We got a chance to speak with Stern about their 40th Anniversary
Q1. How did the company get started?
We started this company in 1986 as Data East Pinball. I put together a business plan in the basement of
my townhouse, working alongside Shelley Sax, Joe Kaminkow, Ed Pellegrini, and my wife Denise. Data
East was a Japanese video game company partially owned by Sega, and we managed to interest their US
management team in pinball. At the time, industry giants like Bally, Williams, and Gottlieb all existed.
People openly asked why the world needed a fourth pinball company. As it turned out, those other three
are all gone now, so I guess the world did need us after all.
We started out in two tiny, temporary rooms in the Rego building in Chicago. We took turns driving down
to the gas station to get propane for the space heater and taking the office garbage home. I stopped that
real quick after the trash stunk up my convertible, we finally got a dumpster service! We designed our
very first game, Laser War, right there.
We brought eight semi-complete machines to our first commercial trade show in New Orleans and,
working behind curtains, cobbled together four working units. The software was so buggy that if a ball
went into an eject hole, it wouldn’t come out. Richard Ditton of IT, who programmed our first game, had
to spend the night typing away frantically in his hotel room to fix the code so we could actually debut the
game.
In 1994, we sold the company to Sega, becoming Sega Pinball. Then in 1999, my group bought the
company back and changed the name to Stern Pinball. During the 2008 recession, Dave Petersen joined
us as a shareholder, and today we are 50/50 partners. Through all three name changes, it has been the
exact same company.
Q2. What have been the biggest challenges as video games emerged and evolved?
Surprisingly, video games weren’t actually our biggest challenge. Pinball enjoyed its biggest modern era
in 1992 and 1993. The coin-operated arcade video game business peaked on the street back in the
1980s, so street video games didn’t really grow during our core pinball growth years.
Home video games certainly exploded, and they changed player expectations because a home game
could be lengthy and deeply involved, whereas traditional street arcade games were short. Ultimately,
the rise of home consoles impacted us in a way that actually ended up helping our business model down
the line.
Q3. How has the rise of consoles and gaming PCs impacted pinball?
It completely shifted our player demographic and how we design our games. Today, 70% of our pinball
machines worldwide are sold new to homeowners. Decades ago, when someone bought a machine for
the home, it was usually a novelty item for their kids. Today, the people buying these machines are 35 to
55 years old, and they grew up as gamers.
Because our buyers are gamers, they demand deep games. There is real game theory, complex rules, and
deep modes built into pinball machines today. It is still a ball and bat game under the glass, but we
design them with immense depth for the real gamers. This shift has even birthed a massive global pro
circuit with highly competitive events happening all the time. Having said that, there are some simple rules for casual players like me.
Q4. When arcades started to diminish, how did Stern adapt?
As traditional arcades faded, they were replaced by entirely new types of social locations. Beyond our
booming home market, we pushed into Family Entertainment Centers, and we leaned heavily into the
rise of the bar arcade. These “barcades” feature rows of games, and instead of hiring a band or a DJ, they rely on games and great beer to draw crowds.
We also started an intentional movement to place pinball machines directly into breweries. Beer and
pinball go together beautifully. We now have games placed in over a thousand breweries across the
country. We adapted by finding the new spaces where people want to socialize.
Q5. What do you see as the biggest challenges to Pinball going forward?
The single most important challenge is that we must continuously grow and enlarge the pinball
community to keep it vibrant. We absolutely need games out on the street (in restaurants, bars, theaters,
bowling alleys, and breweries) so the public physically sees pinball. If we don’t have games out on the
street for people to discover, we won’t have a consumer home business in ten years.
Beyond that, running a major manufacturing business is a constant challenge. We have built a beautiful
230,000-square-foot facility between our regular factory and our woodworking plant. We employ about 500 people: factory workers, engineers, accountants, and salespeople. It is a big mouth to feed, and we have to keep it fed consistently because these people rely on us for their livelihoods.
A pinball machine is an incredibly complex product containing 3,000 parts and a quarter-mile of wire.
Navigating today’s business environment with inflation, rising costs, and unpredictable tariffs is a
massive, ongoing challenge.
Q6. How long does it take to design and get a table to market?
Our physical design and development process takes about 14 to 18 months to get a table entirely done
and ready for the market. However, the macro timeline is much longer because the vast majority of our
titles are licensed.Securing a major license can take six months to a year just to negotiate and contract. Once you secure it, you have to strategically fit it into our manufacturing schedule.
Because of this, we are regularly working on titles two, three, or even four years in advance from the initial pitch to the final product launch.
Q7. What is the approval process like for a license?
It is incredibly time-consuming and meticulous. We submit game elements to the licensor throughout
the entire design cycle, starting with a comprehensive game design document and moving through
various phases of artwork and physical layouts. Some licensors are more demanding than others, but
they all rightfully need to protect their intellectual property and ensure their specific vision is respected.
Furthermore, it’s rarely just one simple contract. We have to license the overarching title, but then we
separately contract the music, the rights to the specific recorded performances of that music, and often the individual likenesses and voice talent of the actors. We know pinball and they know their property,
so the approval process is all about balancing those two worlds.
Q8. What has been the Holy Grail of gaming licenses for you?
Pokémon.
Q9. Have you seen a rise in individual versus business table purchase and to what do
you attribute this?
Yes, absolutely. We used to be a 99% commercial operating business, and today around 70% of our
games are sold to individual homeowners. Years ago, people bought a machine for their home purely as an interactive art piece or a cool status symbol. Today, they buy them because they are gamers and
passionate collectors.
Some collectors get so hooked that they fill every single room in their house. I even saw a video of a
couple in a tiny Japanese apartment; they had two pinball machines with their bed built directly
underneath them! Interestingly, when these home hobbyists accumulate too many games, they often decide to become commercial operators themselves, placing their extra machines in local bowling alleys or bars and turning their passion into a part-time or even full-time business.
Q10. You are often at CES and SDCC. What other shows do you attend and what have been some of your favorite reactions from conventions?
Broad public shows like CES and San Diego Comic-Con are vital because they allow us to show the world
that we are a high-tech game design and manufacturing company deeply rooted in pop culture. On the
commercial coin-op side, we exhibit at IAAPA in Orlando and Europe, the Amusement Expo International
in Las Vegas, and the EAG show in London. For the enthusiasts, we are always at Pinball Expo here in
Chicago and the Texas Pinball Festival.My favorite aspect of attending these shows now is watching people interact with our Insider Connected system.
We have over 500,000 registered pinball insiders winning badges and achievements. These systems are a two-way street that gives us incredible data on where and when people play, but seeing players actively connect, socialize, and compete live at conventions because of that connectivity is the
best reward.
Q11. How do you balance the use of video with traditional play in games?
At the end of the day, no matter how much technology you add, pinball is fundamentally a physical ball
and bat game under the glass. Video games are entirely programmed; there is a digital formula dictating
that if X happens, Y will happen. In pinball, the ball is wild. It is a total physical randomizer, which creates
a beautiful unpredictability that requires genuine mechanical skill to manage.
We treat the video display as a tool to enhance the action, not replace it. The real soul of the game relies
on physical state changes that trigger a Pavlovian response in the player.
When a casual player hits a
drop target, it physically drops down. When they shoot a ramp, a physical toy dinosaur eats the ball, or a
3D Kenny falls over dead. They see that instant mechanical reaction, recognize the fun, and immediately
want to shoot the ball there again.
Q12. What is your all-time favorite table?
Right now, I can look out onto our factory floor and see that we are building Transformers, so that is my
absolute favorite game. My answer is always the new, shiny game that we are currently building on the
line. If I didn’t love the game, we wouldn’t be building it in the first place. I love all my children equally,
so the newest one is always my favorite.
Q13. Why do you think that Pinball has endured?
It has endured because it is a timeless, fundamental game of physical action and skill, much like baseball or tennis. It’s just pure fun. We have also helped it endure by evolving it alongside modern technology; incorporating deep game theory and complex rules that satisfy the core gamer while keeping a simple path to multi-ball for the casual player.
But frankly, pinball also endured because Stern kept making games when Williams, Bally, and Gottlieb all
stopped. We chose to grind through some incredibly tough economic times to keep the industry alive. If
we hadn’t committed to heavily investing in the business and actively working to grow the community,
pinball easily could have faded away entirely.
Q14. What do you have upcoming?
More games!
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