It's for love, don't you forget. It's for love, and forever and ever. Sit up, sit up, sit up, sit up, sit up, sit up. Welcome everybody to Kaneda's Pinball Podcast, two shows in a row. I want to welcome Jason from the Pinball Party, our latest club member. We just set a new record 721 subscribers. Everybody out there bring a friend. Let's get to 800. It annoys everybody else out there. I wanted to just ask a little off the cuff question and this is just going to be a little bit of a tangent podcast from Kaneda. I want to ask a very simple question. Why does pinball need to grow so much? Right? We've heard it all these years. I've been in this hobby for 10 years. You always hear the line like it's kind of like the excuse we need to grow pinball and you're like, okay cool Like what does that really mean? Well, we need to bring more people in why why do we need to bring a lot more people in? Well, we need to create more passion and enthusiasm for the hobby we love so I get it on that front But I just go back to like ten years ago ten years ago. There were stale Stern pinball There was Jersey Jack there was Dutch pinball There was spooky pinball. We had about like six pinball companies making games. Now we have 14 pinball companies in the mix. Ten years ago, the price of a game was much more affordable in relation to where things are today. And now things have gotten really expensive. Even when you adjust for inflation, it's not crazy. I will say this in some defense to the pinball companies. It's not as bad as you think. Like we can always harp and say, look, They've doubled the prices of these LEs and yeah they might have but everybody out there knows that there is something called inflation but I think a lot more people have come into the pinball hobby over the last 10 years. I don't think anybody would argue that point but I want to ask each and every one of you this. Is this a niche hobby where at a certain point if its target is to just grow that this hobby might lose some of its enthusiasm with you if the focus is primarily on growth? Because think about it, bringing more people into the pinball hobby will do one thing, it will create more demand. Ostensibly that is the case, right? If we grow more, we are going to create more pinheads and they're going to want to buy more products. Now that is what Stern Pinball wants absolutely. Every single for-profit company wants growth. I mean that is the job of the CFO, it is the job of the marketing department. We want to attract more people to our brand and to our products. And so over the last 10 years, I would say that Stern Pinball has done a great job in growing the amount of people on a global level that love pinball. There's been a lot of great efforts happening at the location and tournament levels with all these league nights and all this Stern Army activity. I've seen a lot more people come into this hobby over the last like five years, especially during COVID when everyone was stuck at home and didn't spend their money on vacations and other things. But now we're at a point, it's 2024, and I'm just wondering, I just want to ask you guys, where does pinball go from here? Is there going to be continuous growth in pinball at these prices? As the world gets really expensive, are we going to see people start to push back? And should we reach a point in pinball where it's not about growth anymore? We don't need to keep inviting more people into pinball because pinball will always be a very niche hobby. It is a subculture within a subculture. Like gaming is the much larger subculture and then pinball is a subculture within that. I would even argue it's maybe even a subculture within a subculture within a subculture because of what it is. I mean, this is not like a video game. This is a 400 pound box of blinking lights where there really hasn't been much innovation happening in pinball at all. Think about it, in 2024, A device that costs you six to fifteen thousand dollars, the majority of them are not even connected to the internet. Now, I don't think that's necessarily a bad thing because I don't necessarily think pinball needs to be this overly connected device. I think what we all still want to get is a modern version of what we love about pinball, which is a world under glass. Here's my concern about the whole thing about we need to grow pinball and we hear it from the distributors of course because if they grow pinball they have more people to sell games to and if Stern grows pinball same thing more people to sell games to. I was just looking around at like the business definition of why a company needs to keep growing and the reason I wanted to talk about this today is I want to really address this rumor that is seemingly true That Stern Pinball has thousands of unsold games sitting new in box at a warehouse in Chicago And if you think about it let just be like conservative Let just say on a conservative level, Stern Pinball is making 600 pinball machines a week. That's 2600 games a month just from Stern Pinball. Now here's the part that gets kind of scary. If that's what they need to keep that line on in this huge factory of theirs, between cornerstone games, because cornerstone games are every four months, between cornerstone games, that means Stern Pinball is putting 10,400 pinball machines into the world between cornerstones. So what happens when you have a game like John Wick that's not selling and you need to make like 600 games a week and you're going to make them. They're just going to keep making them and then between John Wick and your next cornerstone, you've got 10,000 more games that you're piling onto that warehouse that already has thousands of Stern machines unsold. And I'm a little bit worried that this is sort of like the real danger to our entire hobby. It just seems like Stern Pinball is overproducing now and the demand is not there. And their desires to grow pinball have scaled them up to a level now that's really not sustainable. And look, they obviously have a better line of sight to their business than I do. But when I look around this world and I see what's happening to the auto industry, to the luxury industry, to the food industry, every other industry that scaled up big during COVID is now feeling it. And you're telling me that the one industry that's immune to all the market forces is The pinball industry? And I'm just here to tell you right now, as I'm buying a house right now and buying a few cars and paying for daycare and all this stuff, the last thing my money's gonna go to now is a pinball machine. And it's the easiest thing to cut, because I don't need it. I gotta get Brenda a car. I gotta get myself a car. I gotta get my kids educated. I gotta take my kids on vacation. Do I need another pinball machine? And many of you out there are probably saying the same thing. The other interesting thing about growth is that normally companies need to grow to stay ahead of the competition. So let me read for you on this great Reddit thread about the definition for company growth. And let's think about this through the lens of pinball and ask ourselves, is pinball a normal category or industry or does it operate outside of the normal rules of business? So in business, being dynamic and adaptable is the key. No market or technology is going to stay the same forever. Now that is true, but I would argue that pinball is not a product that really has innovated much over the last like 30 to 40 years. And I think we've actually gone in the wrong direction. We've taken a lot of the mechanical innovation out and we've replaced it with much cheaper stuff, right? All right, this goes on to say, the items and services that your customers want can change on a whim. The things that your competition is offering will change. Sometimes disruptive technology will come along and completely alter your business model. In the early days of the internet, when digital photography became the norm, the companies that were producing film had to either change everything or go broke. Alright, well good news for pinball companies is there's only one real way to do pinball. Nobody's found a better way to do it. Virtual pinball? No. No innovation will ever replicate the analog joy of what pinball's been for all these decades. So that's a good news for these companies, right? And it's also a reason why these pinball companies, I think, get somewhat lazy and are not that creative because they know no one's going to invent something that makes their way of making pinball obsolete. And I think that is one of the reasons why these companies truly have become a little bit lazy is they're not worried about that. They think if they just make pinball the way pinball has always been made, they will be successful. And maybe so. Alright, when planning a business high level strategy, you always want to be proactive, never reactive. Alright, so do we feel that's true in pinball? Are all of these companies being proactive? I don't know. I really don't know. Maybe, but I think what's happened recently in pinball is like Stern has tried to do some proactive moves, you know, like remaking more LEs and anniversary editions, and the reaction All right, this article goes on to say, Let's say that we are people in charge of Kodak in the 90s and the 2000s. We see the digital cameras are just hitting the market. Because of our expertise in the photography industry, we believe that film is going to become obsolete in the near future. It is time for us to make a change If we always been the same size it means there is no extra money in our budget In order to start researching and developing our own digital cameras we are going to have to shrink down other departments to have extra money. Maybe we cut back on manufacturing or marketing or customer support. No matter what we do, we are going to have to lose some people or some market share or some quality. Now, what's interesting when you think about this application To pinball, have we seen in modern pinball times, these companies cut back on certain areas of the game so that they can make more money, generate more money to grow the company? Yes, we've seen them cut back significantly on the mechanical engineering stuff that used to go into pinball machines. There's no doubt about it. If you put Adam's Family next to John Wick and you look at both of those games and you say, hey, which company put more mechanical magic under the glass? It's Adam's Family and that's it. It's like the main thing they've been cutting recently is the mechanical side of pinball and they've been taking the money that they've been saving on that, especially Stern, and they've heavily invested it in insider connected and online capabilities. I mean think about it Stern is really the only company that's going all in on this insider connected and I think when we see spike 3 I don't think you're gonna see this like significant increase in the platform and the mechanical wow in a spike 3 game I think it's gonna be more about the internet connectivity I think it's gonna be more about how it can drive the software of the game but not really improve the hardware of the Stern machine and also the word that we don't talk about a lot The quality of the games that are coming out of the new Stern factory is not as good as it used to be. So, you know, maybe they're cutting back there. Do you really think if they're making 2,600 games a month, 10,000 games between cornerstones, that each of those games is being properly tested? That they're looking over each of those games the right way? I highly doubt it, even though the prices are going up, the quality is seemingly going down. Few more paragraphs here. On the other hand, if we've been growing for the past few years, we have options. We can funnel that extra money into R&D. We can acquire another company that is already researching digital photography if our growth has been substantial. We can borrow money knowing that the future growth will outpace the interest of our loans. Overall, companies grow for the same reason that people grow their careers. They want more stuff and profit. They want to be better suited for emergencies and they want to have money on hand to take advantage of opportunities when they arrive. It makes total sense. And look, if you've been in this hobby for a while now, you've seen tremendous growth by some of these pinball companies. I mean, Stern Pinball has grown tremendously. Jersey Jack has seemingly remained sort of the same size. I don't think their output has like changed significantly over the years and also Jersey Jack. I mean, one of my big complaints about Jersey Jack is they kind of came in early on with a lot of innovation and they really haven't done much since other than lights. I mean, think about it. If you think about the early Jersey Jack games, they were loaded with mechanical stuff. They were beautiful. They had the big screen. They had all this stuff in their games. And now you look at a modern JJP game, the artwork is better, the lights are significantly better, but the mechanics are not better. So they've taken a step back on loading their games with mechanical wow, and they've sort of just relied on really cheap LED lights that is eye popping, but much cheaper to make. And everybody knows that. And they haven't done any innovation whatsoever. This is kind of embarrassing for Jersey Jack. Zero innovation when it comes to online connectivity. In fact, they removed score bit from all of their games and they haven't replaced it with anything. It is really shocking to me that Jersey Jack has failed to invest properly in the software department and get their games better connected. Because I do believe if you think about Stern owners and Jersey Jack owners, they both have like a cult following. Like they really have their diehard fans And Stern does a great job of rewarding their diehard fans with internet connected, whereas Jersey Jack Pinball does not. And I think we're seeing that right now more so than ever, where if you buy a Stern machine, they're going to constantly be dropping all of these achievements and these badges and just things for you to do that make your machine fun again every single month. Where Jersey Jack Pinball, you know, they launched their game with pretty much code complete. What John Youssi is what you get. Then they don't polish the code at all. And then they have no other thing they do with those games for years while all of these owners are just getting bored of their games. And then they just want to sell them because Jersey Jack has seemingly cut bait on the product they bought. I think that why Stern strategy of growth all has to do with internet connectivity more than anything Because you got to think about it like this Imagine Stern has like a quarter million pinball machines out in the world They probably have more but let just say they have 250 machines out there in the world and all of those machines are internet connected What's the fastest way for them to generate revenue? Simply connect all those machines, and charge all of those owners a monthly subscription to do different things with those games. James and their micro transactions and I'm here to tell you people it's gonna work the average Stern buyer probably has spent like twenty to fifty thousand dollars with Stern pinball right so if you're spending that much money on pinball machines are you gonna tell me that you're not gonna fork over five or ten dollars a month to get access to different things that's just a few more millions of dollars into the pocket of Stern pinball every single month that's revenue that Jersey Jack does not have and it's always amazed me when I think they went about it the wrong way. I really do. I think the mistake they all made, the mistake they all made, they made the base level of the product way too expensive. They're just charging way too much to get the machine itself. What they should be doing, and I don't know why they didn't think this through, they should not have raised the MSRP of the games so much. Where they should have made the additional revenue is with stuff like mods and then you can sell new software, you can have accessories. I mean I'm watching the pinballed accessory market now is blowing up. I mean it's exploding. People are making like half a million dollars a year. People are making more money than Keith Elwin by making mods for Keith Elwin's games. I mean and Stern Pinball is not doing anything about that. It's crazy to me. Imagine if Stern like made Godzilla and then actually made like official accessories to go with the games. And I know we would complain about it. I know we would all be like, well, why doesn't this just come with the game? Well, look if a Stern LE was $10,000 then I wouldn't mind spending another $500 on accessories. But when you charge me $13,000 and the games got flat plastics, And as always, thanks for watching this video. I'll see you next time. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. I think they did that panic media tour for a reason. I think they've gone over the edge, right? They've hit that tipping point and now they're at the point of diminishing returns. And I don't think there's more growth, not at these prices. I don't think there's more growth, not if these are the themes. I don't think there's more growth if this is how much mechanical magic you're gonna put into the games. I think we're gonna see an explosion in used pin sales. I think that's where all the deals are gonna be. I think new in box is going to continue to decline every single month. I think those who buy new in box are basically going to be the people that don't have a problem with lighting money on fire. But for everybody else, you might as well just wait, right? This is not a used car. There's no chance it's going to get into a car accident. People don't beat on these machines. People buy these things, barely play them, and they actually tweak them so they work right. You can buy one and save like two to three thousand dollars. So if you ask me like where the growth is gonna be are the used pin dealers. Like if you're a dealer that just deals in used pinball machines, I'm surprised we don't see more of those pop up, right? I mean we've got new car dealerships and we've got used car dealerships. I think that's where growth is gonna happen. The used pinball salesman is the place I would wanna be. All right everybody, thank you for just this random tangent thought. I don't even know if I brought this back to a total conclusion. All I know is I love just doing this show every week and giving you guys content and being on paternity leave hasn't really disrupted our normal scheduling. Join me tomorrow for the Saturday Morning Spectacular at 10 a.m. Eastern Standard Time on Facebook. Everybody be good, we'll talk to you soon. How much do you love to let yourself It's my love, don't you forget Caught in the trap, in the rain by anti drug�� you