Stinger Report - 25/01/2021

TSR Newsletter | January 25, 2021

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The Global Digital Out-Of-Home Entertainment (DOE) Sector covered in The Stinger Report .

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Kevin Williams

Publisher, The Stinger Report (TSR)

Capturing the Prize Across the Market

# 1054

Report Skinny

In The Stinger Report #1054 – This issue covers in detail:

1. The impact on the amusement perennial Crane Gaming in the new market, looking at the history of the platform, and revealing a new future.

2. Marking SEGA’s 35th Anniversary of the legendary ‘UFO Catcher’ and looking at its future in the market it has instigated.

3. The Japanese amusement scene’s dependence, emerging lockdown, on offering fun physical gaming via the Crane Game and their merch, and how venues like from TAITO compete for Guinness World Record machine operation.

4. Charting the brand new online “Live Play”, engendered by the new lease of life through Netch and the birth of “Online Skill-Crane Game”, from a growing number of competitors.

5. The Stinger Report then broadens its coverage to look at developments in the venue market, including eSport development from Riot Games, and the changing cinema scene including new business for ShowBiz Cinemas

….and much, much more!

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- The Stinger Report, published by KWP and its director, Kevin Williams, as the leading interactive out-of-home entertainment news-and-views resource, covering the immersive frontier and beyond.

Main Report

This latest Stinger Report covers the new and unique ways that amusement and entertainment systems are being employed in the changed market landscape. Also looking at the growth of new business models to generate new returns. First charting the ride and rise of one of the oldest amusement pieces in the industry’s inventory.

- Crane Machines Go Virtual!

We have seen several diversions and pivots in the business by those in the amusement and attractions scene. We have covered in The Stinger Report, on several occasions, the embracing of what seems like the go-to app of “Video Conferencing” due to the ramifications of the Global Health Crisis. This is the platform applied by some Zoom-based Escape Gaming, Zoom-based Trivia Parties, and Zoom-based Social Private Hire activities. But there is another aspect of remote-play that has rocketed in interest, which directly takes from the physical aspects of the “Amusement” scene – and was in place long before the current situation.

For perspective, the ‘Prize Machine’, represented by ‘Crane Games’ (‘Claw Machines’), is a mainstay of the carnival and amusement machine lineup. The concept is able to trace its amusement history back to the first iterations as the ‘Digger Machine’, in 1920s carnival and arcade operation, as part of their “Penny Slots” and “Nickle and Dimes” (machines that became embroiled in legal gambling issues of that time). The “Digger” (as it was known) would become the predecessor of the claw machine. A reputable replacement to the digger would come in the 1970, with the crane and claw machines working to strict manufacturing and operational standards.

Early amusement advertisement [International Arcade Museum]

The modern amusement claw machines would ride on the video arcade renaissance, and the market would thrive and redefine itself. Along with being a perennial revenue stream, the claw machine has offered an unusual way to generate attention. Examples include the infamous ‘Marine Lobster Claw’ machine – having players try to capture live lobsters; and the controversial ‘Goldfish MAXe’ machine – scooping live fish from the game. These products are equally as notorious, as the media’s favorite “child trapped in crane machine” story for slow news cycles.

In Japan, the claw machine mutated into the incredibly popular “UFO Catcher” – originated by SEGA back in 1985 (originally named ‘Eagle Catcher’), the concept takes the original claw and prize system and creates a futuristic amusement offering. It has an illuminated playing field and unique prize capture device, from where the game gets its name. The unique illuminated playing field allows for a much wider selection of prizes to be attractively displayed. And so, a massive industry in Japan for the machine series, as well as the merchandise, has defined itself. SEGA has been joined by ATLUS, BANDAI NAMCO, KONAMI, and TAITO iterations on the basic UFO machine formula.

Regarding the lockdown Japanese sector, UFO Catchers have been conscripted to help address the isolation of younger players at home by offering one of their favourite pastimes. Toy and craft publisher, Shogakukan, launched a “build-it-yourself” paper-craft working miniature of a ‘SEGA UFO Catcher’. This news came while SEGA announced a partnership with Shogakukan to mark the 35th Anniversary of the popular UFO Catcher series. Along with the paper-craft model, there will be a series of features in their magazine ‘Kindergarden’. All this will culminate with the launch of ‘UFO Catcher 9 Second’, the latest iteration of the platform, which boasts new features.

The paper-craft UFO Catcher with working claw [Shogakukan]

The popularity for UFO machines has only grown in the Japanese amusement sector, and even with concerns over business direction for traditional amusement, the UFO machine has ruled its own unique niche in the market. This is best illustrated by one of the first new Japanese amusement venues to open, post the initial COVID lockdown in Japan. TAITO opened, in August, its vast ‘TAITO Station Fuchu’ – operating some 450 UFO machines. This garners the site a Guinness World Record award for the largest number of systems in one place and represents a glittering temple to the continued popularity of this prize vending amusement – but the best is still to come.

Inside the vast new facility [TAITO]

This move towards gaining world record status seemed to kick off an arms race with the reopening of Japanese amusement venues. Soon after TAITO’s successful award, it was announced that the reopening of the SEGA Shinjuku Kabukicho would be offering a challenge with its own Guinness World Records attempt. Scheduled for the beginning of January, the SEGA venue would be attempting to break the "world's largest number of crane game machines installed". We will bring you news of if this are successful in coming reports.

The Stinger Report covered, back in 2018, that the UFO Catcher had made the transition into social media, initially with “how-to-play” tutorials on YouTube, and then with online “live-play” websites appearing in Asia and beyond, allowing people to play the machines remotely, with the won prizes mailed to the winners. Sites such as ‘Crane Game Toreba’ (owned by CyberStep), proved extremely popular and, inevitably, Western alternatives started to gain traction, along with smartphone apps that achieved the same principle. The addictive nature of the crane game experience concentrated into a smartphone game application. Video cameras point at “real machines”, remotely controlled by the player who has vast amounts of micro-transactions to play (using their own currency, such as with “Toreba Points”).

As stated, the concept is not new – for example, back in 2015, Netch released its ‘Netcatcher Netch’, which originated the “Online Skill-Crane Game” architecture, comprising the online registration, prize and machine selection, and the direct mailing of prizes to Japanese players. This platform registered membership of some 500,000 players. Netch would go on to expand the service, launching the ‘Akiba Catcher’ platform for an international audience a year later. The platform is named after the slang term for crane machines, referring to the Akihabara region of Tokyo which is populated by arcades running numbers of the popular machines. And with this the flood gates were thrown open.

The Akiba Catcher mobile platform [Netch]

Entering this growing business, ‘SEGA Catcher Online’ is an app (and web portal) for the Japanese market, offering the remote play model to SEGA’s own machines. Launched back in 2017 for the Asian scene, this app-based service builds off the work achieved by the likes of Toreba – promoting its own in-game currency of “SEGA Points” to play a game. The service was such a popular platform that it received a US launch in January; SEGA is offering a Westernized version of its platform.

Another entrant into this popular water was TAITO – in 2017 the company launched ‘TAITO Online Crane’. This platform would follow the norm of offering live feeds of remote-control company-branded crane machines, populated with the latest prize, gift, merchandising and branded items from the extensive TAITO merchandise line. The latest update to the platform, launched in November 2020, is the game service now available on the Amazon Fire TV series. This live-remote game service is now available as a streamed channel in a major new circulation for amusement-based content.

Online Crane channel on Amazon Fire TV [TAITO]

This is a move to its own streaming channel and the continued profitable growth in remote-play smartphone apps. The UFO Catcher, in Japan, is being consumed by mobile game philosophy, though it was revealed that the Japanese factories still had to keep warehouses’ real machines operational, to feed the thirst of the online gamers. Attempts to replace real machines with computer generated representations have not been popular – the real machines remote hock-up allows the players to still enjoy their amusement fix remotely.

Example of an online UFO Catcher setup [allibaba]

As game-streaming services start to look for new draws, the possibility of other physical machines could be transformed into remote-play systems. Other redemption platforms are also given the same treatment. Along with this, the use of in-game currencies are looking at Crypto-currencies as a possible new financial system, opening the concept to wider deployment. Also, the current COVID conditions impacting amusement facilities have also started some operators along the same line of thinking as seen with these online services. Maybe the future for Prize Center business is the 24-hour mailing of the prizes won at venues, sent directly to the customer; rather than retaining a vast inventory of prizes that must be processed.

The COVID-measures has also seen innovation in the design of machines in Japan. One example has been reopening amusement sites in Tokyo employing an "Antivirus Sheet” covering on the controls of their UFO Catchers and other machines. While another crane game manufacturer (Gestelligence) has developed a machine that has complete frictionless / hands-free control. Using a motion tracking sensor, the players hand movements are registered by the catcher and emulated by the claw. A brand new generation of gaming interface to a platform celebrating a long and successful service in the sector.

Antivirus sheet covered control panel [GENDA SEGA]

The question must be – why has this not been a solution seen deployed from the US redemption and prize machine manufacturer scene, and is a revenue stream being missed? Will the Western amusement trade’s aversion to even considering social media as a viable platform for profit, if not just promotion, be a terminal failing?

- Defining Times for eSports

While the Immersive Venue business is slightly more defined, the impact of the current Global Health Crisis and business ramifications sorely tests the strongest of infrastructure. One of the most volatile of the entertainment facility businesses has been the boom in “eSports Venues”. Regular Stinger Report readers will be familiar with a cascade of announcements over recent months of new eSports facility projects and openings – but concerns on the resilience of the business, especially facing suspension of operation, have started to show.

It was first revealed by Esports Observer publication that the ‘Esports Stadium Arlington’ facility was in serious trouble. This came first with Tweeted messages from former members of staff announcing mass lay-offs of employees, which resulted in only two members remaining at the 100,000-sq.ft. venue. At the same time, it was revealed that the present of Esports Stadium has also resigned his position with immediate effect. This location was first opened in November 2018 and was stated as the largest eSports operation in North America of this kind. Sources cited that the impact of the “Stay-at-Home” State guidelines was the last straw for an operation that was already in a precarious position following its opening. The venue is managed by Esports Ventures LLC., in partnership with the city of Arlington, and has already placed a new chief executive in the role.

The original artists interpretation [Esport Ventures]

While some of the early bricks and mortar eSports facilities may be sailing in rough water, the popularity of the eSports sector still seems to be growing, though in directions that may not favor single site operation. It was revealed by Riot Games, publishers of the eSports sensation League of Legends, that their recent championship event broke all records. Held in October, ‘League of Legends 2020 Championship’ attracted a physical audience of some 6,000, but also saw the streamed event break all industry records with some 45.9m viewers at its peak. The popularity of this championship would also see an online game. It was also stated that Western audiences for eSports streamed events has increased by some 10-percent over the last few months. This underlines the issues that physical eSports venues face, attempting to effectively capture this audience’s interest to their permanent sites, against event and streamed offerings.

- Redefining Entertainment Business

While it would be impossible to not see serious concerns in the theater business model, there was a brief glimpse of hope registered by one of the major theater chains. It was revealed by Cinemark that they had seen some 1.3 million moviegoers rent out space since they started their new ‘Private Watch Party’ program. The concept saw audiences, in groups of up-to-20, able to rent entire auditoriums at some 520 Cinemark locations which remained open. The audience can select from a library of films, or available new releases. The company stated that it had sold over 100,000 private watch parties – and the corporation’s CEO underlined that this private hire service had proven how many people treated moviegoing as a treasured global pastime, and this program offered a safe alternative for that very purpose.

Private party screening in a Cinemark theater [Cineluxe]

The concept of a facility hire approach to addressing mandated capacity restrictions falls into the ability to ensure social “Bubbles” – groups of individuals who are in close contact with each other and so, hopefully, are closed off from infection. News from other cinema chains that undertook this approach was not available, with chains like AMC and Megaplex Theaters having launched their own iterations of the private party concept, back in October. Beyond the Western theater business, the development of a more upscale theater experience had been growing, with the UAE sectors leading the charge. The private lounge, specialized seating, and personal service for small groups, were already established for VIP hire long before the crisis. A specialized service is now being expected from other aspects of the entertainment market these groups consume.

One of the areas of survival for the cinema chain owners is the inclusion of a strong secondary entertainment element. In some cases, the entertainment element has been accelerated to a primary function. One of the many examples of a “Cinema Entertainment Center” approach is the investment by ShowBiz Cinemas, who have worked to roll out their sixth ‘ShowBiz Cinemas: Bowling, Movies and More!’ (Idaho), hybrid entertainment space. The remodelled cinema comprises a dedicated boutique bowling and amusement offering (including a dedicated “Redemption Room”), with a VIP style, and special seating environment. It borrows heavily from the UAE style of approach and is one of several such styled “Cinema Entertainment Center” (CEC) chains being fielded.

The approach towards private hire for facilities is not just a simple business. Many amusement venues have been experimenting with the concept to “keep the lights on”, as was stated by one operator. And this approach comes with its own pitfalls. It was reported that Chicago-based ‘Emporium Arcade Bar’ was closed by local officials after being overcrowded according to local COVID measures. Sources cited that the site had been reported as having some 142 guests during one private hire event. Small businesses in the amusement and attraction scene are feeling the pressure to both survive and find a happy medium within confusing local and State legislation.