It’s all in the brand. That’s what experts say about how licensed merchandising can be profitable for customers. For kids and tweens especially, the difference between dropping a coin into a sticker or capsule machine can often come down to whether or not they recognize the famous face or name staring back at them. And while a few reliable brands always seem to create buzz (and profits), it can get complicated when it comes to staying relevant with the ever-changing times.
One of the latest questions in the industry is about whether ticketless machines are worth the investment. Are they the future of coin-op?
“I’m holding off because I have not yet seen any valid tests that show that revenues are maintained over a long period of time by going ticketless,” said Frank Seninsky, owner of Alpha-Omega Amusements in East Brunswick, N.J. “Only one of our now 55 accounts that have debit card systems have chosen to go completely ticketless.”
Manufacturers of token action games contend that in a ticketless operation the token action games will make more money when they each have an internal hopper system that provides the tokens directly to the customer upon the swipe of the debit card, according to Seninsky’s recent Redemption and FEC Report.
“The major drawback to the two-swipe system is that the new players don’t realize they need to swipe their card at the game to collect their points and will walk away and another player will come along and get all of their points,” reported Seninsky. “There can be a problem if a customer does not understand that they must play tokens dispensed at the game station they swiped. Signage, training and customer service are key.”
He admitted that among customers he’s surveyed, most said that there is a huge benefit to digital technology, especially when it comes to social media sites like Facebook and Twitter. “FEC owners rated websites, social media and online communications as the number-one marketing tool positively impacting their businesses,” said Seninsky. “The biggest issue confronting the industry is that many FECs work on limited budgets, but need help in these areas.”
But he said more consultants are specializing in small and medium-sized FECs, like Your Perceptions in Boulder, Colo. The group, headed by Jim Zigarelli, helped Wonder Mountain Fun Park in Wells, Maine, use social media to generate more customer interest. “Social media, particularly proper use of Facebook and YouTube, and online coupons offered in low-performing markets and on-site signage were really the challenges,” explained Seninsky. “Instead of spending thousands of dollars on a new website, Wonder Mountain is spending only hundreds in the areas with the best chance to impact paying customers.”
The Ins and Outs of Licensing
John Kay, the warehouse manager of Merchant’s Mart/TJ King, in Elk Grove Village, Ill., admitted that licensing can sometimes get complicated in coin-op. “Licensing is tricky,” said Kay. “You must be current, i.e., movies and sport seasons – like baseball, football, basketball and hockey.”
He also said that the popularity of certain movies or characters can determine whether the game or machine will be profitable. Characters like Sponge Bob seem to have plenty of staying power. “Disney does well consistently,” he said. Other popular brands include Jersey Shore and Marvel Heroes.
Mix is also important at redemption counters. “There is usually a mix, both from a size standpoint and from a licensed standpoint, or it becomes cost prohibitive,” explained Kay, who operates within 30 to 50 miles of customers. “We do have some customers that run several states and service chains,” he said. “And we do have a website, so we ship throughout the United States.”
The Cost of Redemption
Customer relations also have a big impact on profit. “I believe it is very important that you understand your customer base and know what buttons to press,” said Tony Shamma, vice president of music and game sales at American Vending Sales in Elk Grove, Ill. “This can take a little time to figure out – but when you do – you will have a better understanding of your inventory. Handling licensed merchandise can be very tricky because it can get old very fast. There are trends that you can follow and there are staple products that can be consistent earners.”
Shamma watches trends very closely, especially the latest blockbuster films and TV shows. “You have to be able to follow trends and make sure to hit it while the iron is hot,” he admitted. “It’s all up to knowing your customer.”
Redemption counters can sometimes make or break sales when a lot of the interest is generated within the few minutes. “When you’re talking about a redemption counter that is completely different for many reasons,” said Shamma. “First, your display area is your selling point.”
Does that mean gaming venues need a lot of bells and whistles?
“If you have outdated merchandise, your customer will know this and it will hurt the overall experience,” said Shamma. He said that if Toy Story 3 is out in the movie theatres and an operator only has items from the first Toy Story on the counter, the customer may feel left out of the major trends. “Plus, when you’re thinking licensed merchandise there are items that are timeless, like sports, kids’ movies, action heroes and other novelties, just to name a few,” he said.
Sometimes recruiting outside expertise helps determine what many of the most popular trends are in pop culture. “We work with a company called Redemption Plus,” said Shamma. “They work with us on creating a turnkey operation for our FEC customers.”
His customers span about 50 miles from his Midwest headquarters. “Most operators will tell you that they will cover a radius of 50 miles-plus in all directions,” he said. “It depends on the amount of locations in any one area.” –