SALT LAKE CITY - Brothers Kurt and Jeff Ostler, founders of OK Manufacturing, have built their successful amusement machine manufacturing company based on two timeless principles: if you want something done right, do it yourself; and don't reinvent the wheel , but do keep upgrading it.
From its 58,000-sq.ft. facility here, OK Mfg.'s team of some 70 permanent and seasonal staff builds a lineup of 15 different novelties, cranes, gumball venders, video redemption games and self-contained capsule merchandisers. In keeping with the do-it-yourself principle, OK Mfg. has always supplied gum for its gumball venders and, for the last couple of years, also began supplying capsule merchandise through its own prize division.
Meanwhile, in keeping with the "don't reinvent the wheel" rule, one hallmark of the company's line is games that offer new twists on classic themes. Signature products include such hits as "Gravity Hill," "Skittle Ball" and "Putt Fore Prizes." Recent additions are "GH2 Extreme" and "Tractor Time" cranes. Production versions of "Super Jump Shot Basketball" are expected to begin shipping later this year, probably with a new title and a possible NBA license. Three more new products are expected to launch this fall.
TOP DOGS: OK Mfg.'s top managment includes
(from left) Jeff Ostler, company president,
Jamie Beers, general manager and
Kurt Ostler, vice-president.
For sure, it's a growing stable of equipment, but the company remains cautious when it comes to creating new machines. "We don't have to put out a ton of products to be successful," explained Jeff Ostler. "We just have to make sure the ones we bring out are really good and make sure we have consistently high quality, which means they earn good money."
OK Mfg. puts great emphasis on clean, attractive appearance, knowing this factor has a direct impact on location acceptability and customer appeal. "We want a game that looks so good it can go into a nice hotel and the owners will be proud of it," said Ostler. "We want it to have a consistent, clean look that engenders confidence when a kid asks a parent for money to play a game."
Not all games from OK Mfg. automatically provide blockbuster earnings when first installed, Ostler noted, but the typical pattern finds earnings rising steadily to a profitable plateau that remains constant for as long as a game is operated properly and customer traffic remains steady.
"Many members of our industry go for the quick return and the low-hanging fruit, which is fine, but we also see value in planting a seed and harvesting a later, larger crop," Ostler explained. "We design [games] so there is a learning curve. After players get the knack, the percentage of prizes awarded will be consistent and within an acceptable range to ensure profitability for the operator. A big advantage of this approach is that the earning curve is the opposite of a video game, which typically performs best in its first three months. Our games start moderately and climb over the long haul."
Ostler explained that he and his brother Kurt ventured into manufacturing almost by accident. In the early 1990s, Kurt was an investor in Jeff's arcade and street route business. Desiring better games and faster delivery times, the brothers decided to build their own equipment. Their first project was the "Giant Bubblegum Machine," which lived up to its name at 72 ins. high x 42 ins. square at the base. The unit was originally intended for in-house use only, but eventually, after other locations and fellow operators began asking for it, OK Manufacturing was born.
Now, 13 years later, Kurt handles financial administration and marketing, while Jeff heads research and game development. Jamie Beers has served as general manager since the mid-1990s; sales professional Debbie Gonzalez came aboard in 2001 and, reported Ostler, has helped take the company to new heights. Maris Opfar and Shannon Walley round out the sales team; Heidi Hughey supervises the in-house prize division.
LAND OF GIANTS
Ostler recalled his surprise when the original "Giant Gumball Machine" caught on across the Southwest. "We didn't build it for sale, but when it earned well, our accounts asked for them," he said. "The Smith's grocery store company asked us to install them across their four-state chain. I was only covering two or three counties in Utah with my route at the time, and didn't have time to take care of service, so we called Bob Allen with Folz Vending in New York, a nationwide bulk vender. They agreed to buy the machines if we turned over the Smith's accounts in those states."
Realizing there could be a larger market for their machine, the Ostlers considered making more units to sell to other operators. "The only real gum supplier that we knew of was slow to provide it to us," Jeff recalled. "A new company out of Chicago called Concord Confections got in touch with us and asked for our business."
The alliance turned out to be a classic case of synergy that fueled growth for both companies. "Concord's Rose Schiller gave us the names of possible buyers for our machine and told us about the bulk vending convention," Ostler said. "Since one 'Giant' could hold 32 cases of gum, we sold the machines and let Concord sell the gum. We shared customer names and cross-referred."
At first Jeff considered the manufacturing venture as a short-term project that might last a year. One day, while filling a "Giant" at a local McDonald's, his wife suggested that the "temporary project" become a permanent business. After all, she pointed out, gum sales never went out of style. It was the mid-1990s, and home video consoles , first Nintendo and Sega, later Sony and Microsoft , were beginning to overtake the arcade industry at that point.
Agreeing that an opportunity was at hand, Jeff decided to sell his operation and enter manufacturing full-time. Rather than register a new business with the state, the brothers opened their new venture under the name OK Manufacturing in the early 1990s. Brother Kurt had already been running OK Rentals as a rental business, supplying home electronics such as TVs, microwaves, etc., to college students.
"We've taken a lot of ribbing for the company name over the years," Jeff chuckled. "People say, 'So you're just OK, huh?'" In fact, the company's name is more in line with Mercury astronaut lingo, where "A-OK" means "all systems go and ready for liftoff" , because that's what happened to the Ostler brothers over the next few years. OK Mfg. marketed the "Giant" model for a year and then branched out with the "Junior," which held a relatively modest eight cases of gum.
Next came spiral-based gumball venders in 1994 including "Roadrunner," "The Maze" and other large models. More flash and elaborate attract modes followed, featuring kinetic action, moving parts, flashing lights and sound. Examples included "Sports Ball," which OK Mfg. still produces, along with "Coaster," "Kazoom" and "Kinetic Kid."
OK Mfg. may have had a bit of an identity crisis early on, but that would have been due to its customer niche, not its name. "Bulk venders weren't used to performing occasional maintenance and had an aversion to it," Jeff said. Realizing that its product line's maintenance requirements and price structure made the machines more appealing to arcade operators, OK Mfg. decided it would target that market. The timing was fortuitous as many U.S. fun center operators were searching for alternatives to video games, which were on the wane. "It was a perfect time for us to enter the arcade industry," Jeff observed.
When they were ready to dream up additional products for the line, OK Mfg. stayed with the "tried and true." Rather than investing huge sums on R&D, Jeff researched classic novelties from the 1930s and 1940s. "Everybody wanted machines with legs, and these old machines also featured kinetic action, which I'd just done," he said. "The old games also vended a small prize no matter what action or gameplay was featured. We decided to create an updated version of one of these concepts."
After a prototype, some testing and further refinements, OK Mfg. came out with its breakthrough title, "Gravity Hill." Gameplay lets players rock a handlebar control unit to walk a ball up a hill. Players win a prize if the ball doesn't fall off the track. With this product ready to launch, the time was ripe to approach the arcade market.
At first, Jeff recounted, OK got the "cold shoulder" from many distributors because they "didn't want to deal with bubblegum guys." Meanwhile, most bulk venders tagged OK Mfg. as makers of arcade machines. Among the notable exceptions was Fred Simon of Amusement Factory (Los Angeles, CA), who nudged OK to evolve the product from a high-end bulk machine to a low-cost arcade unit that was "built like a tank." The company followed this advice and the operators who tried it "were really making money," Jeff said. One element contributing to "Gravity Hill's" healthy cashbox was that it appealed equally to women and men, and was acceptable to the entire family.
Additionally, Gonzalez wisely insisted on operators installing the units in typical street stops, which would provide reliable earnings figures. The numbers from this approach convinced a few distributors to begin representing the line.
By then, OK Mfg. had additional products on the blackboard including "Skittle Ball," an alley bowler in an upright video-style cabinet that vended 4-in. capsules. This configuration enabled street operators to stock plenty of prizes without having to refill the hopper frequently. In 2003, OK debuted its first video-based prize-dispensing skill game with "Mr. VIPS," featuring the Video Instant Prize System and incorporating video game software from Merit. Determined to have "Mr. VIPS" appeal to both sexes, Jeff conducted a personal survey of players; he found that a key reason some video games didn't attract women is because many female players disliked joysticks or complicated button-and-joystick controllers.
Merit later licensed "Mr. VIPS," but today, it appears control of the game may revert to OK this year or next. Ostler believes the game still has great potential for those who will take a patient approach.
The popular "Putt Fore Prizes" arrived in 2004. In gameplay, the player uses a lever to control a putter-type interface to knock a ball across the playfield, aiming at one of four scoring holes. Closer holes are easier to hit and reward the player with fewer points. The game comes standard as a merchandiser but has an option for ticket vending. The game received good reception from the marketplace.
Entering the crane arena this year with "Tractor Time" cranes, OK Mfg. is once again offering a new twist on an old favorite. The unit vends either plush or candy and is fully programmable, offering play-until-you win mode for candy and single-play for plush. The metal cabinet features tractor styling and graphics. "Tractor Time" proved such a hit at ATEI (the London Show) in January that as of this spring, it was backordered in Europe, so OK Mfg. has not had time to ship units to the United States yet.
CHICAGO SPRING ROLLOUT
Debuting at last month's ASI trade show was "GH2 Extreme" (which Jeff referred to as "our best game to date"). Players use handles to control wire cables that serve as a track for a ball that moves "uphill" against gravity toward the target. Also at ASI, "Super Jump Shot Basketball," based on a design by Carlos Echaves, was previewed under that name, but an NBA license and some faster action features are expected for production versions of this ticket vending game. A merchandiser version will also be introduced at a later date.
OK Mfg. now successfully bridges the arcade and bulk markets, but Ostler admits there is still work to be done in educating operators. As he put it: "It's easier to teach an arcade operator, who is accustomed to doing maintenance, to add marketing to his routine by changing the merchandise, than to persuade bulk operators to invest the time and effort in maintenance." But Jeff quickly added this caveat: "Our ultimate customer is not the distributor or the operator; our real customer is the player who drops the quarter in the slot."
Looking at the range of games on the market today, Ostler declared that OK Mfg. has found its niche by simply giving players what they want. "Games must be entertaining and they must offer players an opportunity to employ skill and win something for their effort," he stated. "People love the classics like 'Skee-Ball' and air hockey, but at the same time they want to see innovation when they come to arcades. All of our games are skill-based. This means we have no auto-percentaging. OK Mfg.'s machines are not gambling devices. Skill is what makes for fun."
Ostler sees a clear need for new blood among operators, and new thinking among manufacturers. "The biggest thing our industry needs is new blood on the operating level," he said. "Our market contracted in the past decade, but the equipment costs about the same and it is making more money. We can grow this industry if we recruit more operators, put out more machines and service more locations. The more machines people see, the more money they'll put into our national cashbox."
But manufacturers can also improve their act, Ostler is quick to add. "Too many so-called manufacturers actually just license a concept from somebody, then have it developed by an outside hire, and finally produce it through a sub-manufacturer," he observed. "They never get their hands on the R&D or the development process themselves, and that results in mediocre products."
With new operators and better manufacturers making better products, Ostler believes the amusements trade can expand the number of locations that it services , which he views as the key to expanding everyone's cashbox. "Given our limited number of existing locations, we're going to be in a holding pattern unless we begin to install machines in more places across America," Ostler declared. "The truth is that the number of possible locations is 10 times what our industry has penetrated so far."
And in this expansion mission, Ostler sees OK Mfg.'s products as a necessary wedge. "There are so many more places that can have this type of concept; they just need somebody who can pitch to them," he said. "We know this because 'Gravity Hill' opened unconventional locations for us and for other operators. With these machines and 'GH2 Extreme,' some of the locations that the industry lost in the early 1990s as video consolidated, are back again. We just have to get the word out, because that's where the opportunity is."
More information is available from authorized distributors or from OK Manufacturing LLC, 2340 S. 900 W., Salt Lake City, UT 84119; tel. (801) 974-9116 or (800) 748-5480; fax: 801-974-5458; or by e-mailing to email@example.com.