|
If you know family entertainment centers (FECs), walk into an eBash and you’ll see some familiar sights: young people playing their favorite games as friends watch, a birthday party or two in progress, customers lined up to buy snacks.
But eBash is more than just an FEC. In place of traditional arcade and video games, there are rows of flat-screen monitors hooked up to high-speed computers, Microsoft Xboxes, Sony PlayStation 3s, and Nintendo Wiis. All are common equipment for home entertainment, but here, people show up and pay to play.
“My wife and I ran a church youth group and we’d have evenings where the kids would bring in their gaming consoles and TVs, hook them all up, and play each other,” says Zack Johnson, owner of eBash, which has locations in Evansville and Terre Haute, Indiana. “We thought it was a great business idea so we researched it six years ago and here we are.”
Johnson is part of a worldwide trend that seemingly bucks conventional wisdom. It’s been thought by many that the increasing sophistication of home computer and console gaming would keep players in their homes as they tangled with aliens or refought World War II. But furiously working a controller and becoming a champion on a video game while sitting in a basement leaves something to be desired: people.
“This is why smart FEC owners have never been too worried about home computer and console games,” says Michael C. Getlan, an FEC consultant in New Rochelle, New York. “Playing a game together in a location is a completely different experience from playing them online. It‘s like the difference between talking to someone on the phone and talking to them in person.”
LAN Centers: Huge in Asia, Niche in America
Known as LAN (local area network) or gaming centers, there are an estimated 500 of these facilities in the U.S. and many more in other countries, especially in Asia where the trend has blossomed. “In a country like South Korea there are thousands of these centers that have become a part of the culture,” says Scott Steinberg, CEO of TechSavvy Global, a technology research firm in Seattle. “There are closely watched tournaments, and some of the players become celebrities. Can it develop to this point elsewhere? I don’t believe that’s likely. It’s only a niche market in the U.S. for males from 12 to 32, so this isn’t like the boom of arcades in the ’70s and ’80s when you had people of all ages showing up.”
Getlan points out most LAN centers are owned by sole proprietors or small partnerships with one or perhaps a handful of locations and agrees it’s unlikely they’ll grow to challenge the traditional FEC market: “An FEC may have an arcade, but it’s geared to the occasional player or the younger customer. Gamers are serious about the games they play, they’re not looking for FECs where they can play big-time games like ‘Call of Duty.’”
An initial investment of $250,000 to $300,000 is required to open a LAN center, with the bulk going to capital equipment such as computers, monitors, games, and gaming furniture (chairs equipped with speakers, for example). Most centers charge by the hour, around $5, with discounts for multiple hours purchased. Concessions and merchandise sales account for about 20 percent of revenue, and parties make up another 20 percent.
“We do very well with birthday parties for middle-school boys,” says Johnson. “They’re kids who’ve outgrown having their parties at a local FEC and they want to go to a place where the older kids play.”
 Most centers also have lock-in overnight events fairly regularly, which adds to the revenue pot. “We do them every Friday, from 8 p.m. to 8 a.m.” says Jeff Torello, owner of RUaGamer in Cary, North Carolina. “They draw crowds so big we sometimes have to turn people away; we don’t have enough stations. It’s also where we do very well with concession sales.”
In part because of their young customer base and their reliance on the Internet, most centers take advantage of social media like Facebook and Twitter to get the word out about themselves. They also work through traditional marketing, such as a promotion done by RUaGamer with a local theater. “For the movie ‘The Karate Kid,’ we had a tournament of guys playing ‘Tekken.’ The theater did lots of promotions for it and gave out passes as prizes. It drew quite a good crowd, including many new customers,” Torello says.
The location of a LAN center is considered one of the most critical parts of its success. If it’s set too far from its target of young males or if it’s inconvenient to access, failure can be predicted. “With a LAN center you’re always fighting the little voice in the customer’s head that’s saying ‘Do I really want to drive out there when I could just play the game on my computer?’” says Steinberg. “For a center to make it, it’s got to be as easy to play as possible.”
Keeping Up with Tech Is Key
Maintenance of the expensive computers, controllers, and consoles is an issue many owners address themselves. “I think most people who get into this business are techies. They like working on electronics and can do their own work,” says Johnson. “We also have some regular customers who are very skilled at working on our equipment. They’ll hear about a patch needed for some game and they’ll download and install it for us, so there’s plenty of cooperation in our centers.”
Other countries are also experiencing the growth in LAN centers. “When I was a gamer growing up, we didn’t have a place to gather and talk about new games and equipment,” says Rick Bradley, manager of Guf Internet Gaming Centre in Geelong, Australia. “People have been finding out about our two centers and they’ve been flocking to them. It’s really changing the gaming culture in Australia.”
Bradley points out many Internet cafés, which are slowly losing business as more people switch to laptops, netbooks, and smartphones to access the web, are making a natural switch to gaming centers. “It’s a very logical move to make since they’ve got the expertise and the equipment. You just need to be in a location that will attract gamers.”
Two technological developments could affect the business of LAN centers. “There’s the concept of the ‘online pass,’ which more game manufacturers are doing,” says Steinberg. “It used to be that you’d buy a game then go online with it and play others. Now, you’re being asked to pay a regular fee to the manufacturer if you want that online access, so that can add to the operational costs of a center.”
But on the positive side, “cloud” gaming could be the next big trend. “In cloud computing, all of the files and programs are stored in a remote location you access on the Internet,” says Steinberg. “Some developers are coming up with very sophisticated games that are loaded onto high-speed computers that can be accessed and played by you with a much more modest computer. If this becomes a reality, you won’t need to buy super-fast computers and video cards to open a center; you’d just need equipment that was reliable.”
Overall, most don’t see LAN centers taking away business from FECs. “The customer base is very different; it’s not like the arcade boom of the 1980s when you’d see all ages going to FECs,” says Steinberg. “They haven’t been able to find a game that attracts women or older men, at least not yet.”
John Morell is a freelance business writer based in Los Angeles whose work has appeared in the Los Angeles Times and The New York Times. He can be reached at john@jcmorell.com.
|
