Long live the machine

LONG LIVE THE MACHINE
Game cabinets now have greater staying power, but what impact is this having on the industry?

Electrical equipment in the amusement and gaming industry is bucking the trend. While computer systems and mobile phones are having shorter and shorter lifecycles, game cabinets are lasting longer and longer. With the arrival of PC-based and downloadable games, cabinets stay in situ longer and provide return on investment over an extended period of time.

In the same way that the shortening product lifecycles of mobile phones have changed the telecoms industry, today’s longer lifecycle games are bringing about fundamental changes in the gaming market.

The challenge for amusement and gaming machine manufacturers is how to support these longer-life games for several years in the field. Customers need the reassurance of ongoing service back-up throughout the machine’s lifecycle. But, to ensure competitive pricing of machines in the first place, manufacturers have to be able to deliver these aspects of customer service and ongoing support over perhaps four or five years without generating burdensome levels of cost. In the same way that design and manufacture began to be seen as two separate operations during the 1990’s, manufacture and service back-up and now being split off from one another. New ways of delivering ongoing support are being explored, and outsourcing of support activities to an expert third party supplier has begun to be seen as the preferred way forward.

There have already been some notable industry moves in this direction. Earlier this year Global Games announced its decision to employ e-service (a specialist service and support provider for the amusement and gaming industry) to handle its after-sales support. More recently JPM launched a major initiative which delivers ongoing support via a partnership between itself and e-service.

Robin Johnson, Commercial Director of JPM explained, “Manufacturing and delivering amusement and gaming machines is a very different operation to supplying spare parts. Our business excels at high volume supply of machines to customers and has IT and business processes in place to do this extremely efficiently. In contrast, we decided that we were not as well placed to handle the very different requirements of sending out spare parts in low volumes to multiple sites.

“We decided to create a partnership between ourselves and e-service that would give our customers the best of both worlds. It is rather different to a traditional outsourcing arrangement. Usually the whole operation would be handed over to a third party but we decided to split the support operation down a central line. Enquiries from our customers still come to our internal technical team exactly as before. We have personnel with many, many years of experience of our products, and this way we still offer the same customer experience with all of the knowledge base of our personnel intact. The fulfilment of orders for spare parts however is handled by e-service. E-service’s business is focused on exactly this type of operation so they can do it with much greater efficiency.”

Mike Clokie of e-service said, “To be successful as a third party supplier of service and technical support you need to be able to meet the highest service levels. Our engineers carry out installations, upgrading and networking projects, for example, at end sites such as cruise ships, casinos, arcades, pubs, clubs and betting offices. To those site owners, our engineer is the face of the machine manufacturer. The service we provide reflects directly on our customer. It’s a responsibility we take very seriously.”

In the case of Global Games and JPM, e-service’s remit currently covers only theUK market. There is no reason however why the same approach shouldn’t be used by machine manufacturers overseas who wish to sell machines into the UK. Some of the larger manufacturers of components, for example Astrosystems and Azkoyen, have set up service organisations in the UK to support their products installed here. A company which can take a holistic approach to service and support of the complete game cabinet however is a very different matter. Although outsourcing service and support to an expert third party is a relatively new concept in our industry, it could well form part of an international manufacturer’s UK sales strategy in the not too distant future.

Spare parts planning

Another factor for consideration right across the industry is the supply of spare parts throughout the game cabinet’s extended lifecycle.

Mick Johnson of Bellfruit Games said, “Games are more reliable than ever before. We analyse failure rates as part of our quality control procedures and have seen steadily increasing reliability for individual components and for games overall.

“The major impact of games cabinets staying longer in the field is really one of product lifecycle planning. At the design stage for a new game we will be thinking through the likely long-term requirements for that game over, for example, four years in the field. We calculate spares usage for that period and need to have sufficient stocks of spare parts in place from the outset to support the game properly.”

The need to plan so far ahead is a reflection of how component technology within the machine has changed. Far fewer ‘industry-specific’ spares are now used in games. In contrast the components are more likely to be mainstream products such as monitors, touchscreens, note acceptors and so on, used in many different applications outside the amusement and gaming industry. Dealing with an industry-focused supplier like Starpoint or Gamesman is very different to sourcing from a multi-national monitor manufacturer based in the Far East.

Mike Clokie of e-service explained, “There are advantages and disadvantages. There are considerable price reductions available where a mainstream product, for example a monitor from a multi-national manufacturer, can be incorporated into a game design, because of the economies of scale. On the other hand, a game manufacturer simply won’t be buying in sufficient volumes to be a major customer to a multi-national component manufacturer like that. So when it comes to decisions about whether to discontinue a specific model of component for example, businesses in our industry have very little ‘purchasing muscle’ to influence ongoing availability.

“We see sourcing of stocks of parts for legacy equipment as a key service our company is able to provide. As we are able to purchase on behalf of a number of manufacturers, we are ordering in sufficient volumes to do this cost-effectively. It is also easier for us to justify the research time needed to track down these spares, wherever they may be in the world. I have spoken to several game manufacturers who have found this time-consuming process to be a real burden on their in-house purchasing departments.”

Looking even further forward, the longer lifecycle of game cabinets is good news in environmental terms. In the UK, and across Europe, pressure is mounting on manufacturers with regard to disposal of electrical equipment at the end of its useful life.

The UK Treasury declared from the very beginning its intention to steadily raise the price per tonne for the Landfill Tax every year. In April 2005 it rose to £18 per tonne - the largest percentage rise to date, an increase of three pounds per tonne in one year. The impact of the WEEE Directive can also be expected to hit in future years. The cost and regulatory burden of waste disposal shows every sign of increasing sharply as we approach the end of the decade. In this respect the amusement and gaming industry has fewer nightmares in prospect that its colleagues in the office IT and mobile phone industries.

Robin Johnson of JPM said, “It is important to have strategies in place at the end of the product lifecycle. Our industry already has a culture of refurbishing cabinets and re-siting them. At JPM we also use a policy of buying back our game cabinets. This gives us a degree of control over environmental impact. In addition this generates a source of spare parts that can be re-used if required in machines in the field”.

Today’s generation of PC-based game cabinets appear to have more commercial benefits than disadvantages. The subject of on-going support however is likely to continue to be a hot topic of conversation as the industry evolves to meet the demands of these longer product lifecycles.

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