Staying in the Game:
A Boca Raton entrepreneur turns his fascination with pinball machines into a thriving online operation — giving a lift to an industry close to extinction.
David Young has galvanized the industry of selling pinball machines and arcade games by taking it online. Through the click of a mouse, Boca Raton-based company BMI Gaming can deliver to your home the fun of plunging a metal ball with a coiled spring into a colorful, glass-encased labyrinth (the real deal, not the insipid computer version).
BMI was one of the first retailers to take arcade game sales online, and remains one of the largest. Young would not release profits, but he estimates the company will pull in $10 million in revenues this year. In 2006, revenues hit $7.25 million, up from $5.26 million in 2005.
Young got into pinball and arcade retailing quite accidentally. In early 2001, Young was looking for his next business venture. As he was en route to meet with an investor, he saw something out of the corner of his eye at a suburban Fort Lauderdale storefront. With some time to kill before the meeting, he pulled up in his BMW and walked to the store in his Armani suit.
“I saw this little store that said pinball machines and I’m like, ‘Ah! That’s interesting,’” Young recalls. “I walked in there and it had about five or six pinball machines for sale and the lady says, ‘You can look but you can’t play.’” That day he bought Funhouse, his first pinball machine, for $1,500.
Later that year, with his semi-conductor business, Boca Microtechnology, in a slump after the Sept. 11, 2001 terrorist attacks, Young decided to pull the plug and spend his time developing a new business plan. Hooked by Funhouse, he kept collecting pinball machines for fun. He had amassed 15 in a warehouse when someone saw him unloading one and asked if he was interested in selling it. He ended up selling three pinball machines and turning a hefty profit. Then, as if in a perfect bumper score, a bulb lit up. “I was working on an Internet project and I needed a test bed, basically a test company to test some theories I had on Internet marketing,” Young says. He thought: “I got 15 of these things, apparently there’s demand.”
While the larger project is still in concept stage, BMI was born with a very basic Web page, and Young sold his collection in a couple of weeks. After doing some homework, Young found out that arcade distributors were not tapping into the consumer market. But mom-and-pop arcades and even pinball manufacturers were disappearing — until eventually, there was only one standing: Stern Pinball of Chicago. “We went from initially 15, 20 items to 1,300-plus items today,” Young says, adding that his site “is the world’s largest. It’s the No. 1 traffic site in the world for any coin-operation [amusement], period.”
Young’s company stands as a major provider in a niche that has seen some positive signs in the last years. Competitive pinball has grown in popularity with the creation of the International Flipper Pinball Association (IFPA) and the World Pinball Player Rankings (WPPR). In June, the IFPA saw yet another increase in its member ranks, from 1,154 players to 1,257 players.
“BMI is probably one of the pioneers of the last several years that have developed that market for a lot of our products,” says Mike Rudowitz, president of the American Amusement Machines Association in suburban Chicago. “And he has worked basically everything through the Internet.”
A sign of BMI’s growth may be the hiring of a public relations firm in what used to be considered a handshake business. The firm landed BMI’s arcade games on the “Raechel Ray Show” in 2006. Young seized the opportunity to advertise his company on national television. “Raechel likes arcade games. She thought it would be fun if different celebrities would play each other on our games,” Young says. “So you would have the soap opera hunk face off against the skinny guy on air hockey.”
Like Ray, Young, 47, is fast-talking and enthusiastic. He likes to boast that he comes from a family of entrepreneurs. Recently, he started hiring people who know the arcade business inside and out, bringing in Paul Jacobs, a man who has been in the amusement business his whole life, as his executive vice president.
“I’m like an old horse in a new barn,” says Jacobs, whose father was a Wulitzer jukebox distributor. The biggest catalyst to the business, though, has been the Internet. More than 90 percent of BMI’s transactions come from online orders, split evenly between home sales and sales to arcades, restaurants and bars. Young has sold machines to NASCAR racers, country rock stars and other celebrities, and top executives at major Wall Street corporations. Some even visit the Boca Raton showroom, where consoles such as Arcade Legends II, which has 125 classic games, including Asteroids, Centipede, Missile Command and Space Invaders, rest along with other more classic items, such as beautiful old-fashioned wooden shuffleboards, jukeboxes and poker tables.
But the showroom is probably more of a legacy. Companies like BMI could indicate a sea change in the industry known for strip mall arcades. Young is following the market shift to customers who want a pinball machine or arcade game at home or to ticket-based operators such as Dave & Busters and Chuck E. Cheese’s.
“Our business has gone through a retrenching, a slowdown because the size of the industry has diminished,” says Rudowitz of the AAMA. “A lot of the eateries that now dominate the market — the McDonald’s, the Applebee’s — now want people in and out, they want to turn over those tables.” Rudowitz calls Young “one of the bright shining stars of the industry.”
The company, however, is no longer alone in the space. Its business model has started catching on with other new entrants in the sector. “BMI was an inspiration because they gave me the confidence to know that it is working,” says Nick Parks, president of St. Louis-based retailer The Pinball Company. Parks has been in business for just a year and has found success on the Internet, but there are risks and challenges. “It is fickle like any luxury item. A real downturn in the economy, and even high-end consumers will not be looking to play Ms. Pacman,” he says. Also, sending the bulky product long distances to customers poses problems. He often sends his workers along for the ride to set up the machine so there are no complications.
Young, meanwhile, is ready to make BMI self-sufficient so he can return to his original, and still secret, Internet project. You would think that running an arcade game retailer would be a dream job for someone who, as a young boy in the mid-1970s, grew up playing the Harlem Globe Trotters pinball machine with his dad in Seaside Heights, New Jersey. But Young says he learned his lesson with Boca Micro, which he could have sold but kept unsuccessfully trying to turn around. He hopes to start and sell-off a new company every five to seven years. I learned nothing is forever,” he says. “And as a classic entrepreneur, my talent lies in building an installing things — not managing them.”
Written by John Pacenti.