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Issue Date: Vol. 40, No. 12 / October 25, 2000 - November 24, 2000, Posted On: 10/25/2000


Pinball Downturn Challenges Music And Games Operator; Flippers Still Have A Place In Today's Equipment Mix


Marcus Webb

U.S.A - When WMS Industries pulled out of the pinball manufacturing business in October of 1999, questions were bound to follow. Was the writing on the wall for the flipper business? Was the silver ball headed down the drain for the last time?

With its Williams and Bally brand products, WMS's Williams Electronics Games unit dominated the worldwide pin market for decades. Considering the extent of its prominence, the company's departure was viewed by many as the final blow to a category that once defined the coin-operated entertainment industry.

Nearly one year later, many of the questions surrounding pinball's fate remain largely unanswered.

The current state of the industry consists of one major factory, Chicago-based Stern Pinball Inc., which acquired Sega's flipper unit, Sega Pinball, in October 1999. The only other player is pinball collector Gene Cunningham, who formed Illinois Pinball Co. earlier this year. Cunningham, who showed a new game, "Pool Player," at the AMOA International Expo, purchased the rights to remanufacture Williams' parts this month.

Thanks to Stern Pinball, the category is still alive, but its future role in the industry is open to debate.

Just eight years ago, more than 100,000 pinballs in as many as two dozen models, were produced annually by four or five manufacturers, which included Capcom, Premier Technology, Alvin G. & Co. and Data East, along with Williams. At that time, much of the demand was concentrated in Western Europe. And that remains true today, as more than half of Stern's sales are exports.

In the U.S., feelings toward pinball vary greatly. Some operators recognize the importance of offering pinball in the mix, while others have become frustrated with the high level of service required to keep them running in the field, so much so that some argue the game's value in today's coin-operated market.

Pinball, perhaps more than any other piece of coin-op equipment, is unique in that it evokes strong emotions among its followers; it also has become a fabled piece of Americana. Regardless of what may happen to the game as a commercially viable equipment type for operators, it has secured its place in American culture and history.

Even today, pinball fans remain passionate. It is not uncommon for aficionados to communicate constantly over the Internet, attend conferences, compete in leagues and tournaments and buy and sell the games.

For these reasons, many observers believe that it may be a mistake to write off pinball just yet.

"We've [coin-op community] tended to put nails prematurely in a variety of coffins over the years," said Roger Sharpe, who spent 12 years with Williams Electronics Games and Midway Games in a variety of roles, including director of marketing and licensing, and has been involved in coin-op since the mid-1970s. "The question that I have is why, as compared to any other time in recent history, do we now assume that pinball has outlived its usefulness?"

Sharpe, author of Pinball! (E.P. Dutton, 1977), recently formed Sharpe Communications, a full-service marketing, advertising and licensing and promotional agency based in Arlington Heights, IL.

One of the biggest myths about pinball machines, Sharpe is quick to note, is that nobody wants to play them.

"I just came from an event [Pinball Expo in Chicago] that was attended by more than a thousand people from the four corners of the earth," he said. "I doubt that those are the only thousand people on the face of the earth who still love the game."

He noted that pinball's continued allure is evident in the premium prices being paid today for used games. A collector recently bought a "World Cup Soccer" pinball, which Williams admittedly overproduced, for $10,000, and the games continue to sell well on Internet sites like e-Bay, he said.

"That tells me that perhaps there is something still left in the legitimacy of pinball as an amusement attraction and as an investment for home entertainment," he said. "Operators could conceivably turn around and sell a pinball to a private buyer for double or triple what it cost them new, and that's after they've paid off their investment."

For that to happen, he added, operators have to do a better job of maintaining the machines, which, for the most part, is not happening due to a shortage of qualified technicians with pinball know-how. He compared the maintenance to that of a car, which can hold a high resale value if properly maintained.

To Sharpe, the idea that pinball should be put out of its misery is ludicrous.

"It's kind of like thinking who needs jukeboxes anymore?" he questioned. "We have MP3s today, and people can carry around instantaneous music anywhere they want, so people could just as easily question why we need jukeboxes. Well, the reason we need them is because they're part of our culture. How could we not have them?"

For the greater part of the 20th century following World War II, he added, pinball machines have set the pace of the coin-op amusement industry. "Yet so many are quick to write it off.

"If you take a look at the core items in this industry, darts, jukeboxes, shuffle alleys, 'Skee-Ball,' air hockey, pinball , the greatness of the coin-op industry is the diversity of entertainment it provides to the widest range of human beings on the face of planet," he said. "Once we forget that the success is dependent on the diversity of product, we've lost our way."

While pinball continues to struggle on the street, Sharpe reported that the majority of contemporary pinball play is occuring in the private sector. A pinball player himself, Sharpe used to get together with 15 other players once a week at a location in Chicago, each spending an average of $8.

Unfortunately for that location owner, that money is now being put into a pot that is paid out to private owners, as the informal league gathering has moved into the basements of the players' homes.

"The end result is that the money is leaving the street and is staying at home," he said. "That's a frightening thought, because I don't think people in the business really appreciate or understand how and why they're losing their business."

In New York City, Walt Levine, general manager of Broadway City Arcade, believes that pinball has lost its way partly by trying to keep up with video games.

"The factories began putting these games out at a greater cost because they were trying to compete with video games and trying to put everything but the kitchen sink into them," he said. "There were more whistles, more horns, more racks, more tunnels underneath'but many of the games had no substance. Do we really need six or seven balls flying around at once? To me, that's not pinball."

As recently as the early 1990s, he recalled, it was not uncommon to see lines of people pining to play pinball. At the now-defunct legendary Broadway Arcade, where Levine also served as general manager, it seemed as if the Midtown Manhattan venue's 20 pinball machines were being played around the clock.

"We were the premiere pinball palace," he recalled, "and we were able to have this huge market. A lot of operators didn't have the understanding about pinball, and what the pinball player was looking for, and we certainly did. We were pinball players ourselves."

Eventually, he said, the cost of maintaining the machines became prohibitive.

"When pinballs work properly, there is very little maintenance besides cleaning and setting them up," he said. "At some point, it became very expensive to keep them running. Parts became expensive, and machines were breaking down two, three times a week."

As the new deluxe video games and motion simulators hit the market, Levine pointed out, it made better business sense to have fewer pinballs.

The new Broadway City Arcade boasts eight pinball machines , a relative bonanza by today's standards.

Such a concentration of machines is bound to attract attention among pinball fans.

"I often see my old die-hard pinball customer," he said. "Wherever you have more than two pinball machines you'll see that old customer. He's an adult, he's male, and he usually started playing pinball when he was in college."

Although the games do well at the location, Levine emphasized that pinball fans are fewer in numbers. A player himself, however, he feels it's important to fill the void.

"I wish that were true, that people sought us out in droves, because it's not the most profitable part of the store," he said. "I guess we're stubborn and we want to accommodate some of our old customers."

While pinball continues to play an important role in arcades, the game has always been primarily a "street" piece.

ALWAYS A PLACE

Operator Dave Cadieux of Oak Lawn, IL-based Arcade Amusements, has seen the industry go through a number of cycles since he started in the business in 1985.

"When I began my career, pinball was pretty much a dead issue, because video was so strong then," he said. "In the mid- to late-1980s, pinball had a resurgence and then it started to slow down again. Around 1991 and 1992 it picked up again; but in 1994, it slowly started to taper away."

Today, Arcade Amusements has a total of 36 pinball machines in the field, less than 3 percent of the company's overall business. Cadieux says the game still serves a need.

"The way we look at pinball, in general, is that it's geared for the 30 and up crowd," he said. "They really don't have much of a presence in arcades anymore, but it certainly is still a classic bar piece. For those people who grew up in the 1980s and are now old enough to drink, there's a demand there."

Due to a city ordinance that limits the number of games in a location to three [not including a jukebox], the operator noted that it is dificult to justify placing pinball machines in Chicago locations.

"You're obviously going to have a 'Golden Tee ' and you're probably going to have a pool table if you can fit it, and perhaps a dart board or touchscreen," he said. "Those choices generally rule out pinball."

In an effort to rekindle interest in pinball, Arcade Amusements offers the majority of its flippers at three plays for a dollar.

"For a while, we were doing 50 cents per play, but it kind of backfired because it was perceived to be too much by our customers," he said. "I'd rather give them [customers] a better deal and get them interested in pinball again than try to squeeze a little more money out of them."

As Cadieux sees it, if five people walk up to a machine, three might play it out of curiosity and the other two might not because of the price.

"We decided that since pinball is struggling, we were going to give them a better deal and let them play to keep them interested and to make sure they come back again," he explained. "You don't want to steer them away with the price."

Part of the problem, Cadieux noted, is that the high level of service required doesn't always relate to the size of the cash box.

"They are the highest-maintenance equipment type there is," he explained, "because they are constantly taking abuse. It's a mechanical machine, so parts are going to break'that's just the way it is."

Despite these challenges, Cadieux believes that pinball will always have a place in his operation.

"There's always going to be that niche market," he said, "so I don't think it will ever completely fade away. You have to remember that while pinball is not big anymore in the U.S., 70 percent of the games are exported. Europe is where pinball is really, really big. Here it's more of a novelty."

Some operators, however, have been trying to eliminate the game completely from their routes. And one Chicago-based operator, who asked not to be identified for this story, is trying to do just that.

"It's a dying industry," he said, "and you don't want to part of a dying industry because all you do is keep cutting and cutting until it dies.

"I'm getting rid of everything I have," the operator told V/T.

When is comes down to it, he added, there is equipment available that's cheaper and easier to service and maintain. He cites touchscreen video games, which, according to many industry observers, have contributed greatly to the eroding base of pinball machines in the U.S. tavern market.

"The demand is there, and people ask me for them, but when you put them in a location, they don't make money," the Chicago operator said. "If it costs me $3,000 and makes only $70 a week, it just doesn't work."

Pinball returns were strong, he recalled, when the cost of new equipment was reasonable and it was the only game in town.

"Pinball didn't have everything that it's up against today, and the taverns have changed completely. Now they have 10 television screens showing sports and it seems that pinball has been left behind. It's sad'but it's reality."

Despite the doom and gloom that's often associated with pinball, some operators are taking heart in the fact that the home market is providing them with a viable exit strategy.

HOME SALES

Bryan Scopel of Alpha Amusements (Madison Heights, MI), for one, has been operating pins less and less, but is selling a large number of models to the home market during the holiday season. The company, he said, sells flippers through its own showrooms and a local billiard chain that offers pool tables and recreation room furniture to consumers, lessening the urgency for high weekly earnings.

"Even though we don't get a very good rate of return from our pinballs on the route," he said, "we don't care. We know we have the home market, which pays a premium price for used pinballs, in our back pocket. Realizing this, we also take pretty good care of them, so when they come off the route they are in pristine condition."

Over the past few years, Scopel has witnessed prices skyrocket in the home market. According to the industry's price guide, Distributors Research Associates, a pinball "as is" should sell for $300, and for $500 reconditioned.

"In reality, that pinball is probably worth $1,000 and $1,200, just because there is a great demand for pinballs in the home market," he said.

Although it's been a boon to his business, Scope admitted that he's concerned about the pinball market in general.

"I'm not happy that there's nobody out there producing pinballs anymore, because that's going to hurt my business," he said.

Instead of 100 to 150 pinball machines coming on and off route, as has been the case over the past few years, the company is now down to 60 and 70 pinballs, he said.

"I'm not replacing them," he told V/T, "because there's very little to buy. This year may be my last good year of pinball sales. My only other option is to tap into the used market or Internet sites like e-Bay, but prices are up there as well because demand is so high."

As Scopel pointed out, it may take just one big hit to get the industry back on its feet again, similar to what happened 10 years ago when "Terminator 2" was released.

"That game turned the tide for us," he said. "We were very skeptical at the time because we weren't getting a good rate of return. But when we started seeing $200 a week in the pinball machine's ["Terminator"] cashbox, we decided to get back into it."

After a couple of years of prosperity, Scopel remembers that equipment income experienced a downturn, while new equipment prices went steadily up.

"That's a prescription for disaster," he said. "When that happens, something has got to give, and that's one of the main reasons why there is only one pinball manufacturer left; the business model did not work anymore."

As price is always a major concern, Scopel believes that the model could be fixed, and that today's manufacturers would benefit greatly if the numbers were adjusted.

"If they [manufacturer(s)] can get the price down to $2,000 or $2,500, which may not be possible in today's labor market, pinball can be very, very viable again," he said. "If not, there's no telling what will happen."


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