Stinger Report - 28/06/2021

TSR Newsletter | June 28, 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)

Entertainment’s Growing Landscape

Part 1 | # 1076

Report Skinny

In The Stinger Report #1076 – This issue covers in detail:

1. [TRENDING NEWS] The amusement distribution impact emerging from lockdown sees major developments as the industry adjusts to the new normal.

2. [BREAKING NEWS] SEGA reveals its entry into the eSports scene, with a brand-new platform to support competition, based on the Virtua Fighter property.

3. [TRENDING NEWS] The use of new marketing platforms sees the amusement trade embrace the QR code revolution, as the rest of the market makes the move.

….and much, much more!

To read the full Stinger Report, register for your subscription here.

- The Stinger Report, published by KWP and its director, Kevin Williams, is the leading interactive Out-of-Home Entertainment news-and-views resource, covering the immersive frontier and beyond.

Main Report

It is more than obvious that the Out-of-Home Entertainment landscape is not just evolving, but also growing. The continued number of new facilities announcing their opening of doors only just keeps up with the news of growing business for the previous re-opening businesses. But, in amongst all the news, some trends are continuing to make themselves felt in the industry.

- Entertainment Market Restructuring

As the amusement and leisure entertainment sector slowly re-engages with the audience after the long lockdown following the Global Health Crisis, there are the first indicators of major fracture lines in the traditional business, and indicators of a major change in the industry as it adapts to the new realities.

- Shipping New Machines

One of those fracture lines has been seen in “Distribution” – the traditional amusement trade has depended on the operation of distributors who have evolved from the early coin-operated amusement days. They offer a means for operators to purchase/lease hardware, receive supplies and maintenance support and, in a changing landscape, even utilize these distributors to design and develop facilities. For manufacturers, the distributor has offered a sales agent means to sell into territories and promote their products and service systems in the field. But 2021 sees cracks in this symbiotic relationship.

In compiling this piece, The Stinger Report reached out to a respected European distributor for their perspective on the feature. In general agreement with the premises, it was also felt that it was important to include in the list of services a distributor carries out the additional aspect of credit and certification. This ensures that imported machines are correctly certificated and abide by local supply and service needs – and many distributors offer a means to extend credit for smaller operators to have access to machines that may be out of their normal buying limit. As pointed out, these are valuable and essential activities which need to be included.

The new generation of facility operators, entering the teaming waters of the current entertainment facility business, seem less enamoured with the option of utilizing traditional methods. Many new operators and existing chains are now moving to buying direct and maintaining their hardware themselves. At the same time, several of the leading hardware providers are looking less and less at an exclusive sales agent relationship, and rather, at non-exclusive sales agreements. The disruption in the international supply lines by the impact of the pandemic has meant that distributors are also looking at constrained supply of hardware and spares, thus adding to the questioning of their value in the supply line.

An example of the constraints being felt was illustrated recently by a customer letter that was sent by Warehouse of Games (WOG), one of the prominent UAE based distributors. Stating “unprecedented supply chain disruptions”, the operation warned its customers of significant delays in deliveries. They are warned of price increases, with more changes to possibly follow. This is the first distributor to go on record, publicly, to speak of impending price hikes and supply shortages. However, it has been reported in confidence that sales of second-hand amusement equipment, internationally, have skyrocketed as demand kicked in following the reopening of business. The preferential position that some distributors held with some suppliers are now abandoned, on a “first come, first served” basis.

Shipping conditions following logistic chain blockages range from the impact of the pandemic to the blocking of the Suez Canal, and have all added their impact. But also, it has been charted from sources that supplies of amusement pieces and support hardware have been impacted. There is a run on second-hand amusement (particularly Redemption) pieces on the market. And with the news of new facilities planning to open next year, manufacturers are in a precarious position to meet orders and plan for a surge in business.

- Making New Hardware

Looking at the “Manufacturers”, there was some news of amusement developers looking at new approaches towards the business approach. No greater investment is being seen than that from the Japanese factories. As was reported recently, inroads towards establishing an eSports presence had started to gain momentum. As reported last year from the JAEPO’20 event and KONAMI’s launch of an eSports product line and facility support division, we have also seen CAPCOM establish an eSports championship for their fighting series (‘CAPCOM CUP’), including an agreement with television and streaming media corporation NTT DoCoMo – which will be following the ‘Street Fighter League: Pro-JP 2021’ competition though the new channel, ‘X-MOMENT’.

The other big news was the move by SEGA Sammy to “Utilization of IP Assets”, only to announce their legacy brawler series would be entering the competition arena with the launch of ‘Virtua Fighter eSports’. The game had been trailed as far back as an announcement at Tokyo Game Show 2020, but with its appearance, the Japanese media was quickly on the case to gain more details of this major development from the amusement and gaming veteran. Japanese news service Famitsu carried out an interview with leading a SEGA AM2 producer on the project. The biggest question was regarding the consumer/amusement cross-play for the eSports game. It was confirmed that a free-play version of the new game would be available in Japan for Sony Playstation 4 consoles (through the Playstation Plus portal). Meanwhile, an amusement version of the game with supporting terminal is being fielded.

Regarding the confirmation of the amusement release, the AM2 team stated that, even under the heavy COVID lockdown that Japanese amusement venues are experiencing, they have also supported an extensive arcade release for the eSports version, running on the ‘ALL.Net P-ras MULTI Version 3’ (cloud-based amusement distribution service supported in cabinets in the territory). The game development was initially scheduled to coincide with the 60th anniversary of SEGA, but eventually came out this year. The question of actual cross-play (PS4 players competing with amusement players) was skirted in the interview, with little information if this would be merely a shared leader board towards the onstage championship later in the year, played on the amusement version, but with the eSports streaming element shared across console and arcade competitors.

The game will support the Aime IC card used by the ALL.Net, especially through its VR.NET fighting game platform. And this will have a dedicated server, called ‘VF.eSports.NET’, that will hold all the stats on championships, tournament, and league details, along with individual player stats. The system will be used as a membership card to the eSports competition, and will allow competitors to collect prize money. This is still very much in an embryonic state, and the game is fundamentally an updated version of the console and amusement release ‘Virtua Fighter 5 Final Showdown’ – though the eSports component is based on a lot of the experience that SEGA gained with its 2019 release, ‘Puyo Puyo e-Sports’. This is favouring more of a tournament competitive approach than a true eSports competition.

Details on the rollout of the tournaments will be ongoing, though a major competition is expected near the end of the year, selected from the top players and teams from the initial competition. The AM2 producer also lifted the veil slightly, to reveal that work was ongoing for the next iteration of the franchise, with ‘Virtua Fighter 6’ progressing towards a 2022 release, again confirming that it will support this eSports/tournament capability. For ‘Virtua Fighter eSports’, the competition started at the beginning of June and will continue through the rest of the year, with tournaments being streamed and appearing on a dedicated YouTube channel (‘Virtua Fighter eSports Challenge Cup’).

More details on other supporters of this unique approach to an amusement console crossover will be revealed from SEGA in due course. For the amusement trade dealing with facilities under lockdown and an explosion in streamed eSport tournament competition – expect more arcade IP to find themselves re-utilized in this kind of approach.

The new roaster of combatants entering eSports [SEGA]

Speaking of a new way for cross-platform pugilistic competition, a new VR game experience was released onto the market that shares a similar name to the SEGA classic, but is taking to the market in a totally brand new way. Launched in China and now being distributed in the West,‘Virtual Fighting Championship’ (VFC) has been developed by L&L Technology and offers a virtual boxing game experience. Not the first that has attempted to do this, but VFC is supported by a dedicated social media network and looks to offer commercial and consumer competition through leagues and championships to become its own sport experience.

In early access, the game proclaims to feature the world’s first multi-player mode that will allow two players to engage in virtual combat in real time, in VR. VFC is a highly physical fighting experience, with the players using PCVR headsets such as the HTC VIVE Pro. The game is currently distributed through SpringboardVR, Private Label, SynthesisVR, in the West, and in Asia through VIVEPORT Arcade and ZMVR commercial VR game services. This in support of the consumer release on STEAM and Oculus Store. The big element to this game is the prize element, with the early access promoting weekly tournament pay-outs for players of up to $20 per competition.

The grandiose claims of the game aside, this will be the first time that consumer and commercial gamers will be able to compete in direct competition and will open the door on the long-awaited VR multi-platform opportunities, and the draw of practice for consumers, performing in the arcade. The game hopes to be supported by an eSports championship and is already running a Discord and other social media networks to promote competition and share player stats. The concept is clearly wanting to become the VR game equivalent of the Ultimate Fighting Championship (UFC) – only time will tell.

- New Way to Engage

The way the industry presents and promotes has been another aspect of the post-pandemic landscape. Our readers will be familiar with the inroads that cashless payments and ePayments have achieved in the COVID environment. But there is another technology that has received a rapid adoption in the West.

Charted as far back as 1995, when first mentioned by The Stinger Report, the technology of the QR (Quick Response) code was first deployed in Asian amusement adoption. The ability to link smart phone users to a web page or download an app, just by capturing a coded image, was a revolutionary marketing and promotional tool at the time. The Asians’ advancement in mobile apps meant that it was embraced as an obvious utility, and the Western amusement scene was slow to adopt.

Fast forward to the post-lockdown landscape and the “Frictionless” economy has quickly embraced the utility that QR represents. Numerous countries have embraced the ability to direct health information, such as in the UK vaccine procedure, not only with leaflets but also with QR code direction, to government information webpages. And with this, the hospitality industry has followed suit, pubs and bars, as well as other hospitality, are employing the ‘NHS COVID QR’ to capture patrons’ details on the Government's Tack and Trace app.

The Japanese amusement trade has continued to be a great supporter of QRs – all the ALL.Net, NESiCA, and other amusement network community/distribution systems have supported the app, as has much of the Japanese transportation and vending, concession scene. This is seeing players using the QR code to jump to a league web page and membership stats. The app has proven a strong tool incorporated in printed signage, and even digital displays. Now the Western industry will have to evolve to adopt this versatile promotional tool.

Now from necessity, the technology has become utilitarian, and the entertainment industry can now take a second look. We have started to see, across the board, several marketing and promotion schemes in the amusement and attraction scene embrace the use of QR – also seeing more magazine advertisements. The Stinger Report experimented with a QR advert back in 1996 and now, some 25-years later, we are glad to see our latest advertisers return to the application. We hope that all trade advertising embraces a new way to reach their customers.

1,500 drones paint a QR code in Shanghai skies [Billbill]

In an additional element to the adoption of QR codes, news was released from Germany that they were rolling out a scheme called ‘CovPass’ that would see a special QR code being displayed through an app to confirm the full vaccination status of the user. This is currently being evaluated by European Health Ministers and could be employed as a “Digital COVID-19 Vaccination Certificate” towards allowing entry and travel. (A few days after writing this, it was announced that the European Parliament gave their approval of the certificate). This will be like the system employed in China, and the World Health Organization (WHO) vaccination certificate.