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The Wii is rapidly encroaching on that area, because you can have a steering wheel or gun as control input, theoretically.
EJ: Well, I think there's a big gap between a theoretical steering wheel and a real steering wheel. You're air-steering!
The games you've released so far have been within existing ideas of what those cabinets can be. Do you envision new types coming up, or is that not necessarily important?
EJ: It's very important to keep evolving. When you're a startup company, the first things you do are to try and hit the big targets that have historically sold well, and that you think you can do a better job of. We started out with driving and shooting games, then we moved to the motorcycle. The next thing we're going to go into are boat games and skateboarding games.
We're stretching the interface, and trying different types of simulators. I hope to get into the VR space, with headset games, in the not-too-distant future. The technology there is finally getting to the point where it's beyond the hype phase. In the early '90s, everyone was hyping it, but unfortunately all it did was give you a headache at three frames a second. Now, the technology is getting to the point where you can provide a high-quality experience to the player. We want to go into some of those more immersive areas.
What made you decide to get back into this market, and how did you end up forming Raw Thrills?
EJ: The whole thing was kind of a mistake! Midway was closing down, and they decided to focus on the home market. The arcade space is a smaller, niche market these days, and it didn't make sense for such a large corporation [to pursue it].
So anyway, one of the guys from Midway asked me, "Hey Jarvis, why don't you start a new arcade company?" Somehow, they talked me into it, and here we are. We're doing very well. We just got the manufacturer of the year award from the AAMA. For a small company, it's a good opportunity. It's a small market, but you can really focus on that marketplace and design games that appeal to players. You also have to be very competitive on your pricing.
Most of the Raw Thrills guys were from the Midway arcade side?
EJ: That's right. We had a couple of guys from Microsoft and a few other companies, but mostly it was ex-Midway guys.
When you sell arcade games, do you actually get returns on the coin drop, or is it only selling the cabinets?
EJ: Traditionally, we just sell them the game, and you don't see the coin drop. Incredible Technologies -- the Golden Tee Golf company -- have an evolved business model where they are actually participating in the coin drop. I wish I could! You look at some of these games, and in three or four years, they'll make like $15,000. You just go, "Shit, where's my money?" But if some competitors are just going to sell them the game, then you'd better too. Traditionally, that's been the model. You just sell them the game. My goal is to have a game good enough that I can participate in the coin drop, but you need to have a phenomenal game in order to do that.
Who are your true competitors right now?
EJ: There's Sega, which is a very strong competitor. It's amazing how many games they release per year. They're very strong in Japan, and are a very strong competitor domestically. There's Namco, who are most famous for Pac-Man. They're still making Pac-Man in the year 2007, if you can believe it. Their biggest seller in arcades last year was [Ms.] Pac-Man and Galaga. They're very strong with their Time Crisis games, and their Wangan Midnight driving series.
There's a company called Global VR on the west coast who do the EA games like Need for Speed and Madden in the arcade. They also do a golf game with EA. They're another very strong competitor in the space, along with Incredible Technologies with Golden Tee Golf. There's some competition out there, but it's not with hundreds of companies. It's maybe ten companies out there.
What is your average budget for an arcade game compared to console space?
EJ: Our budget ranges from two to four million dollars typically for an arcade game.
Is that just software development, or does that include anything else?
EJ: That includes software, hardware, special interface boards, mechanical engineering for controls, and even the plastic mold. People want to see a new-looking game, so you have to put new plastic mold on where you sit and on the control panels. It's kind of a style-conscious business. Some percentage of it is, "Does it look cool? Do I want to sit on this motorcycle? If it looks stupid, I'm not even going to want to sit on it." You've got to make it look cool. There's a lot of 3D CAD modeling, to create these different molds.
How do you do in Japan? You're distributed over there, right?
EJ: Taito is our distributor in Japan. They're another competitor for us. They do Battle Gear, the driving series. They've been distributing us in Japan for the last few years. We've done pretty well. It's not our hugest market. Two or three percent of our business might be in Japan.
So most of it is here, or in Europe?
EJ: We're much bigger in Europe [than in Japan]. We probably do 20 percent of our business in Europe. It's interesting, because there is a cultural [divide]. Americans design different games than Japanese designers. It seems like American games historically have done better in Europe. Japan has a big cultural divide there.
Microsoft is always trying to figure out how to sell their Xbox in Japan. It's a very specialized market. They do their own thing, and it's been hard for American designers to get into the Japanese market. We've actually had more success in China and some of the other Asian countries like Korea. They seem to be more receptive to American games.
So the U.S. is about 60 percent or something?
EJ: Yeah, the U.S. is probably about 60 to 70 percent. That would include Canada. It's a worldwide business. Russia is a big growth area. India is a very big growing market right now. It's kind of fascinating, how it's a worldwide business.