The Best Thing that Ever Happened
(To the Arcade Business)

By George McAuliffe, President, Pinnacle Entertainment Group

Are you ever reminded that you’re getting old? If not, just wait. It will happen. I was in a meeting the other day where I tossed out a reference to Get Smart, a famous TV show from the 1960s and ’70s, and nobody knew what I was talking about. (If you don’t either, go to en.wikipedia.org/wiki/Get_Smart.)

What does that have to do with cashless card systems? Well, it used to take two people six hours just to get our weekly sales numbers, the key to understanding the business. It would be a full week before the (paper) report reached my desk and I knew what my arcades did in the week ending seven or eight days ago. And the payroll cost of that process was huge!

That’s just the sales reporting which, with the right card system today, we can see in real time from any remote computer anywhere.

The impact on pricing is another huge benefit. In the old days, by the time the customer was plunking their third or fourth quarter into a machine, they were thinking, “Wow, this game is expensive!” Now, a $3 swipe takes place in two seconds! Card systems allow unlimited pricing options, give us “upsell” features and allow us to tweak pricing at the point of sale and at the game to maximize perceived value.

Game management, redemption controls, labor savings, guest experience, marketing, party and group sales management are all improved with the right card systems. These have made a major contribution to what I maintain is the “Golden Age of Arcades,” the period in which we find ourselves today.

Tips on Choosing the System

It can be a daunting proposition wading through the various features of the card systems on the market to decide which is best. Here are a few things to look for:

1. Connectivity/Redundancy: With cloud-based systems, which are preferable for many reasons, solid redundancy keeps you in business when location-to-cloud connectivity is interrupted. One way some suppliers reduce their costs is by skimping on redundancy. We recently saw what can happen where a single software update shuts down businesses worldwide.

While occasional disasters happen, systems with cell-based backup are just too vulnerable for a full-sized redemption arcade of any scale. Our favorite system – full disclosure, a Pinnacle client – is cloud based but installs two lower-priced transaction servers on site. If the internet connection to the cloud is interrupted, the arcade is still in business. Once the connection is restored, the data is all updated to the cloud. You are up and operating throughout!

2. Track Record: While new is often sexy, suppliers that have been around for 30 years have the customer base and experience to deliver, innovate and provide support.

3. Hardware: As operators grow, their businesses change and diversify. Choose a system with a variety of options, like teller/kiosk features, or with a variety of card readers that handle swipe, tap, RFID, credit cards or mobile iWallet apps.

4. Software: All systems are designed to take the guest’s money and load value on cards. The best will have a variety of features such as variable price packaging, upsell ability to a variety of media such as wristbands and lanyards, time-play options, online sales and scheduling, ability to incorporate gate passes for attractions, bulk encoding for ease of group and party set up, and QR code navigation.

5. Reporting: The best systems have good, solid and easy-to-navigate reporting on key aspects of arcade and FEC operations, including pricing, revenue, game sales, bonus management, group and party use, internal loss prevention and redemption management controls.

6. Redemption Manage­ment: Redemption IS the arcade business today with some 80% of sales earned through merchandise games. There are lots of moving parts in redemption and those moving parts need to be tied together and managed to maximize sales and control costs. A good card system allows for a “closed loop redemption management system.” It starts with integration of a digital packing list (DPL), which Redemption Plus invented in the late ’90s. The DPL tracks and reports payout management on games, items scanned and the coupon value of prizes dispensed. A good system helps to automate the inventory process and closes the loop with a “Rapid Reorder” capability (another Redemption Plus invention), “teeing up” the next order for management review and reorder.

7. Integration: Today’s arcade and FEC rarely stand alone, they are usually part of another business whether it’s a restaurant, bowling center, cinema center, etc.The ability to integrate the card system with bowling POS systems like Brunswick Sync or Qubica Conqueror, or in cinema centers, Vista, is a huge plus. We found long ago that our clients who are the best integrators tend to be the most successful.

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So, as you can see, there are a few things to look for when considering which system to buy, or if you’re looking to replace one hasn’t lived up to the standards you need. One last thought: Beware of letting “the tail wag the dog.” I spoke to one operator who was complaining about a lost Saturday of business because his card system connectivity was down. When I asked why he chose that system in the first place, he said, “I really liked their dashboard report which gave me key data points at a glance, plus it was cheapest.” I’ll just leave it there. You get the point.

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George McAuliffe has helped hundreds of businesses large and small develop and execute arcades and FECs. He has personally operated family entertainment centers from 2,000 to 150,000 square feet as a corporate executive, entrepreneur and consultant. He is the owner, with his partner and son Howard, of Pinnacle Entertainment Group.

George lives on the Jersey Shore with his wife, Julie. They have three sons, two daughters-in-law and a grandson.

Readers can learn more about Pinnacle at grouppinnacle.com or contact George at [email protected]; phone: 314-422-7197.