The Pinnacle Report Volume 1 #4

It’s getting exciting as we develop and refine the benefits you’ll be receiving when we launch the Pinnacle Insider in July. For those of you just joining us, Pinnacle Insiders will be a select group of members who enjoy benefits targeted to FEC & BEC profitability. Those benefits will include data collection, organization, and analysis. We will place a lot of emphasis on game performance and on helping you make great buying decisions; you will finally have the means to compare performance in your center to others. We will have a marketing department geared to providing you with creative, money-making ideas and the materials to execute them. The Insider will also be a thought leader, promoting ideas and discussion, and consolidating and keeping you informed on industry best practices.

And that’s just the start. Howard and I intend to continue to develop additional services to support your business. Pinnacle Insiders are scattered across the US and Canada, many of them single locations or small chains. We want to create your “corporate headquarters” for you, consolidating data and best practices and providing the valuable services and ideas that are tried and proven so you can compete “like the big guys.” We’ll finance these products and services through a subscription fee which will allow us to cover necessary investments and operating costs. We’ll keep it reasonable and provide you with a payback many times over. So get ready– we’re almost there!

Your Insider marketing department has begun work on the first promotion for the July launch: Back to School (BTS)!

BTS is a challenging time for FECs as players and parents change their focus from fun to getting off to a good academic start. Friday night football also affects FEC attendance. With 70 percent of FEC sales occurring from 6 p.m. Friday to 6 p.m. Sunday, football– especially in the early weeks of the season– can have an outsized impact.

So all the more reason to create events and excitement in your facility(ies) and spread the word to promote that these events are happening. Our marketing program will provide Insiders with:

  • Marketing Assets: Templates, Flyers, Web Banners, and Social Media Advertising Assets.
  • Merchandise Ideas and Sources: Create some shelf or wall space in your redemption center for Back to School supplies. We’ll ID sources and product suggestions and will negotiate special pricing on your behalf.
  • Events: We’ll suggest events and promotions for you to advertise, designed to generate visits.
  • Timing: BTS promotions are designed to run in the six-week, August 15 to October 1 time frame.
  • Special Public Relations/Community Support Program: To be announced when we launch the Insider in July. We have a tried and true PR/CS program we think you’ll want to use.

And that’s just the plans for one event. As an Insider you will benefit from a similarly focused promotion each month, along with the structure and materials to support your execution of the promotion. Every retailer in America capitalizes on sporting events and seasons to wrap their advertising and product promotion around– why not FECs and BECs? Why not, indeed! We’ll provide the marketing calendar and resources for you to do just that. Last thought from your Insider marketing department: we are developing social media and e-marketing campaigns to help drive online sales for your facility.

“What are the best games out right now?” We receive dozens of locations’ numbers each week and are providing a ranking based on aggregated real numbers for this article. This list is not the traditional top games by sales rank, it is the top list by popularity on location. The game rankings are based on the frequency with which their sales place them on the top games list. We compiled the top games for each of the locations we tracked. Remember, those locations are big, small, high volume or low, frequent new game purchasers or less frequent– if anyone is curious about detailed methodology and how it applies to your center, feel free to contact Howard to discuss.

Redemption games are the heart and soul of the modern arcade, accounting for about 70 percent of arcade sales on average. The list below outlines the Top 10 Redemption Games on location by times appearing on top ten sales lists across all of the tracked locations. Again, although the “basketball” game is ranked third on this list, it is rarely a top three ranked by sales; we’re just illustrating that it’s often in the Top Ten.

This is evidence that the game is extremely popular and a must have, though we don’t think it will be a top three earning piece in most arcades. The last game on the list is a ticket crane, although this game is the number one overall redemption game by sales in every location we track that has one. Many of the locations we surveyed do not have this game, which under represents its value. This is a must-have game; there is no better value for money on the market.  

The cranes and merchandisers are another key piece of the game mix. We have split the “Crane” category into two classifications: “Plush Crane” and “Knobby Ball” crane. There is no way to aggregate the type of product in the machines, but we do know that most of the locations we track have these two types of product. Many of our clients’ locations have Keymaster, and it still performs well. However, we no longer place them due to “fair play” legal concerns. The Prize Locker is a skill version of the Keymaster, which we do often recommend. The Giant Crane/Big One have been combined since they are similar machines. They are typically the top earning crane, but many locations do not have them because of space issues. When space is available, a giant crane is a must-have.

The video game category has had a resurgence in recent years as Jurassic Park has been a home run. This game tops our list and is a must-have for all locations. Air Hockey is a game that is included in many locations and is overrated here. There are no locations where it is a #1 or #2 video game by sales.

Super Cars 2 made this list, but we also had a significant number of Super Bikes 2 and Cruisi’n Blast. Currently, Cruisi’n Blast is our go-to driving game; two linked driving games are a must in most locations. Typhoon is by far the most expensive game on the list, at over $20,000. When it is included in an arcade, it is typically the #1 or #2 game, but the cost makes it unaffordable for many locations.

Games that perform well but are still too new to make this list include The World’s Largest PAC-MAN as well as The Walking Dead. The Walking Dead appeared in seven locations and was ranked in the top five videos in all. In six locations, it ranked behind Jurassic Park, doing about 80 percent of Jurassic Park sales. In the seventh, it outranked Jurassic Park. Space Invaders Frenzy is an interesting case as it is rapidly gaining distribution, but some locations operate it as a video game and others redemption. Either way, we like it a lot.

As we’ve mentioned, this list is compiled from data we collect each week. No matter how good the data, there are always variables that require interpretation and expertise. Next month we will further analyze the top games and publish our New Client Top Game Lists which will differ from these slightly. The list will be our opinion of the top pieces on the market today. We will include games that are new and performing so strongly that they are must-haves. In addition, we will include games that appeal to specific niches, ones that may not be top earning but can drive incremental sales by targeting customers who would otherwise not play in the arcade.

Last month we wrote about the reasons why it is challenging to integrate an arcade into a facility. Specifically:

Changing Business Model– The business model changed from the arcade being a way to get additional revenue from existing customers to a key attraction used in conjunction with other business units to create an experience.

Learning the Arcade Business– The arcade is a completely different business than the owner’s core business, such as a traditional bowling alley, restaurant, or hotel.

Continuing to Integrate Over Time– Maintaining and consistently integrating the arcade into the overall operation over time is often a challenge. Even when the arcade is well integrated at opening, over time it deteriorates without a system and focus.

The most successful facilities are the ones that integrate the arcade into their business model.  The arcade cannot be an afterthought but must be important to everyone who works at the facility.

Here are some specific ideas to help integrate the arcade and counteract the challenges listed above:

Let Go of Uncooperative Staff– Staff members who don’t evolve to the new model need to be let go. Several operators have told us they have nearly 100 percent staff turnover when they change their business model.

Learn the Arcade Business– Arcades are often the most profitable portion of the business but are completely different than the core business. It is essential to continue to learn this business.

Reinvest– Reinvesting in the capital equipment is essential. This is so important that we include 10 percent reinvestment annually when valuing or discussing financials with clients: five percent of the reinvestment from cash, and five percent from game trade-ins. This business does not allow the convenience of delaying capital improvements for years. Sales will decline if reinvestment is not done.

Upgrade Experience– New games are needed annually, but, when possible, adding an attraction like Laser Tag or more affordable attractions, like Laser Frenzy or Escape Rooms, can really add to the profitability of the facility.

Cross Promote– Creating promotions that advertise the arcade in combination with other pieces of the business are great. For example, Dave & Buster’s has offered arcade card deals in their restaurant menus in an “Eat and Play” package. Adding an arcade card deal to corporate events and parties is essential.

Implement Interior Signage and Video– Signage throughout the facility should promote events, specials, and other areas of the business along with in-house ads on video systems.

Allow Cash Play to Be Used Throughout the Facility– We are proponents of allowing the cash value of your arcade debit cards to be used throughout the facility. It makes enjoying the full experience of your facility convenient and easy.

Arcades can be a great experience for your customers. However, profitability will be limited if the arcade is not integrated into your overall facility and is treated as a key piece of the experience. If you would like to discuss any of these ideas above, especially game or attraction reinvestment, please contact us. In addition, if you have ideas that have worked well in your facility, we would love to hear about them. Click here to share your insights and successes.