Surviving in the Stand-Up Arcade Business

by Game Writer Central‘s Michelle B.

I’m over forty and female which I think is a bit unusual in the gaming industry itself. [I think you’d be surprised :) – Game Writer Guy] I do think female gamers are one of the fastest growing demographics for games and what appeals to me will probably be different than what appeals to others. I also am having to learn new terminology – first person shooters, platformers, scrolling, etc. I find it a new and exciting world so please excuse my enthusiasm.

As I pondered which game I should review first, I found myself asking: why am I qualified to review computer games? The answer: I’m no more qualified than anyone else but I have been playing since video games came out in the early 1980s. I can remember being thrown out of my local grocery store for playing Galaga for over two hours. I have several high scores and MLB (my initials) has appeared on Galaga, Qbert, Pac Man, Space Invaders, Phoenix, and Tempest all over the Southwest? East Coast? needs something a bit concrete to give flavah. I have, sadly, been playing video games longer than most young people in the computer gaming industry have been alive.

There’s a new reviewer in town… and she knows how to play Donkey Kong with the best of them.

Given my background, I decided to sit down and talk to the Pinball Wizard, Darren Spohn, the owner of Pinballz Arcade at 8940 Research Boulevard just south of Burnet and 183. — Michelle B. (aka MLB)

MLB: When did Pinballz open?

Spohn: We opened November 2010. We’re coming up on our one year anniversary.

MLB: How did you pick this location?

Spohn: We wanted a good drive by for cars. We have 186,000 cars a day come by the road out front and we wanted a place that was in central Austin so we could reach both northern families as well as the downtown area too.

MLB: What were you doing before you started Pinballz?

Spohn: We have three technology companies we’ve had for about 14 years now. They’re data communication companies and this was more of a family business on the side that we started.

MLB: What made you decide on this business?

Spohn: It was kind of a collection gone awry. We just started collecting them and I have sons that are 13 and 15 and wanted to get them into working hard and learning business ethics. Our goal was to put a few pieces of equipment on route <what’s this mean?> and once we started looking at doing that, we decided we wanted to open a small arcade. And then my wife wanted to do a cafe which she’s doing downstairs. We decided to get something a little larger. Our goal of 5,000 square feet turned into 13,000 square feet.

We started out looking for 5 or 6,000 square feet and then we figured we needed enough games to hit all different audiences. When you’re looking at covering that broad a spectrum of people, you need to have a lot of different games. Our company was finishing up a seven-year lease in the Arboretum so we put all the companies together and rented out almost the entire building.

I saw a business need if you run it like a business. The problem is people run it like a hobby. It’s a weird hobby. It’s somewhat of a niche hobby. There’s a variety of reasons why they don’t succeed but a lot of people start off too small with a hobby in mind and don’t approach it from the standpoint of how to actually make money doing it.

We had to get into various things to make money. We sell games, we put them on route, we rent them out to locations, we do church events and other things like that so we do a lot of things to generate revenue. It’s not just coin operations downstairs.

Let’s say you have a doctor’s office and you want to put a game in your doctor’s office, We share revenue with you and you can entertain people and make some money too. All those things help make it a bit more profitable.

MLB: What was the hardest game to find and get?

Spohn: We’re trying to get the top fifty games of all time. There’s a couple games that are still out there that are like $12,000 each. They’re a bit expensive so not that they’re hard to find; they’re hard to find at the right price. I guess the answer is finding all the top games at the right price. I could go buy them and collect them but I would go bankrupt trying to buy all the games I want. I’ve got to be smart in how I buy them.

MLB: Were any of the games difficult to maintain or hard to repair?

Spohn: The pinball machines are high maintenance. That’s probably the reason why a lot of arcades went out of business. Flippers go bad, play field issues. I mean you got a bunch of metal balls running around on a play field of wood and plastic so bad things are going to happen. You have to clean them constantly, you have to fix parts. You really don’t make a ton of money off the pinball machines. They’re more there for the uniqueness of the place.

We have party events – arcade rentals. People play redemption games – they like to turn in tickets for prizes. Selling games. There’s other things we do that make money that help us fund the arcade aspects of it.

MLB: How large a staff do you have for repairs and how much time do you spend on repairs?

Spohn: We’re constantly repairing machines. We have four technicians dedicated to repairs. It’s one of our largest expenses.

MLB: Do you have plans to open nationwide?

Spohn: We’re talking about multiple locations. Plans are in process. We have a lot of people in different cities saying let me know when you’re coming here, I’d love to help. We have a bit of a cult following in just one year. I don’t know if cult is the right word. We have a good following. We have a lot of members and a lot of regulars that come in. People come in here and say “oh my God” and then we see them every week.

We’re also cost effective. That’s the balance point – keeping it cost effective. Main Event and Dave & Busters are really expensive. People go there and take their kids and spend $100 bucks and feel like they broke the bank playing. Here you can come and spend $20, play with your friends, family, or whatever and not feel that you didn’t break the bank and still have fun.

MLB: What is your favorite game?

Spohn: I have a couple. Swords of Fury is one of my favorites. It’s a very hard game to play. I like the faster games like Tron and Star Trek because of the theme. Scared Stiff is probably my favorite – that’s my wife and I’s favorite. It’s an Elvira machine. It’s Elvira Mistress of the Dark and it’s got all these different deep modes to it and it’s really hard to beat.

MLB: What was a unique and challenging find game-wise?

Spohn: I got a Banzai Run prototype model which was hard to find. It’s the one that has two play fields. It’s got a horizontal and vertical play field to it. It’s only one of ten made. There’s only ten in the world and six of them were shipped overseas. So there are only four in the US and I negotiated and finally pried it out of the hands of one of the collectors.

MLB: I’ve heard that some games can be dangerous due to wiring and problems. Have you noticed anything like that since you opened Pinballz?

Spohn: We check them out before we put them on the floor. I wouldn’t say they’re dangerous but they’re dangerous to work on and they’re just poor designs. For example, one of them will have the transformer which is where the high voltage is at right behind the backglass area. If people decide to open that backglass to look inside of it, the transformer is right there. In any of these machines, you don’t want to open them up and stick your hands in them because they’re all high voltage. The older machines don’t disable the high voltage when you open them so you have to be really careful. We also do in home video and pinball repairs. That’s another business.

MLB: What has been the most difficult thing about running Pinballz?

Spohn: Working with the city on what we can and can’t do. For example, we want to serve beer but we have to work on the bathrooms and everything. We’ve been dealing with the city for almost a year to just build our basic infrastructure. That’s been the biggest challenge is working with the city of Austin. All the rules this city has on what you have to do to be able to serve alcohol. If you change the structure of a building, you have all these environmental rules and city rules. All the unions have basically gotten together and driven up the requirements for bathrooms, environmentals, to the point where you almost can’t do business.

We didn’t know it until we got in because we wanted to add some bathrooms and do some other stuff but to do all this stuff… it takes $100,000. It’s just brutally expensive and it’s time consuming. I think one of the reasons you see so many vacant stores in this town is the city rules are far too strict for how to do business. It’s too hard to start a business in this town. It’s so much easier to do business in Houston than in Austin just because of all the regulations.

MLB: What is the easiest thing?

Spohn: The easiest thing is if you have a passion for it. It’s coming to work everyday. It’s working in this business because the people are so cool. You run a retail business in this town and you get a broad swath of people through here and it’s easy to come in and work. It’s kind of like a Cheers bar – it feels like that sometimes.

MLB: What is the funniest thing?

Spohn: The funniest thing is buying new machines. I’ve touched now at least 200 different types of pinball machines and a total of 400 different types of games. It’s buying and playing the machines. It’s enjoying the fruits of your labors.

MLB: Any closing comments or things you’d like people to know?

Spohn: Pinballz is targeted for all ages. It’s a cool Austin place to play. We’ve created what we call a classic gaming experience or classic arcade experience because it’s tokens and quarters. It’s not the swipe cards. It’s real tickets. It’s not zip cards where you have to figure out how many credits you have. You see faces shine. The kids come up with bundles and even adults at night have their bundles of tickets buying their handcuffs or coozies or toys. It’s neat to build a place like that in this industry. It’s something Austin really needs more of. You have to appeal to a broad enough audience but still have things you do for each of the different audiences.

Austin Humane Society is our chosen charity. On [November] 20^th, we’re doing a big fundraiser for them. We’re going to invite all the press here on the 20^th and have a big tournament with the new Transformer pins. We’re going to have a new Transformer pinball machine and transform lives through adoption of pets. We’re going to re-release the company with all the media there.

[Pinballz also has a Boombox Arcade event on December 2nd from 9p to 2a. This cool event combines music from four Austin DJs, BYOB drinks for those with ID, and of course the full Pinballz arcade experience.]