Game-maker jumped in the deep end of tech pool
(Fort Worth Star-Telegram; 01/26/98)
RICHLAND HILLS - Dynamo Ltd. was behind the eight ball in 1995.
The company's main business - coin-operated pool tables - wasn't growing
fast, the competition was chipping at Dynamo's big lead in the market and pool
players were getting older.
Dynamo's other products - air hockey tables, table soccer games, video game
consoles - were big hits, especially in Japanese arcades, but the company
needed a new shot to match its early growth rate.
Bill Rickett, Dynamo's president and founder, calls 1993 "our high-water
mark. That was the apex of coin-op."
So the 25-year-old Richland Hills company tweaked some products, offering
four-player air hockey and glow-in-the-dark pool tables.
Dynamo also quit making video game consoles in 1995, a painful decision that
ended a 10-year run of making more than 200,000 cabinets on a contract basis.
"Sixty percent of our management effort was going toward 10 percent of our
margin," Rickett says.
And Dynamo started looking for new markets.
Last fall, it found its future in high tech, and Dynamo Interactive was
born.
The new division is building video gambling terminals, automated
teller
machines, PC-based video game systems and public-access Internet
kiosks.
"We picked a stable product early on, which gives us some staying
power,"
Rickett says. "That product keeps us in business and pays the
rent. Then we
went and looked for an opportunity, and we'll build on that.
"We're out there looking for something new to do rather than
looking for
better ways to do things we already do."
Dynamo expects to post $20 million in sales this year - $10
million in its
stable pool tables and other low-tech games, and $10
million in its Interactive
products.
The company will sell more pool tables than ATMs, video
games and Internet
kiosks. A typical pool table sells for $2,000, compared
with an ATM, which can
cost as much as $8,000.
Dynamo Interactive's goal is to recraft the company
in a more nimble
industry. It's not a straight shot; it's more like
banking the ball around a
competitor's ball.
And everybody is swaggering around the table
watching the shot.
"There's a joke that this entire industry is
from Missouri," saus Mark
Struhs, president of Dynamo Interactive. "It's
filled with people who say `Show
me.' "
Changing rules and new competitors are
constantly reshaping Dynamo's
business.
It got into the ATM business because of
new rules that let independent
companies, not just banks, operate the
machines, while some coffee shops are
installing machines that allow customers
to connect to the Internet for a per-
minute fee.
The new strategy was forced on Dynamo
by Intel Corp.'s effort to encourage
PC-style microprocessors in arcade
games, says John Klayh, a vice
president of
the National Amusement Network, a
division of Chicago-based Amusement
and Music
Operators Association.
Dynamo made the boxes that held
dedicated video games manufactured
by big
Japanese game companies. The
Japanese companies insisted that
arcade managers
buy the game - the software - and
the wooden box, or the "firmware,"
as Klayh
calls it.
When arcade managers wanted to
replace a game, they had to buy
a new box.
That kept Dynamo and other
companies busy making new boxes,
Klayh says, but it
also kept the prices of arcade
games artificially high.
Last April, Intel announced
that it is working with about
80 hardware,
sofware, coin-operation and
distribution companies to
promote development of
games written for the Pentium
II microprocessor, the
company's high-powered
computer chip.
Previously, the graphics
in a PC chip weren't as
good as the graphics in a
dedicated system in an
arcade game. But Intel's
Pentium II chip is fast
enough
to work well with the
heavy graphics content in
arcade games.
If developers switch to
PC-based games, arcades
wouldn't have to
replace the
box. The games would be
loaded into a box that
sits permanently in the
arcade,
Klayh says.
Intel wants arcade
games to run on
Pentium II chips
because, with 1.2
million games, the
arcades are a
significant market.
But that's not
the only, or even
the most
important,
reason. If people
like
the game at the
arcade, they'll
want to upgrade
their home
computer, Intel
spokeswoman Lynn
Heinisch says.
For game
writers,
they'll get to
sell home
versions of
their games
faster.
Five games
were
introduced
last year, and
more will be
unveiled at a
conference
next week in
Great Britain,
Heinisch says.
For game
players,
PC-based
games
improve the
ability to
play
against
gamers
in romote
locations.
The games
in arcades
in Fort
Worth,
Seattle or
London can
be linked
on the
Internet.
The PC
initiative
is
shaking
up the
arcade
business,
and
Dynamo,
like
many
other
companies,
is
trying
to link
with
Intel to
help
them
grow.
"We
haven't
figured
out a
way
to
get
in
their
pocket,"
Struhs
says
jokingly.
But
Dynamo
officials
are
hoping
they
are
taking
the
right
shot.
"We
are
just
looking
for
the
trend,
and
we're
trying
to
get
in
the
way
of
it,"
Rickett
says.
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