We love the idea of taking hit games and porting them into their own arcade consoles. Someday we hope to work with game developers to create life sized versions of their games, but for now, we’ll have to keep dreaming about arcade games that don’t quite exist just yet. One of the biggest hits in the last decade has been the game Minecraft. In some ways, it would be the perfect candidate for turning it into an arcade because unlike most games produced these days, the graphics have a very 16 bit feel to them.
Tubby Paws also dreams about Minecraft arcades and after one night he awoke to create a cool mock up of what a Minecraft arcade would look like. His vision is a cross between your typical shooter type cabinet and a Dance Dance Revolution machine. We think his design would certainly make the game more interactive and is a glimpse at what could be, if game developers start creating cabinets to go with their games. h/t to Brian.Carnell.com
In order to keep an eye on the arcade industry, one of the things that I like to do is to tune into public conference calls from leaders in our industry. Last Thursday, Chuck E’ Cheese President & CEO Mike Magusiak, Chairman Dick Frank and CFO Tiffany Kice all took part in a conference call discussing their earnings during the 2nd quarter. Seeking Alpha has a transcript of the call for those wanting to play along at home.
From an earnings perspective, Chuck E’ Cheese is doing a lot of things right. Year to date their revenue is up 4.2%, net income is up 11.3% and in the first 6 months of the year, the company has generated $92.7 million in cash flow. During the call they admitted that they may have hit a rough pocket in July, but think it will smooth over by the end of the year. The most impressive part of what they’ve done, is how they are spending their money.
According to Kice, “we utilized this cash by investing $32.1 million, primarily in new and existing stores, paying $4.4 million in cash dividends repurchasing 18.1 million of our common stock and reducing our outstanding borrowings on our revolving credit facility by 35.7 million.”
From the perspective of a Chuck E’ Cheese investor, it was another solid quarter. Profits are higher, debt is lower and the company continues to generously buy back their own stock. This signals confidence on the part of management because instead of hoarding their cash, they are giving it back. In response to the numbers, Chuck E’ Cheese’s stock (ticker CEC) is up about 4% from before the announcement. For most, the story ends there, but from the perspective of an arcade vendor, the news is actually a bitter pill to swallow.
Driving most of the gains in Chuck E’ Cheese’s net income was a 20% reduction in the cost of dough because they’re making thinner crust pizza’s for their guests. Diluting the quality of a product can have a short term boost on profits, but if Chuck E’ Cheese’s management isn’t careful, over the long run, this sort of deterioration can have a negative impact on their brand. Thinner crusts aren’t the only sacrifice being made, as part of their cost cutting measures, CEO Maguzia made it clear that the company is cutting back their investment in new games.
2 years ago, Chuck E’ Cheese spent $65 million on entertainment attractions for their guests. I’m not sure if this makes them the arcade industry’s biggest customer, but they are undeniably one of the largest. The deterioration in the price on used games has put pressure on the price of new games coming to market. A healthy market for the classics can cause the new release market to earn stronger margins, but until operators on the street can earn again, it will create situations where companies like Chuck E’ Cheese have the advantage.
This soft market meant that last year, Chuck E’ Cheese was able to slash their games budget by over 35% and spent a little over $40 million keeping their titles fresh. This year, the company is projecting that this number will be less than $25 million. That’s a pretty big chunk of our market, to vanish into thin air, especially over such a short period of time. Call me a pessimist, but I bet Chuck E’ Cheese is able to cut this part of their budget again next year without impacting the quality of their attractions.
How is Chuck E’ Cheese getting away with such a remarkably lower investment in games? The same way operators have been doing it for years, by rotating their games from one store to another, in order to keep the appearance of new titles.
According to Magusiak “we have recently enhanced our existing store capital strategy by fully utilizing used or transferred games from existing stores in combination with new games and rides. this substantially reduces the cost of game enhancements and enables to impact each of our stores on a more frequent basis.”
As more and more income opportunities are being taken away from operators on the street, it’s putting pressure on the price of the new games that come to market. Instead of buying new games from distributors, it would appear that Chuck E’ Cheese is going after the very same classics that we are 🙂
With both the Feds and the state of California set to make major overhauls on the redemption games, Chuck E’ Cheese could make a play for recreating the classic arcade at their restaurants. We think that there is a big opportunity for someone to use a free play classic arcade, in order to drive restaurants sales and think McDonalds is actually taking the lead in this area.
If you look at the tablet type games that McDonald’s has put into their playgrounds, it’s very telling that they aren’t coin-op, but are 100% free play. The value of getting kids to bring their parents there vastly exceeds the few quarters McDonald’s might scrape by from running a Burgertime at 50 cents a play. It will be interesting to see how Chuck E’ Cheese’s deploys their remaining game budget over the next year or two and whether they continue to invest in the latest and greatest to drive traffic or if they start aggressively buying on the used market.
Domestically, the arcade industry may be in decline, but overseas the story is quite different. Last year Kyle Orland explored some of the reasons why Japanese arcades seem to be flourishing while North American arcades have struggled. It’s still a tough riddle to solve, but the Taipei Times gives us more proof that the arcade industry continues to earn internationally.
“Now comes a new kind of relationship, and this one is for children in Taiwan and the US where a standing coin-operated arcade game called Hit, Hit, Alaska (極地獵) has been selling like hotcakes. The Alaska-themed game was the brainchild of Ben Lu (呂坤謀), who runs an arcade firm in Taipei called Saint Fun. In Chinese, the game’s name means “Ice Hunters.” Since 2009, Saint Fun has also been selling the game in Russia, Indonesia, Malaysia, Thailand and Japan, said Rita Lai (賴佩琦), a Saint Fun office staffer in Taipei.”
Hit Hit Alaska takes all of the best qualities of a whack a mole game and incorporates them into an arcade environment. I’m not surprised to see it sell well. It looks like a lot of fun and those quick burst of excitement can be very addictive for players. Hopefully strength in other markets allows the industry to keep coming out with cool games. As much as we hate to see the games fade away, we’d hate it even more if development came to a stop. 50 years from now we want another generation to be trying to figure out how to fix games whose time has passed.
Normally, I’m given quite a bit of latitude when it comes to what games I’m allowed to buy, but after our latest restoration, my brother and co-founder Tim, has now forbidden me from ever buying an arcade game that has had it’s side art painted over. Not necessarily because it looks bad, but because he knows I can’t resist wanting to peak under the paint to see what the side art looks like.
Over the course of their lives, arcade games tend to change identities. When a game would get stale, operators would change it into something new and often times much worse. Collectors today spend countless hours trying to return classics back into original condition. It’s this labor of love that drives what we do and is part of the reason we try to convert as many of our games back into their original. Some games were only released in kit form, so we don’t mind having a few generic cabs, but whenever I see the artwork painted over, I can’t help but wonder if it was because they didn’t like the game or because something went wrong. It’s a gamble taking the paint off because you can get 5 hours in only to discover that they were covering up graffiti or other damage and now you have to repaint over the work you did to take it off.
This particular cabinet was purchased as a Circus Charlie game. I actually find the game charming, but it’s kind of an odd match for the cabinet. Circus Charlie is a fun casual game, but this cabinet is huge on the inside and is designed to look fierce. It’s big enough that you could actually sleep inside of it, but apparently this is the line between casual arcade hoarder collector and crazy.
Instead of changing the sideart, someone had painted over it to hide the cabinet’s real identity. In order to get to the original side art, you have to scrub the paint away with a chemical remover. While it’s fun to watch the progress as you go, the problem with this type of restoration is that is a labor intensive task. Scrub too hard, you ruin the sideart. Not hard enough and you’re there for days. Each side takes us about 7 hours to complete.
It’s also not a very pleasant experience from a comfort perspective, because you have to be wearing a respirator or else the fumes from the Goof Off will kill your brain cells dead. Nonetheless, I think the result is well worth it and whenever I’m done, I’m always pleased to have a game that many consider a grail.
The next series of photos will show what this transformation looks like. To have some fun with this post (and to recreate how long we have to scrub at these things before we can get to the sticker underneath) we’re going to update a new photo each hour or until someone correctly guesses the game that we saved in the comments.
Nick at Arcade Hunters.com was lucky enough to participate in an arcade tournament at The Pinball Wizard’s arcade in Pelham New Hampshire and filmed what it’s actually like inside of one of the world’s mega arcades. Part 1 of the tour is listed above and part 2 is below. It’s hard to appreciate how massive this place is until you can see how many games there are in the videos. There are almost no repeats in their collection. In total they have over 170 games available for you to play.
Paperboy was one of my favorites growing up, so it makes me feel a bit old to think that it’s about to hit the 30. The game really was designed to be played on the arcade platform and features handle bars that you can use to control your bicycle on your paper route. To help celebrate the big 3-0 Globacore has created a virtual reality game that recreates the game with even more intensity. Not only would this be a lot of fun, you could probably get some good exercise on the bike.
Galaga is one of the most beloved games of all time and deserves it’s place in our Hall of Fame. The concept is simple, but fast paced and if you can master the environment you can play for a long time on a single credit. In the game, you are sometimes attacked by a magnetic beam and can allow your ship to be captured. If you clear the level, it will double up your firepower and allows you to achieve higher bonus and to take out enemies faster. It’s also risky though because you lose an extra life if you die.
On Reddit, Dicebat wants to know what the better way to play is. Part of it comes down to longevity vs. high score. If I’m playing a single player game, I tend to try and shoot my way out of the magnetic beams, but when it’s competition 2 player style, you can’t beat the bonuses and it puts pressure on your opponent to play more aggressive than they might otherwise.
Some of the advice offered on the thread is a little mixed and a little salty (prbly NSFW). Dicebat says going slow and steady is his preferred choice while kthru12drunk says that he was a referee at Twin Galaxies and all the pros go double.
For years, they entertained us with their Go-Karts, Mini-putt and of course their arcade games, but in August, Malibu Grand Prix in Redwood City is officially calling it quits. I wish I could say that this was a case where they sold the business for big bucks and were retiring into the sunset, but unfortunately the closing is do to attrition.
Owning a business is tough, for the last 5 years, owning an arcade business has been brutal. This is why we are working so hard to provide another revenue stream for arcade owners and operators. If the industry doesn’t evolve it will die and while the Dave & Buster’s/Barcade model seems to be a winning combo, it’s not a large enough audience to be able to absorb the millions of arcade games that are out there. For years, the Family Entertainment Center has been a staple of the arcade industry and if this closing tells us anything, it’s that this business model is fracturing.
I’m not sure what will happen to their games at Malibu Grand Prix, but I remember attending an office event held there about 6 years ago and already the arcade had been gutted. Hopefully, the remaining ones will be recirculated, so that people can still enjoy them. It was a blast to race their go karts and after getting the competitive juices flowing, it was even more fun to race my co-workers on the arcade games. I’ll miss Malibu Grand Prix, even with a new entertainment center set to open in my hometown of Antioch. Hopefully, residents in the bay area will make sure to give Malibu Grand Prix a proper sendoff. Sometimes it takes losing something for people to realize how important it is to them. We wish Palace Entertainment (the owner of Malibu Grand Prix) the best of luck with their other locations.
Not convinced how awesome Malibu Grand Prix really is? Check out this retro commercial the franchise created during the golden age of gaming. h/t to SmartWatermelon