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RePlay Magazine Podcast - Malcolm Steinberg

Replay Magazine Podcast·podcast_episode·1h 3m·held·Nov 7, 2025
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claude-haiku-4-5-20251001 · $0.032

TL;DR

Malcolm Steinberg recounts building $1B entertainment business from 1958 pinballs to global FEC operator.

Summary

Malcolm Steinberg, 86-year-old founder of LIA Games and operator of 360 entertainment venues across 7 countries with ~$1 billion in annual revenue, discusses his 66-year journey from starting with 21 pinball machines in 1958 to building a global entertainment empire. He reflects on near-bankruptcy experiences, the structural imbalance between content creators and operators in the arcade/FEC industry, missed investment opportunities (notably NVIDIA in 1997), and his current focus on the Malka Foundation supporting young entrepreneurs.

Key Claims

  • Malcolm Steinberg operates 360 venues in 7 countries with combined annual sales approaching $1 billion

    high confidence · Malcolm directly corrected Randy's initial statement, clarifying the venue count and country count

  • Started business in April 1958 with 21 pinball machines acquired from uncle in Newcastle

    high confidence · Malcolm detailed his origin story directly, mentioning the three-month visit that led to the initial acquisition

  • Coin-op industry owned 100% of interactive game market in 1975, now owns ~10% of a $25B market while home/online games represent $255B

    high confidence · Malcolm provided specific market data and analysis of market share erosion over 50 years

  • Stacker game produced 20,000 units generating $70M in sales for manufacturer, but generated over $3B in revenue for operators in 3-4 years

    high confidence · Malcolm cited specific case study demonstrating operator vs. manufacturer revenue disparity

  • Sega offered Malcolm opportunity to invest in NVIDIA startup in 1997 for $5M; Malcolm declined due to lack of capital and focus on arcade business

    high confidence · Malcolm recounted detailed anecdote of meeting with Hayao Nakayama and chairman in Japan regarding NVIDIA investment opportunity

  • Survived two near-bankruptcies: 1983 Australian Tax Office dispute (7-year litigation) and late 1990s banker pressure to pay down debt

    high confidence · Malcolm explicitly discussed both crises and how he survived them, mentioning friend Brian Coppin's $1M guarantee

  • Embed payment system operates in 3,000+ locations worldwide with US as largest market

    high confidence · Malcolm stated Embed operates in more than 3,000 locations, created by his son Adam

  • FEC/location business (Time Zone, Kingpin, Zone Bowling) represents 80% of total business revenue

    high confidence · Malcolm directly stated FEC business is 'probably 80% of our total business today'

Notable Quotes

  • “We've actually got 360 venues in seven countries. Everything else is accurate.”

    Malcolm Steinberg @ early in interview — Correction of initial facts, establishing baseline scope of operations

  • “In hindsight, if I had my time all over again, I think I would have done things a little differently because I think being the founder and CEO for over 50 years is just too long.”

    Malcolm Steinberg @ mid-interview — Reflection on leadership longevity; notes FEC business doubled from 200 to 360 locations in 8 years after leadership transition

  • “When you look at those 20,000 machines, you know, in three or four years following the introduction, they earned more than $3 billion in revenue for the operators. So when you look at the apportionment, you get $3 billion going to the operators and $70 million going to the content developer.”

    Malcolm Steinberg @ mid-interview — Core critique of industry structure; illustrates central inequality between manufacturers and operators

  • “That startup was looking for some capital... they want to sell half the company for $5 million... The startup was NVIDIA... A year later, the company went public, and they got $15 million back for their $5 million... That was the worst call I ever made in my life.”

    Malcolm Steinberg @ mid-interview — High-profile missed investment opportunity story; NVIDIA now $4.2T company

  • “I think now with modern technology, especially artificial intelligence, I think we're capable of producing experiences never previously imagined possible. But it takes a lot of capital, mainly in manpower time.”

    Malcolm Steinberg @ late in interview — Vision for industry evolution and investment in content development; mentions AI as enabler

  • “The market had gone from one arcade to 14 in Singapore in two weeks... 13 new arcades had opened... we learned what competition was in Asia.”

    Malcolm Steinberg @ mid-interview — Illustration of Singapore market dynamics in 1993; led to strategy shift to distribution model

  • “Well, it's a slow process. It's hard to change established ways of doing things, but I really think the industry would benefit if we can invest more in content development.”

Entities

Malcolm SteinbergpersonAdam SteinbergpersonRandy SheldonpersonFrances SteinbergpersonUncle Alec HankinpersonBrian CoppinpersonGordon SteinbergpersonDean SteinbergpersonJessica SteinbergpersonMorris Steinbergperson

Signals

  • ?

    business_signal: Malcolm built global FEC empire by entering markets opportunistically (Singapore 1993, Indonesia, Philippines, China 2002) and adapting to regulatory changes; demonstrates geographic diversification across 7 countries with 360 venues

    high · Detailed Singapore entry story (market went from 1 to 14 arcades in 2 weeks), China exit due to one-child policy, and Indonesia/Philippines expansion timeline

  • ?

    industry_signal: Fundamental imbalance in arcade/FEC industry: content developers (manufacturers) receive fixed wholesale prices while operators capture majority of revenue; example: Stacker generated $70M for manufacturer but $3B+ for operators

    high · Malcolm's detailed economic analysis of Stacker game and comparison to cinema revenue-sharing model; framed as core industry problem limiting R&D investment

  • $

    market_signal: Coin-op entertainment declined from 100% of interactive game market in 1975 to ~10% today; home/online games grew to $255B while arcade sector is $25B

    high · Malcolm cited specific market size figures and historical comparison; attributed decline partly to separation of content production from retail operations

  • ?

    business_signal: FEC business (Time Zone) more than doubled from 200 to 360 venues in 8 years after Adam took over as CEO; Malcolm cites leadership change as key to growth

    high · Malcolm stated CEO transition occurred 8 years prior and credited fresh leadership for expansion; suggests optimal CEO tenure ~7-10 years

  • ?

    business_signal: Adam Steinberg created Embed payment system as solution to cash handling challenges in FEC business; system now operates in 3,000+ locations worldwide with US as primary market

Transcript

groq_whisper · $0.189

0:00
Welcome to Replay Magazine's podcast, where we'll dive into the legends and interesting stories within the world of what we call coin-op entertainment. That's games and amusement machines you find in arcades, fun centers, bars, restaurants, and beyond. Replay's covered this business for 50 years and is joining forces with industry veteran and former association president Randy Sheldon. He is chief revenue officer for National Entertainment Network, owned by Japanese amusement giant Kittleton Genda. And now, here's Randy and this month's Replay Podcast. Hello everybody and welcome to, I believe it's episode 7 of our Replay Magazine Podcast. And we just keep, the interviews just keep getting more and more interesting. This is such a joy for me to hear their stories. Today we're talking to Malcolm Steinberg of LIA Games, Time Zone Arcades, and a whole list of other companies in bed.
0:59
Him and his son, Adam, lead the company based out of Perth, Australia. So this was 5 p.m. my time and 7 p.m. tomorrow or yesterday, 7 a.m. his time. So anyway, we had a great chat, and I hope you enjoy Malcolm. His story is just incredible. He's 86 years old and sharp as a tack, as you will see as you listen to him tell his stories about starting out with 16 pinball machines in 1958 and how he parlayed that. And as we talk about his international presence, he goes into new countries like U.S. operators go into new counties. I mean, it's unbelievable how he has figured out how to do this on an international basis. He now runs all in companies. That's a billion dollars in annual sales. If you lump all of them together, he's got a he's got a fascinating story about his Malka Foundation, which is an honor to his grandmother, which is where Malcolm spends most of his time. Adam runs the day to day operations as a CEO of the organization. but you hear a lot of passion around being able to give back to entrepreneurs, new venture capital funds they've created, and it's just such a joy to hear his story. And he has all the numbers. He has all the data. We had to do a lot of homework to keep up with him and his sharp mind, but I hope you enjoy it. But before we go straight into that, I do want to make a shout-out to, you know, My friends at Replay Magazine for making this possible. Keith Snodgrass, who does a fantastic job of making all this make sense and helping bring the right people to the table. And Chad Jameson, who eliminates all of my misstatements and does a great job producing and editing this podcast on a monthly basis. So Chad Jameson, if you ever need a great editor or have a similar project, he's your guy. So thank you to both Keith and to Chad. I wanted to put that out there and enjoy my chat with Malcolm Steinberg. Thank you. So welcome, Malcolm Steinberg. It's just a huge honor.

  • China arcade market became world's largest after one-child policy ended; Malcolm exited China in 2002 due to policy restrictions limiting arcade play to 1 hour per Sunday

    high confidence · Malcolm detailed China market entry/exit strategy tied to regulatory policy changes

  • Married to Frances for 63 years; has three children (Adam, Dean, Jessica) with Adam serving as CEO for 32 years

    high confidence · Malcolm provided family details directly in response to Randy's questions

    • Malcolm Steinberg @ late in interview — Core thesis on industry structural reform; suggests path forward for sector growth

  • “I'd forgotten all about it. But a year or so back, I was just doing a bit of surfing on Google, and I looked up NVIDIA, and it tells this story about Sega buying this equity in 1997.”

    Malcolm Steinberg @ mid-interview — Demonstrates Malcolm's discovery method for reconnecting past business opportunity to outcome

    • Jensen Huang
    person
    Hayao Nakayamaperson
    LIA Gamescompany
    Time Zone Arcadescompany
    Embedcompany
    Kingpincompany
    Zone Bowlingcompany
    Play and Learncompany
    ArcadeXRcompany
    Malka Foundationorganization
    National Entertainment Networkcompany
    NVIDIAcompany
    Segacompany
    Replay Magazinecompany

    high · Malcolm explained Adam visited Argentina (Socorro), couldn't reach agreement, then developed proprietary system; now major market player

  • ?

    technology_signal: Malcolm launched ArcadeXR (arcadeonline.com) to enter online arcade segment; described as new business with significant growth potential as FEC market expands online

    medium · Malcolm mentioned ArcadeXR as newest venture and noted FEC segment currently generates 'virtually no revenue online' but that's 'changing'

  • ?

    personnel_signal: Malcolm transitioned from founder/CEO role to non-executive chair after 50+ years; son Adam now runs day-to-day operations as CEO; reflects Malcolm's belief in limiting CEO tenure to 7-10 years

    high · Malcolm explicitly discussed stepping back from CEO role and praising Adam's 32-year tenure and growth achievements

  • ?

    community_signal: Malcolm now focuses time on Malka Foundation (named after grandmother) supporting young entrepreneurs; invests ~$4M annually in partnerships with 4 universities, 2 incubators, 2 education orgs in Western Australia

    high · Malcolm described Malka Foundation role as primary focus in retirement; detailed partnership structure and annual investment level

  • ?

    design_philosophy: Malcolm argues arcade industry needs substantially increased R&D investment in content to compete with $255B home/online market; mentions AI as enabling technology for 'experiences never previously imagined'

    high · Malcolm emphasized content development gap, cited AI potential, and explained how cinema revenue-sharing model could improve industry economics

  • ?

    historical_signal: 1970s-1980s arcade boom era (Space Invaders, Pac-Man production runs of 100K-300K units) created favorable conditions; industry never recovered revenue model after consolidation and market saturation

    high · Malcolm noted Taito produced 300K Space Invaders units, Japan ran out of 100 yen coins, but modern production runs of 1,000 units considered successful

  • ?

    regulatory_signal: China's one-child policy (2002 entry, limited arcade play to 1 hour/Sunday) forced Malcolm to exit market; policy elimination years later made China world's largest arcade market; demonstrates policy risk in international expansion

    high · Malcolm detailed specific policy constraints and timing of market exit/eventual re-evaluation; noted China now 'biggest world market'

  • ?

    business_signal: Malcolm survived two near-bankruptcy crises (1983 tax dispute, late 1990s banker pressure) through litigation persistence and personal relationships; friend Brian Coppin's $1M guarantee saved business during tax crisis

    high · Malcolm described both crises in detail; 1983 ATO dispute lasted 7 years and 'almost sent the business bankrupt'; 1990s banker pressure required loan guarantee from friend

    • 3:23
    I want to read something here because one of the favorite things about doing these podcasts is I learn a lot about people like you and the stories about others that we've talked to. And your story is fascinating. I want to make sure I have this right. LAI Games, Montehari Leisure, Embed, Booking Boss, Zone Bowling, Kingpin FECs, Arcade XR, and now you have your very own charitable foundation, the Malka Foundation. Did I miss anything? No, I think you pretty well got it all there, Randy. And then just to put a bullet on that, you operate in 10 countries. You've got 160 entertainment venues, 9,000 employees, and you're a billion-dollar business. Yeah. We've actually got 360 venues in seven countries.
    4:26
    Everything else is accurate. Yeah. What a fascinating career. and I'm just really looking forward to hearing you talk about it. You're a very well-published guy. I mean, your story has been heard over Australia. I watched some of your interviews over a couple hundred thousand times, so your story is well told. But let's just say we can't talk about your story without the great beginning in 1958.
    4:59
    Can you tell us about that? Well, you know, it started by chance, actually, because I'd left school, I'd left high school at the age of 16 because I really wanted to get out into the commercial world. And I didn't know what I wanted to do. I got a job in an accounting firm as an audit clerk, and I didn't like that because we used to go out on audits, and the auditor would call numbers, and I'd tick them off. And every now and again, he'd call a wrong number. I'd tick it off anyhow, so I knew that wasn't for me. And then I worked for my dad for a few months. He was in the furniture business. and like any father and son relationship, the son always thinks he knows better. And one day my dad said, well, son, maybe you should find something else. And so I went to Melbourne on a holiday with a friend. And while I was there, an uncle of mine in Newcastle, which is about 100 miles north of Sydney, invited me to visit the family. Unbeknown to me, he was in the games business. And to cut a long story short, the weekend turned into three months, and I came back to the West Coast with 21 pinball machines and started the company in April 1958. So that's how it got started. Now, that initial business, you were in partner with your Uncle Alec, correct? That's right. And your dad? Uncle Alec Hankin, yeah, and my dad. They owned 40% each, and I had 20%, and I gradually – I bought Alec Hankin out a few years later, and then my dad split his equity between myself and my brother, and I bought my brother out in the early 80s.
    6:57
    Was that your brother Gordon? Gordon, yeah. He's since passed, unfortunately. You know, out of everything I read about you, I don't know your dad's name. What is your dad's name? Morris. And your wife is Frances. Do you have any other children? Yes, I have two sons, Adam and Dean, and a daughter, Jessica. Adam runs the business now. He's the CEO of the group. he's been with the company now about 32 years yeah i read a lot about him he's an he's an interview all by himself very yeah he's like a great team the business world yeah so uh i'm a big family business guy and people in this industry are big family business so you've been in business with your your your son your brother your dad how is that obviously it's worked out to some level, but is that – how did that work out? Did that have its challenges or did you all get along great? Most of us. Yeah, no, we pretty much got along all fine. Yeah, I think that, you know, in hindsight, if I had my time all over again, you know, I think I would have done things a little differently because I think being the founder and CEO for over 50 years is just too long. You know, if you look at the really successful companies in the world today, you know, not too many have CEOs that are there for more than seven to ten years. And I think that, you know, business, no matter what business you're in, And it's a team sport, and the team leader, the captain or the coach, you know, has to be a very creative person because you've got to come up with new ideas to find new ways and new directions for the business. And I think that's why it makes sense to change the leadership, you know, certainly every seven to ten years. We did that eight years ago in terms of our FEC business.
    9:20
    And in that time, you know, in those eight years, the business has gone from about 200 locations to 360. So, you know, that's added a lot of growth in that time. Now, it's a remarkable story. And is your wife Frances still with us? Yes, she is. Yes. How many years have you been married? That's kind of. We've been married 63 years. Ah. Yeah. Now we're getting to the good stuff. Yeah. Well, congratulations. That's a big number.
    9:55
    Yeah. It is. It's a big number. She's been involved in the business. She was originally. Yeah, she, when I first started the business, about two years after I started, I met her and then she came in and worked as an administrator and financial controller. But she retired when we got married a couple of years later. But she was very much involved in the early days. Yeah. Well, congratulations on 63 years. Thank you.
    10:31
    You dropped out. I'm going to go back here to you. You dropped out of school at 16 years old. Now, for all of us that spent hundreds of thousands of dollars sending our children to college, did you ever go, wow, I really wish I knew this or I knew that or I really wish I would have stayed in school or gone back to school? Or did you just never skip a beat when it comes to education?
    10:55
    Yeah, look, I think, you know, I left school because it really didn't interest me. I wanted to get out into the commercial world. But in hindsight, you know, I would have preferred to have had a better education. I think it would have served me better. Not that I'm complaining. I've done very, very nicely. But I think to have a really good education, particularly in the business world, is a significant asset. Yeah, well, that's pretty remarkable that you did what you did. Yeah. So at what point along this journey, I mean, there's a lot of people, my father included, 16 pinballs sounded like my father's story coming out of World War II. But we didn't quite get to a billion dollars. At what point along that journey did you go, man, this could be really big? Or was that your goal from day one? I don't know. Well, it wasn't, you know, when you start a business at the age of 18, you certainly never envisage you're going to have a billion dollar business at any time in the future. In fact, I think my original goal back in 1958 was to generate $100,000 a year in sales.
    12:16
    And I didn't see much opportunity beyond that. But as things grow and time goes on, you know, we started operating games in other states in Australia. And in the 90s, we moved into Asia.
    12:34
    And also during that decade, we started a business in the U.S. selling games. So it just evolves, you know. I mean, as you make certain achievements, you see new opportunities and you push ahead to achieve them. So it's an evolution. It's not a specific intention when you start. It evolves over time. Yeah. Well, as I said, it's certainly a great story.
    13:04
    In what I read about you and some of your other interviews, you were very transparent. You almost lost it all a couple of times. Tell me about that. Yeah, there were two occasions. The first one was I had a dispute with the Australian Tax Office, what you call the IRS, and a significant litigation occurred as a result of that, and it went on for seven years. We won eventually, but that caused a lot of damage. It almost sent the business bankrupt.
    13:48
    And that was in 1983. And in 1990, the late 90s, I had an issue with our bankers. The owners of the bank I dealt with changed hands, hands and the new owners didn't like the games business. So they wanted me to pay down my debt and that caused a lot of hardship and financial pressures, but I got through them both and survived. So it's just a question of, you know, when you're in the right and you know you're doing the right thing, you persevere with it and you get there. Yeah. Nobody builds a business like you have without a few bumps along the road. Oh, of course not. Yeah. And you talk about your friend, Brian Coppin. Coppin, yeah. Brian was a great friend. He since passed. He wasn't in this business. He was in other businesses, but he was a he was a very clever entrepreneur. I didn't know him very well at the time, but in the 80s, when I got in trouble with the tax office, he called me one day and said, He said, I heard you got a few problems.
    15:05
    And I said, that would be an understatement. I said, I've been to every bank and loan shark, you know, to try and get finance to get me through this, but it's getting increasingly difficult. And he took me along to see his banker. And I said, I've already been to that bank, Brian. He said, no, no. He said, I know the bank manager very well. So he took me along and we went to the ivory tower bank manager office on the top floor of the building And the bank manager he explained my predicament And the bank manager said how much does he need And I said million facility And he said to Brian, will you guarantee it? And Brian said, if I have to. And he said, done deal. Let's have a drink. So it was that easy.
    16:07
    Oh, my goodness. It's a show, you know. So when you've got good connections, it can make a world of difference. And that really saved the business at that time. A friend that signs for you, that's a friend. That is a friend. That is a friend, yeah. Yeah, so that was a warming experience, I have to tell you.
    16:31
    You know, but I've seen, you know, the industry has certainly changed a lot over the years. You know, I think there are a lot of things that are holding it back, and I think it could do a lot better if some of those things changed. Because, you know, point-up games have been around since the turn of the 20th century. You know, they used to be, you'd see them on amusement piers and boardwalks and places like that. They weren't really in the retail sector because I guess they had a sort of stigma attached to them. and they weren't really seen as a retail opportunity. But then in the 1970s, that all changed when the major manufacturers at the time, which were all Japanese, being, you know, Sagan, Namco, and Taito, they started developing these really quality products, and there wasn't enough retail market or FECs to absorb their production. So they started to develop their own FECs. In other words, they got into the B2C side of the business, and they also started to export their products around the world. So they built a huge FEC operation in Japan, and they started to spread that. In fact, you may recall that I think Namco at one stage operated about 400 arcades in the U.S.
    18:00
    Yes, they did. and another thousand locations. It spread very rapidly. But what happened was that in 1975, if you wanted to play an interactive game, it had to be a coin operator game. There was no online services. There were no home game consoles. There were only arcade games, pinball machines, football tables, and various other devices. So the coin-op market owned 100% of the interactive game market. Today they earn 10% because we're a $25 billion business and the home game market, which is mainly online today, is a $255 billion business. So we just got killed in the rush. And I think the reason for that is that when content production, in other words the game manufacturers, separated from the retail FEC operators,
    19:10
    the way our industry works, which is quite different to, say, the cinema industry where the content producer gets a share of the box office, The content producer in our industry sells at a fixed price, the best price they can get based on the competition available in the market. And I think a really good example of that is our stacker game, which we produced about 20 years ago. How many of those did you make? 20,000. 20,000 stacker machines. and it generated about $70 million in sales.
    19:51
    And we made a lot of money out of it. I'm not suggesting we didn't do well. But when you look at those 20,000 machines, you know, in three or four years following the introduction, they earned more than $3 billion in revenue for the operators. So when you look at the apportionment, you know, You get $3 billion going to the operators and $70 million going to the content developer.
    20:21
    And that's where I see the problem in the industry today. You know, there's not enough being invested in research and development for content development because of the way it's structured. Now, the people that run our FEC operation are probably thinking right now, I wish he'd shut his mouth. You know, we don't want to give any more of our revenue away. But the reality is that if more revenue can go towards the content producer, it'll be a win-win situation because the quality of product will increase so much that the revenues will grow sufficiently to more than offset any cost to the retailer or the FEC operator. And I think that's the reason why we've gone from 10% of the market to – sorry, from 100% of the market to 10% of the market in 50 years. And I think it will work out in time. It's a slow process. It's hard to change established ways of doing things. but I really think the industry would benefit if we can invest more in content development. I'll give you a story. You know, in the late 90s, I was the distributor in Australia for Sega.
    21:46
    And at that time, they were just introducing their Dreamcast game, a home console. and I was up there visiting in Japan and I met with Hayao Nakayama and his chairman at the time. And they told me that they were competing with PlayStation and Nintendo and they needed to generate better quality graphics on their home console and they were working with this startup company that they thought could really develop some quality chips to achieve that objective so they'd be more competitive. But the startup was looking for some capital. Would I be interested in investing?
    22:33
    And I said, how much are they looking for? He said, they want to sell half the company for $5 million. And I said, well, I don't have $5 million to invest. He said, well, you don't have to invest $5 million. You can take a part of it. And I said, well, you know, I'm in the arcade business. I'm not really looking to get into the home game business. So we changed the subject. And anyhow, Sega put the $5 million up. And a year later, the company went public, and they got $15 million back for their $5 million, which is a pretty – I mean, it's not unusual to hear those kinds of growths in the public company scene. That's not so remarkable. What is remarkable, Randy, is the name of that company is NVIDIA.
    23:25
    Oh, no way. Yeah. Jensen Huang. Yeah, that was the worst call I ever made in my life, but there you go. Wow, that's a great story.
    23:40
    NVIDIA the chip maker is what you're saying. Do I have that wrong? NVIDIA the $4.2 trillion company. You know, I met him about six months ago. Jason Twain. Yeah, Jason Twain, yeah. You run into those circles, but this is a big deal for me. You know, he got his start. He sketched out his business plan in a booth in the back of a Denny's in San Jose, California. So we were a provider to Denny's, and he showed up at one of their conventions, and he stayed all night, and he had dinner with us, and he danced with us. Oh, yeah. Very, very humble trillionaire. Well, you know, over the years, because he had to raise capital,
    24:22
    he had to dilute his holding from 100% initially, and today he owns about 3.6%, but that 3.6% is worth about $160 billion.
    24:38
    So he's done pretty well out of it, even though he's been heavily diluted because he never had the cash when the business was growing.
    24:47
    Right. Yeah. Well, I never knew the connection between those companies. That's a great story. Oh, yeah, yeah. I didn't know either, you know, because, you know, going back to 1997, I'd forgotten all about it. But a year or so back, I was just doing a bit of surfing on Google, and I looked up NVIDIA, and it tells this story about Sega buying this equity in 1997. I thought, gee whiz, that's I know all about that.
    25:19
    Oh my goodness. Well, that's great. You know, in your in some of your interviews, you said, man, I wish I was 35 years old again, go do it all again.
    25:32
    And in the same sentence, you're talking about the cinema structure where the manufacturer shares in the cash pan. And you think that model actually has legs in our industry? You think we'd ever get around to it? Well, it's a slow – it'll be a slow process. But I do think that the content development side of the business needs to invest a lot more capital.
    25:58
    Because, I mean, look what we've done with the capital that we've got. You know, I mean, we've produced some pretty amazing content. But I think now with modern technology, especially artificial intelligence, I think we're capable of producing experiences never previously imagined possible. But it takes a lot of capital, mainly in manpower time. But you've got to invest that kind of capital to produce the content. And I think if we can do that, then both the content development side of the business and the retail side of the business will both jointly benefit. So one way or another. I mean, look, in the heady days of, you know, Space Invader and Pac-Man where they were making 100,000 machines, 200,000 machines, I think Taito finished up producing 300,000 Space Invaders altogether. You know, it didn't really matter because, you know, first of all, it was generating so much revenue from the sale of games. And companies like Taito, for example, and Namco were operating enormous numbers of these games. So the question really didn't come up. It's only when things normalize and, you know, we went back to much smaller production runs. You know, I mean, today a production run of 1,000 of a game is considered a good result. But in those days, you know, I mean, I remember reading articles in Japan where they actually ran out of 100 yen coins because the coinage was being absorbed by the space invader boom. Yeah, so things are different today. You know, one thing, having been in this industry a while and know a lot of manufacturers, a lot of operators, a lot of distributors, it always amazes me. Manufacturers always think the operator makes too much money in the proposition. The operator always thinks the manufacturer makes too much money in the proposition. I'm not sure who's right. Well, you know, at one time, you know, back in the 70s, there were combined manufacturers and operators. You know, and that doesn't exist today. All the operators are independent of the manufacturers. So in that sense, there's a bit of a contest going on, you know, for market share. So I can understand, you know, the feelings of both sides. You know, both sides, I think, they should get a bigger piece of the pie. But at the end of the day, if giving game content development a bigger piece of the pie results in substantial growth in revenues overall, then it'd be a win-win. I don't know if this is a good analogy, but it kind of sounds like the legalized gaming that's proliferating throughout the U.S., where the state lottery may take half the money, but it's so much that everybody wins. The operator wins, the location wins, even with the state taking a big chunk of the cash band. And I know a few of those guys, and they're doing just fine. The operators. Oh, I think, you know, that $255 billion number doesn't include gambling or lotteries. That's just pure amusement devices.
    29:31
    Yeah, so if you take that, I mean, another good analogy is that, you know, 20 years ago, 100% of the gambling market was in casinos and clubs and various other venues. Now it's dropped to 70% because 30% of gambling revenue is generated online, whereas in the FEC business, the FEC segment of the market generates virtually no revenue online. That's changing, by the way. I don't know whether you read up on our newest business, which is ArcadeXR that runs that site, arcadeonline.com. Your online arcade business. Yeah. It's new. It's growing. We think that's got a lot of potential opportunity.
    30:27
    Well, let me say out loud what everybody who's listening to this right now is saying. They're saying that Malcolm is sharp as a tack. You are pulling data and numbers as good as anybody I've known at any age, which leads me to one of my questions is you seem like you're a data-driven guy when it comes to your big decision, or are you more of a gut-feeling entrepreneur guy?
    30:53
    I think I started off as a gut feeling, but today it's all data-driven. We generate an enormous amount of data within our own systems, and we subscribe to major data production services in all the markets that we operate. So it's very much a data-driven business today. And you seem to have a great handle on it. I'm a little envious. You putting stats out there that I learning from you so thank you for sharing that You know one thing that as I read about you and Adam and how you guys have grown the business you go into new countries like we go into new counties I mean, you're a worldwide organization, and I can't even imagine opening up. our company certainly does some international business, but not without challenges, is it? I mean, when you go into Malaysia or you go into China, I know you had some wins and losses there, but you seem to do that with a great level of confidence and competence.
    32:07
    Well, you know, it was really driven by the evolution of the home game market because in the 1980s and early 1990s, I could see that the home games were going to have a big impact on our business in Australia. And it wasn't anywhere near as developed in Southeast Asia. So that's when we decided to go into – I was coming home on a trip to London in 1993, and I stopped over in Singapore,
    32:41
    which at that time under Lee Kuan Yew didn't allow arcades. and I was walking down Orchard Road and to my amazement, I see this arcade operating. So I made inquiries and I found out that his successor, Go Chok Tong, had changed the rules and allowed arcades. So I said to our manager in Sydney, I said, how would you like to go to Singapore and start a business? And he said, sure, but I'll need a couple of weeks to get organised to get up there. I said, that's fine.
    33:18
    Well, in that two weeks, the market had gone from one arcade to 14 in Singapore in two weeks. So 13 new arcades had opened.
    33:29
    So he got in there and started bidding for leases, for retail leases. I remember him telling me the story that he put a bid in for a retail lease at, I think it was at the time, $1.60 per square foot per month.
    33:48
    And he didn't hear from the realtor and he called a couple of weeks later and he said, how was my bid?
    33:56
    You know, did anybody, because he put a bid in slightly low and he said, did somebody pay the full price? He said, oh, no, no. He said they paid $2.20 a foot. So we learned what competition was in Asia, you know. I mean, it was so aggressive in Singapore that we finished up becoming a distributor in the first two years while these Singapore entrepreneurs were fighting each other to get access to suitable sites. and like anything that gets overdone, you know, you get a collapse and we were fortunate enough to be able to buy up a lot of these sites a couple of years later when they overstretched themselves. So that's how we got started in Asia.
    34:45
    And then a couple of years later we went to Indonesia, then the Philippines, then we went to China. unfortunately that was in 2002 they had a one child policy where the child was only allowed out for one hour on a Sunday and we used to do 85% of our business on a Sunday and the rest of the week 15% it just wasn't enough so we decided to call it quits and two years later They eliminated the one-child policy, and now China is the biggest world market for the arcade business, both in content development and retail operations. So it's amazing how markets changed.
    35:38
    Yeah, that's amazing. a question for you you've got all these companies and I know you're privately held so I don't want you to disclose any hard numbers to us but I would expect and I want to talk about InBed as well Friday I didn't know you created InBed as a company so this is big learning for me but out of all the companies that was actually my son Adam that created that company because we were struggling with coins in our FEC business, and he went around the world looking for a payment system.
    36:16
    And firstly, he went to, is it Argentina with Socorro, and they couldn't come to an agreement. And he came back and he said, I think we're going to have to develop our own system, and that's how Embed evolved. Like father, like son. No, I'm very familiar with Embed. We bought embed systems for our company and operate them. I just didn't know the connection. So thank you. It's a great system. Yeah, no, it is. They operate, I think they're in more than 3,000 locations around the world now. And I think the U.S. is probably their biggest market.
    36:55
    What are the, how do I want to ask this question? I want to get some understanding of, out of all these companies, Was it LAI, the game manufacturing? Was it the time zone locations that, you know, contributed mostly to the size of your company? What were the really big winners? Yeah, well, the time zone, which includes some other brands, you know, like Kingpin, which is like a kind of a cross between Dave and Buster's main event. and then we have another product called Play and Learn, which is a kiddies thing.
    37:38
    But most of the stores are Time Zone branded or Zone Bowling, which is our bowling operation. As I said, we have 360 venues in seven countries, but certainly that business is probably 80% of our total business today. Oh, okay. The times are good. Yeah. All right. Thank you for sharing that. I went by shifting gears here a little bit. I Googled before we got on the call. Talk about a great time to be alive. You and I are 10,000 miles apart as we speak. Yeah. You're just outside Boulder, Colorado, and you're in Perth, Australia. Were you born in Perth, Australia? I was, yeah. I was born there. So you've lived there your whole life. You traveled the world. You wasn't up back in Perth. Did you ever think, man, I need to move to California or I need to move to London? Or you've just always been a... No, I've always been based in Perth. I spent a little time in Sydney when we were developing our operations on the East Coast here. But I came back to Perth and I've been here ever since.
    38:49
    What is a day in your life in Perth like today? Oh, today? Well, you know, my role in the business is non-executive. I chair the four corporate structures that we have, but I'm very involved in the Melker Foundation, which is an organisation which is dedicated to helping young start-up entrepreneurs, both in terms of education and funding. We work with four major universities here in Western Australia, two incubator organisations and two education organisations, and we're putting about $4 million a year into funding these developments, and it's having a tremendous impact on the economy because this state is a resource-driven economy. The backbone of our economy is the mining industry, mainly iron ore, and that accounts for about 45% of our economy. But we're getting more competition in iron ore from Brazil and West Africa. So I think the opportunity for the technology industry to replace the resource industry over the next 10 or 15 years is there very clearly, and we're working very closely with government to try and achieve that objective. I mean, if you look at, you know, just to give you out of our state,
    40:33
    there's three companies which are multi-billion dollar companies that have evolved through technology over the last 10 years. One you've probably heard of called Canva, C-A-N-V-A.
    40:48
    Another one is called Learning Machines, which was developed by a guy called Andrew Tullock, who came out of high school here in Perth. He now lives in Silicon Valley. And another one called VGW, Virtual Gaming World, which is a multi-billion dollar company based in Perth, which is in the gambling business and does most of its business in the US. So we've generated quite a few what we call unicorn companies out of Perth, and I think the technology is going to drive that, and we're going to see a big change in the role that technology plays in the economy over the next decade or so. If you've got a really good idea and a laptop to start, you don't need a lot of capital because capital will always follow opportunity. But if you've got a really good idea and a laptop, you can create a billion-dollar enterprise in 10 years.
    41:53
    And those three companies I mentioned, Canva, VGW, and Learning Machines, they're all multi-billion dollars and they all evolved in the last 10 years.
    42:06
    So, I mean, it's exciting times. And the reason I'm so excited about it is not because it's an opportunity to create wealth. It's because I think the quality of life wherever you live in this world is directly related to the gross domestic product generated by the community. That's what funds everything. And the more wealth that can be created, the greater the quality of life. And your American population are the greatest example of that, you know, because you've only been going less than 250 years and you're the greatest and biggest economy in the world. And that just proves that if you generate wealth, you improve the quality of life. It's not that you don't have other problems, but in terms of life quality, it's a pretty admirable situation that has developed in the U.S., in my opinion. Yeah, this capitalist concept seems to be working more than it's not. It works, yeah. You said a guy needs a laptop and a big idea. Well, I got half the equation. I got the laptop. Now I just need the big idea. Well, that's, you know, I guess in life, you know, how many times have we said, oh, that's a good idea and then forgot about it? You know, they're out there. It's just a question of latching on, focusing and working on it.
    43:39
    I have what I call the WINE principle, WINE being an acronym with W being meaning watch out for opportunities and recognise one when you see it.
    43:52
    I being immediately make plans to take advantage of that opportunity. And that's all the things like market research and business plan and people and funders and everything, getting everything into place.
    44:06
    N stands for never, never procrastinate on the implementation of those plans. and the E stands for one simple word, which is the key to the whole process, in my opinion, that's execution.
    44:23
    You know, you've got the plan becomes a living document, which is evolving all the time. And the challenge for the founder is to faithfully execute that plan, you know, not to be distracted in any way. And if you can, I believe if you can follow those four pathways, you're going to develop a very successful enterprise. So W is for watch out for opportunities. Watch out. I is immediately react to it. Immediately take action to develop business plans, funding, people, all the other things that go with it. The N is never procrastinating. Yeah, get on to it. And the E is the execution part of it. Oh, I'm going to use that. Yeah. I heard that on one of your other podcasts, and I had written it down, and I was going to ask you about it. So thanks for walking through that. You know, it's good to have that guiding principle throughout your whole organization, and obviously you've got a bunch of great people that work in your organization. Very fortunate, yeah, we have. folks. Just compliment you on that before I start going down your executive roster, but know a handful of them, and it's a very impressive, talented group. Yeah. Well, people are the basis of the execution process. It's like a sporting team. I mean, if you look at any sporting team, whether it be football or baseball or soccer or whatever, you know, athletically all the players are the same you know, it's the execution of the process that determines who wins or not and that's what it's all about doesn't matter if you can't execute it no, it doesn't work yeah, I mean Elon Musk was quoted as saying once that a starter is like looking into the abyss and chewing glass I think he's got a point you can relate to that I can relate to that alright I want to ask you let me get to my notes this is really interesting to me having been in a variety of different configurations of corporate businesses in 2017 you went from owning it all yourself to bringing on quadrant private equity a very large Australian private equity firm. How has that been? That's been fantastic, you know, because not only were they able to help us with capital raising but their experience in a diversity of businesses added a lot of value at the board level in terms of executing processes coming up with new ideas You know, since that venture started in 2017, the business has grown exponentially during that period. So in other words, my half of the business today, of that business, is probably worth, today it's got to be worth 10 times what 100% was worth seven years ago. So it's certainly been a very successful partnership. Well, that's a credit to you and a credit to Adam because that's not how that story usually ends in my experience. Because as an entrepreneur, you and Adam get up every morning, hey, we're going to do this. Well, now you've got a 50% part. You've got to go convince five other guys it's a good idea. And I've seen that not work particularly well in my career. Yeah, I've seen it fail too. But in our particular case, it's been a marriage made in heaven because we've got on it. I mean, look, I think any business, any partnership that's successful is going to be a good relationship. It's the ones that get into rough waters where the tensions and the disagreements occur. But I think because we just happened to pick some really good people and because together we've been very successful, So the relationship's been excellent.
    48:53
    Well, and another loaded question. What I know about private equity, which is limited, but in my experience, they buy to sell. They buy to exit. They don't buy to hold and be partners for a lifetime. What is the – and this ties into my what is the future for Entertainment and Education Group, which is the company that you created with that private equity investment. Where does this go from here over the next five to 15 years? Well, you're quite right. You know, private equity companies generally exit within five years. and they've looked at selling equity in the business, selling their equity. I haven't been keen to sell because I still think there's a lot of upside in the business. But they haven't been able to get the price they want, so they've taken the unusual decision to stay with it because the business is still growing and the asset is still increasing in value year by year. So they're very comfortable about it. They're now in their seventh year, eighth year, in fact. Right. And they're quite happy to hang in there until the right opportunity presents itself. Well, that sounds like a great partnership. It is, yeah. Very fortunate, actually. I've got one more thing I want to talk about, and then I'll let you get on with your day. It's 7 a.m. where you are and 5 p.m. here. And good job you kept a sales guy in the office past 5 p.m.
    50:41
    Well, we didn't have a lot of choice, did we, because of the time difference. Well, hey, this is, you know, this little podcast experiment has turned out to be a real labor of love. Getting to talk to people like you is just a great experience. In any normal walk of life, we're probably not doing this. And I really enjoy it. I really appreciate it. But one of my questions is you have received a Lifetime Achievement Award. You are in the Hall of Fame of the AAMA. You were not only in the inaugural class, you were the first non-American to be inducted into either. Do I have that right? Yes. Yes, that's right. Yes, that is my, you know, in terms of if you want to know what I think I've achieved in the industry, they're the two greatest things that have happened to me in my 67 years in this business. You know, to get recognised from a country on the other side of the world and being the first foreigner to do that is, I'm very humble and appreciative of that because I didn't expect it to happen, but it did, and I'm very grateful for it. Well, that's a big honor and just incredibly well deserved.
    52:09
    Well, we all want to be loved, you know, and that's, in a commercial sense, that's the greatest expression of love that you can give, you know, to recognize somebody. and it's certainly been the highlight of my business career.
    52:27
    Yeah, I agree. We all just want to be loved. It's a good way to put a cap on it. Do you still travel? Do you attend the shows, the industry shows, or do you stay pretty close to home? Yeah, not as much. What's your travel? I used to travel. When I was running the business, I used to travel three weeks out of four out of the country. But as I said, you know, I'm almost 86, so I'm just not physically capable of doing that. But I do try to get to – we used to go to Sydney or Singapore every month for a board meeting, and then COVID made us realise that you don't have to do that. You can do it just like we're communicating today. So we don't travel for board meetings anymore. But I do try to get to IAPA every year. I'm not going this year, unfortunately, because it clashes with my granddaughter's wedding here in Perth. So I was threatened with divorce if I wasn't here for the wedding. So I won't be there this year. But I think I've been there every year. And I used to go to the shows in Japan and Korea and China and all over, every year for many, many years.
    53:49
    But I was invited in May this year to give a keynote address at the AAA show in Guangzhou this year, which I went up there. What an amazing industry China is.
    54:08
    They've got over 4,000 FECs in China. and Guangzhou is the major centre and the industry occupies this huge business park in Guangzhou and I understand there are 800 companies that have offices or showrooms in that business park in China. Can you imagine that? It's such a massive industry and yet the industry is, because of the intense competition in the industry,
    54:46
    it's really struggling domestically because competition has forced the price per play, generally speaking in China, is about five cents,
    54:58
    which you just can't make money at that level. And they're struggling to improve that. But I think the industry, the content production side of the industry, relies mainly on exports. But this latest 100% tariff, additional tariff imposition, which the Trump administration announced last week, is going to make it pretty tough for the Chinese manufacturers, that's for sure. So they're going to have to try and compensate by building other markets. And there are other developments. I mean, India is a hugely developing market. You know, India today has more population than China.
    55:43
    And China has 4,000 FECs, and India at this stage has less than 400. So that's going to be a huge growth market, both in terms of FECs, which is a very fast-growing market. I think our business, we're opening something like 20 new stores every year in India. But it's also developing some intellectual property in the content development area as well, which I think you'll start to see a lot more product coming out of India where historically it's been virtually non-existent. So, you know, if you look at history, this business started in the U.S.
    56:32
    You know, when I started in the 1950s, the late 1950s, all of our equipment supplies were U.S.-based.
    56:43
    And then when Sega and Namco and Taito started developing product in Japan, It shifted towards Japan and then into South Korea and Taiwan.
    56:59
    And when we left China in 2003, I think it was, or 2004, there were manufacturers in China but almost nonexistent. But in that short period of 21, 22 years, China is now the dominant force in content production. No question about it. You know, even the US manufacturers, you know, like Raw Thrills are licensing manufacturers like Wallap in China to produce their products for the China and Asian market. So China is definitely the dominant player in our business right now, even though the FEC domestic industry is really doing it tough right there, right now. Yeah.
    57:49
    You know, since you brought it up, I did note that you're, correct me if I'm wrong, your grandparents were Jewish Russians that immigrated to Australia. Did I get that right? Yes. And so your grandmother, was her name Malka? I know that's where the name came from. My paternal grandmother on my father's side, her name was Malka, and that's why we named the family foundation Malka Foundation. She was the entrepreneur of the family. When they came out here in the early 1900s, her husband was a cabinetmaker, and she used to buy up these derelict houses and renovate them. Her husband used to do a lot of the renovation work and then they'd rent them out and sell them and then buy another one, other house. So she was the entrepreneurial spirit of our family and I never met her because when she was 40, she went into hospital to have a hysterectomy and died. yeah and that never happens these days but in those days it did so she had a very short life so I never met her but I've always believed that she is the entrepreneurial spirit in our family and that's why as I said we named the foundation after her and what a great way to honour her yeah I recently had a grave renovated here in Perth because it's been there since 1928, I think.
    59:39
    Well, you know, my wife's best friend lives in Sydney, so I've been there a couple of times. Oh, yeah? Just because we go visit. And, you know, having made it over to Perth, I had to look up where Perth was. You're on the other side of the country.
    59:53
    Yeah. Well, we often describe it as being 6,000 miles east of Madagascar. Oh, that's lovely. It's very isolated. I mean, you know, a Perth-Sydney trip is like Los Angeles, New York. Right. In square miles, we're pretty much the same size as the U.S. mainland. So it's a big country. We're only 27 million people, but there's a lot of land here. That's beautiful. What have I failed to mention? We're still learning our way here in this podcast world. Okay. I did make some notes as if I missed anything. I'm not surprised.
    60:32
    Yeah, I think I've told you just about everything I wanted you to know, so I can't think of anything else other than to say, you know, I have a lot of confidence in the future of the industry. I think there's a lot of growth there, particularly with modern technology. We're going to see some extraordinary things happen in the next decade or two. I hope I'm around for as long as possible to see it happen. Well, I hope you are too. You've got a lot to – you certainly have a lot to continue to contribute to the industry. It's immeasurable what you've contributed up to this point. Yeah. Well, I've enjoyed it. And I've enjoyed this discussion today, Randy. It's been good to talk to somebody that knows the business. And I've also enjoyed your interviews with several other industry people that I've known. In fact, I think everybody that you've interviewed I know personally have been in the business that long. So it's refreshing to hear their stories as well.
    61:40
    It brings back a lot of great memories. I just have a great seat here because I get to hear them all firsthand and researching the folks we're talking to. And to get the stories and technology to your point is such that this is easy. This is easy. And just to get stories like yours that are memorialized forever, well, this is fantastic. And the folks at Replay couldn't be more supportive. I hope you enjoyed Eddie's part one and part two. He's an absolute icon. He's the best. In his head, there's more about the history of the industry in his head than any other person on the planet. I mean, that guy, he's a publisher extraordinaire. He's just a remarkable individual, and he's so on the ball at 86. He's amazing, you know, that he's so focused on what's going on. He knows everything that's happening, and I'm sure he's going to be involved for many years to come. And, well, it's just been a real pleasure, Malcolm. Thank you for taking the time, and I'm sure everybody's really going to enjoy hearing your story.
    62:54
    Thank you, Randy, for the opportunity. I really appreciate it. Game over.