One of the basic truths of operating games is: For redemption games on location to earn their best, they must look and work their best. Unfortunately, too many games on location do not look or earn anywhere near their full revenue potentials. In fact, machines sometimes are not set up and programmed correctly when first installed, and the operator’s technicians never catch up. However, the good news is that even an older redemption game can again often be fully reconditioned to become very presentable and a strong earner – assuming it was a strong earner in the first place.
This fact stands in stark contrast to a myth perpetrated by some industry members which holds that older games can never be brought up to snuff, and only new equipment can maximize earnings.
Some 20% of redemption games consistently generate 80% of the revenues in a location.
I call these my “workhorses.” Our ideal games mix today (and for the past 20 years) consists of 50% ‘new’ games and 50% older, reconditioned ones. But even a brand-new game frequently comes with its own problems.
OPENING THE BOX
For example, like a new car, the moment a brand-new game is put into operation it begins to depreciate in value. Within three hours of installation on the game room floor, a typical new game will have a scratch or a ding in the cabinet. Through no fault of the operator or the manufacturer, before you know it, your “new” game has lost 25% of the value you just paid for it.
Fortunately, the old “half-life rule” that applied to the value of video games is not true of redemption models. With video, we used to say that a $3.000 game lost half its value by the end of the first year, depreciating to a value of $1,500. By the end of the second year, its value dropped 50% again – now it’s worth $750 – and, by the end of the third year, it lost a further 20% – now it’s worth $600. By the end of the fourth year, the value levels off and the video game might remain for a few years at this “salvage” value (according to IRS’s position, which is open for debate).
With strong-earning redemption games, the story is totally different. A good, properly reconditioned redemption machine can hold a much higher percentage of its purchase value for years. It might lose only 25%-30% of its value the first year, then level off at a strong 70% of purchase price for the next several years. Big Bass Wheel is a good example.
My companies make sure that brand-new video and redemption games are shipped to our Shop in original crates because we don’t want game distributors to touch them. We often find loose nuts and bolts, loose circuit boards or power supplies, and coin mechs that have fallen out of their brackets, scratches from shipping, etc., so we closely inspect the machines and get everything in order before the game is powered up for the first time. This procedure often saves us from destroying a valuable circuit board, monitor or power supply.
Next, we program each new machine for its specific location destination, making sure that the pricing per play and the ticket payout percentage is appropriate. Sometimes for our own routes, or for customers who understand the value – we upgrade the coin mechs to Imonex plastic units to ensure there are very few coin/token jams.
Reconditioning is the most important business activity that we perform, outside of basic service, and it takes place both in the Shop and on location. Reconditioning our older and completely depreciated games is a crucial step toward improving our company earnings. Purchasing used (sometimes not working) games from other game operators and from FEC game owners and reconditioning them for immediate resale is also one of our most important profit centers. Naturally, several other distributors and operators around the U.S. can say the same thing about how they recondition and sell amusement equipment, but our company’s focus on reconditioning games is what we are most proud of.
In fact, every distributor and in some cases manufacturers as well should be able to say the same. Oddly, some don’t seem to see the value of good, reconditioned equipment to their customers, and continue to only push “new” games. But with a good redemption game, every dollar and every hour invested in reconditioning pays for itself many times over. These games consistently earn five times more per week than the average video game.
To guide the in-shop reconditioning of used redemption games, our team consults and refers to a detailed “Redemption/Novelty Game Prep Guide & Checklist.” A copy of this Frank ‘the Crank’ checklist document accompanies this article, courtesy of Alpha-Omega Amusements & Sales. Each machine has its own copy of the blank checklist clipped to the outside front of its cabinet as the unit moves through the various stages of our reconditioning and quality control (QC) process.
This checklist provides team members with extensive guidance for reconditioning activities and requirements, from filling in cabinet cracks and gouges with bonding material through painting to replacing all the worn parts. We may need to buy and install new parts, apply new decals, repair wiring, etc. It can often take a single technician up to five hours to fully recondition a redemption game, even if that game has been reasonably well maintained in the field. When we acquire a poorly maintained game from an outside source, the reconditioning process can take as long as two days.
The prep person must be different from the QC inspector, who must be a skilled game player, as well. The QC individual, in addition to his or her other activities, plays each game for five minutes, to make sure it’s working correctly before signing off on the checklist.
When reconditioning is complete, the checklist sheet goes to the front office. The office staff fills in the final blank lines on the sheet – the location where this particular game is headed and then files the document. The checklist then is used to track technician repair time and parts for that machine.
Finally, the game is bubble-wrapped to keep it dust-free and to protect it during shipping (blanket wrapped or crated). When the machine is delivered to its assigned location, if a problem arises, we go back to the checklist on file to learn which prep and QC person missed the issue. That procedure ensures accountability and motivates all staff members to take their jobs very seriously.
On-location or on-site reconditioning is also important, and must be viewed as a separate activity from basic tech support. The tech has a well-defined “weekly job”: collecting games, fixing out-of-orders, cleaning machines, customer relations, and lastly, doing a bit of preventive maintenance. When there is time, the on-site technician(s) also is responsible for performing some reconditioning. For the most part, on-site reconditioning takes place “after hours’ when it does not interfere with customers playing the games, or it doesn’t take place at all.
Onsite reconditioning is also a crucial strategy. Obviously, the better we keep our games working onsite, the more money our machines make. Less obvious, but equally important, is the fact that when it comes time to bring these machines back into the Shop, a game that has been well maintained on location is easier to recondition and requires less time and money to refurbish.
Onsite reconditioning is tracked with a different paperwork system than the documents used for in-shop reconditioning. Instead of the checklist sheet, we still use the old-fashioned shoebox of index cards at each multi-game location. Initially, the box contains one index card per game. Techs use these cards to log game history including out-of-order incidents and fixes, reconditioning steps that have been performed, etc. Even if only a partial reconditioning step is performed, it is logged on the index card. This allows the next tech who picks up the front card to see exactly what has been done so far, so he can start working where the prior tech left off. When a game is fully reconditioned, its card is moved to the back of the shoebox, and the new front card is the next game to be reconditioned.
We tell the onsite tech team in a 50-game venue, for example, that they should plan to recondition at least one game per week. Their goal is to recondition all 50 games in the location over the course of a year. In practice, onsite tech(s) usually fall behind on this schedule, so we have to send in a reconditioning team to catch up every year or so. This team usually tries to recondition most of the games onsite as well. Sometimes, however, when repeated efforts by the onsite techs just can’t seem to achieve full reconditioning of a high-earning “workhorse” games, we may deliver an already-reconditioned unit of the same title to the location. The problematic game is picked up, brought back to the Shop, and goes through the full reconditioning process. That game is then sent out to a different location.
In rare instances, if there are no parts available for a certain game (either because that model has been discontinued or because the manufacturer has gone out of business), we cannibalize parts from two or three different machines of that same model to build one fully functional game and then run it through the reconditioning process. Obviously, this is a high-cost solution. It’s one more reason that we try to stick with proven winners from financially stable manufacturers whenever we buy new games to increase the chances that parts remain available for years and years. Also, note that we all save a lot of money by sourcing less expensive parts (such as motors) from third party suppliers.
It should be noted that reconditioning is not a strategy to avoid buying top-rated new games. Running a profitable games operation is a delicate balancing act of maintaining the proper mix of new and older games. Obviously, new games tend to require less maintenance and reconditioning during the first year of operation. Even the most dedicated and aggressive reconditioning team can only recondition so many games in a day, a week, or a year. Buying several new proven-earning games can help reduce the overall time it takes to put a 50- or 100-game shipment together within a 60-day or less time period. We also pay more for purchasing used games from other operators that are in “good” condition and we pay higher prices for games that are traded-in by our customers that will cost us less time and require fewer parts to fully recondition.
We also purchase new games with an eye toward the reconditioning demands that will eventually be imposed on us by those machines. We don’t want to be forced to “remanufacture” a badly made game. Unfortunately, some game manufacturers make their games as inexpensively as possible, using pressed wood and cheap metal/plastic parts. But the truly great manufacturers make every effort to use top-quality materials. Their prices are higher, but their machines earn more money and they last much, much longer on location with less maintenance and less costly reconditioning requirements. You all know who these respected manufacturers are and I salute them!
I hope that you can now understand why reconditioning should be an important part of your operation, and not left as the least important aspect. Reconditioning is a win-win for everyone including our players, the lifeblood of our industry.
Updated from Vending Times – April 2010