I urge
you to speak to Dave Adams and Jim Perkins at GT.
$30,000,000 in Performance Bonuses
To celebrate the launch of the Pubic PC and the AMOA model, we are giving
away one of three $10,000,000 performance prizes to any company whose
single title generates four hundred million paid plays in coin-op over
in a one year period, as measured by the NANI system. This is roughly
the same number of plays that Williams Mortal Kombat generated in a one
year period. If you think that your games are as good as Williams arcade
games are, now is your chance to prove it and earn big bucks in doing
so.
This event will commence at the AMOA's fall show in Atlanta in October,
and run for a one year period. To find out more details about this program,
email naninet@msn.com.
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