Question and Answer Session with Mr. Gary Stern – Founder, CEO and Chairman of Stern Pinball, Inc.
Q: Gary, there seems to be a lot going on at your company these days. Can you tell us a little about it?
Gary: Yes, we’re living in interesting times, aren’t we? Pinball was born during the Great Depression and the industry has never seen economic times like that until the current Great Recession started in the second half of 2008. When the credit markets froze, it caught our entire industry (and most of the world) by surprise. Our games are expensive to design and build and, as a result, their price points are relatively high. Most buyers end-up financing their purchases. When they couldn’t get credit, they had no choice but to slow buying.
Q: Are things getting any better today?
Gary: A little. The credit markets are starting to open up a bit but there’s still a lot of bad economic news out there so buyers are understandably skittish. But we are seeing pick-ups in volume, which is encouraging.
Q: What has the company been doing in light of the times?
Gary: In November of 2009 we partnered with a group that has been helping us in many different ways. They brought capital to the table and expertise that complements skills we already had in-house. They’ve helped us shore up the business, think through the future direction and execute several initiatives that are in various stages of completion.
Q: Can you give us a few examples?
Gary: Sure. A few of the items that are visible to the public include upgrading our on-line presence. We recently launched a new website and upgraded our Facebook, Twitter and YouTube sites. Our primary goals with those efforts have been to provide additional places for pinball fans to get together and to raise overall awareness of the game. We’ve also begun to test what we call a “Standard” version of our games that is designed for what we believe is a largely untapped segment of the market. Buyers in this segment are interested in owning a pinball game that is simpler than our traditional “Pro” (coin-op) model. With fewer features, the game also carries a lower price.
Q: Does the introduction of the “Standard” model mean that the company will be moving away from the types of games it has produced traditionally?
Gary: Not at all. We will continue to produce our main “Pro” models with features designed for location play and, of course, our “Premium” models that are designed for pinball enthusiasts and collectors. In fact, we hope that we’ll be able to incorporate some of the results from our R&D work associated with the “Standard” model into our more expensive models. The goal is to bring down costs and price points without adversely effecting game play.
Q: What other things are you working on at the company?
Gary: We have many other initiatives underway including improving our product development and manufacturing processes and leveraging the e-commerce capabilities of our new website. As volume picks up, we also expect to add talented new people to our team. We’re also excited about the new titles that we anticipate bringing to market later this year and in 2011. It’s been a tough stretch, but our optimism is growing.
Q: Your last few games were developed with your in-house design team. Do you expect to use outside designers in the future?
Gary: Absolutely. Our in-house team has really done a great job on the last few games but it’s important to partner with outside designers too. We will continue to do that.
Q: Do you see any major innovations in the game somewhere down the road?
Gary: I think in terms of “improvements” and “innovations”. We’re constantly looking for ways to improve the game. We’re currently focused on reliability and ROI improvements. With regard to innovation, we believe we need to innovate; our market demands it. The rate of innovation is affected by economic conditions of course. There are more resources available for innovation when times are good. Times haven’t been so good as of late so out of necessity our pace of innovation has slowed.
Q: Can you give some ideas of the types of innovations you’re working on?
Gary: We are beginning to experiment with new ways to make the games more engaging for participants on location. Networking games in different locations is another area of interest to players and us. We’re in the early stages of both of those initiatives.
Q: Thanks very much for your time today. Would you be willing to do this again?
Gary: I’d be happy to do it again.