Mechanical Action Pinball
MELROSE PARK, IL — The new millennium begins with one manufacturer building pinball machines, one of the coin-op industry's most popular entertainment devices in the second half of the 20th Century. And, in recent years, equipment operators and distributors, along with other industry players, have been questioning the game's future.
Stern Pinball Inc. has adopted a philosophy that may secure the game's future: keep it simple. In an age when many game manufacturers are looking for ways to apply the latest computer and information technologies to coin-op game designs and business models, this small factory realizes that it's the nostalgic appeal of pinball that has become the game's most attractive characteristic.
Located here outside of Chicago, where about a dozen fabled pinball factories thrived at one time or another following World War II, SPI became the sole manufacturer of pinball games in 1999 following WMS Industries' shutdown of Williams Electronics Games.
SPI president Gary Stern told V/T that he is more optimistic about the future of pinball than he has been in years, noting that he was anticipating a greater worldwide demand for the electro-mechanical styled flipper games his company offers.
Son of industry pioneer Sam Stern, who died in 1984, Gary Stern has seen almost everything there is to see in the pinball business, beginning with an apprenticeship at Williams and later running Stern Electronics with his father. He later became the president of Data East's pinball unit, and continued as president for five years after it was acquired by Sega in 1994. In October, Stern acquired Sega Enterprises' flipper unit, Sega Pinball Inc., establishing Stern Pinball Inc., a new company with a long history in pinball.
The ability to carry on the business and follow in his father's footsteps is not something that Stern takes lightly. "I have grown up in the pinball business," he said, "and I am thrilled with the opportunity to continue practicing the trade my father taught me."
Much of what drives Stern today is a direct result of what he learned from his late father, who began his coin-op career in the 1930s as an operator in Philadelphia. "My dad would take my mom on dates and stop by a jukebox to get the money to pay for it," Stern recalled.
Like a number of forward-thinking operators, Sam eventually became a distributor, running a successful business in Philadelphia until 1948, when he moved his family to Chicago after buying half of the thriving pinball business owned by Harry Williams. Sam later moved over to Bally before purchasing another company, Chicago Coin, which was absorbed in 1986 by Data East Pinball.
Father and son also worked together during the 1980s at their own factory, Stern Electronics. They produced a multitude of video and pinball games. Flipper titles included "Big Game," "Meteor," "Stars," "Nine Ball" and "Memory Lane," to name a few.
Stern, who holds a law degree from Northwestern University and a BBA with a major in accounting from Tulane University, started working for his father at age 16 in the Williams stock room. One of the most important things he learned early on from Sam was controlling production costs. "As much as I love pinball," he said, "it is a business well before an art form, as some consider it to be. Operators must make a living with coin-op equipment. Factories must also live with making games.
"The reason Sam started me in the stockroom was so I could learn that we are first and foremost manufacturers, even before designers," he observed. "As with any small margin product line, pinball manufacturers must control material… and if you have material left over when production has finished, well, money equal to the cost of that material has been lost.
"If you run out of material," he added, "you waste labor and time, not to mention lost sales. Manufacturers must control materials."
Stern's commitment to pinball is evident in his outright rejection of the notion that he is the last pinball manufacturer, even if the evidence suggests otherwise. "I like to say we're the only pinball manufacturer left, not the last," he emphasized. "Last sounds like we're getting out of the business, and we have no plans to do that."
[In fact, a company, Illinois Pinball Co., is showing its first title, "Pinball Pool," at AMOA International Expo in Las Vegas as V/T goes to press.]
Whether or not he is the last or the only established pinball manufacturer, the new Stern company is in better shape following WMS's departure, which Stern readily acknowledges. In the time since WMS's pullout, SPI has added a number of Williams distributors, including Betson Enterprises in the U.S. and Nova Games in Europe.
During the early 1990s, as many as 20 pinball games were produced annually by four factories, creating a supply that exceeded the demand. While the industry may never return to the glorious heyday of 1992, when more than 100,000 pinballs were produced (the company Stern now owns made about 27,000 of them), he believes there is now greater demand for games in the market. And games that retain value can go into multiple production runs; the Sega "South Park" title, for instance, has already gone into three production runs since its introduction early last year.
The SPI president doesn't expect to ever again sell 27,000 games in one year, although the company's new 40,000-sq.-ft. facility is capable of producing some 75 units per day.
Much of that demand is concentrated in western Europe, which accounts for approximately 60 percent of SPI's business, Stern said, adding that the market is still sufficient to support his new company, if not one or two others. "There's room for one small, economically run pinball company, and it can't be a high-tech, public company," he explained.
Stern's concern about a publicly traded pinball company is based on the theory that pinball, which he describes as a "grind business," is not a good fit with the quarter-to-quarter pressure applied by today's financial markets. With that in mind, he quickly dismissed any thoughts, slight as they may be, over the possibility of SPI going public. "This [SPI] is not an IPO candidate," he said.
"We [pinball manufacturers] grind it out," he said. "We're never going back to the time when there were multiple pinball makers producing more than a dozen models annually."
And while SPI's position has undoubtedly improved following WMS's departure, Stern takes exception to the idea that his company has a stranglehold on the pinball market. "It's not a monopoly," he pointed out. "We're competing with other coin-op equipment categories like poker machines and touchscreens."
Pinball, he added, also faces the same pressures as other coin-op equipment categories, including fierce competition for location space and the popularity of home-based entertainment systems.
On the other hand, Stern said, SPI's philosophy of making mechanical-action pinball as opposed to high-tech pinball hybrids gives it an added advantage. Mechanical-action pinball, he points out, is one thing that most people can't get in their homes. "The bottom line is that we're not selling technology, we're selling entertainment," he said, noting that the fun factor is more important than bells and whistles.
In addition to "mechanical-action pinball," Stern frequently uses another mantra: "inexpensive entertainment." "Sam [Stern] used to say that games are an "inexpensive entertainment' form, not unlike a movie. Although they don't have any great moral, like some movies," he explained, "they are pure entertainment. And like a movie, games must have good themes, action and climax. They [games] must also possess sound effects, photography or artwork, promotion and distribution."
Like any successful businessman, Stern has surrounded himself with a competent staff. Shelley Sax, SPI's administrator who is better known as "Jack of all Trades," has worked with Stern since 1979 and keeps the company running smoothly. Industry veteran Jolly Backer, who was with the company when it was owned by Data East, serves as SPI's vice-president of sales. Mike O'Donnell, who has been with the pinball organization since 1987, serves as the plant's vice-president and general manager. Joe Blackwell heads the technical services department.
The SPI design team consists of several experienced pinball artists, engineers and programmers. Lonnie Ropp, who worked for Incredible Technologies when it programmed Data East pinballs, directs software design. Ray Tanzer, who comes from Gottlieb and Grand Products, directs mechanical engineering. Other well-known pinball designers include Joe Balcer, John Borg, John Norris, Phillis Rosenthal and Jay Dominak. Former WMS designers Dwight Sullivan and Keith Johnson were added recently to the team.
Looking toward the future, Stern Pinball Inc. is planning to design and manufacture between three and four titles annually. The company, which today produces about 40 games daily, has had remarkable success with its "South Park" and "Harley Davidson" models, the last two models produced under the Sega name.
SPI's first two models, "Striker Xtreme," a soccer-themed game that was previewed in January at the Amusement Trades Exhibition International in London, and the new "Sharkey's Shootout" address the needs of today's pinball market. They are primarily designed for casual play. "Sharkey's Shootout," introduced last month, also can support wide-area networked tournament play, administered by Incredible Technologies' "International Tournament System."
"I'm optimistic about the future of pinball," Stern said. "I think SPI has much to look forward to as a provider of ancillary entertainment."