Cover Story (June 2008)

LAI Games celebrates the big 50!

Half a century is just the beginning for an innovative company with a presence in 26 countries.

In the U.S., the year 1958 was marked by the launch of the first U.S. satellite, Explorer 1; President Dwight D. Eisenhower signed the bill to approve statehood for Alaska; the Brooklyn Dodgers became the Los Angeles Dodgers; and Gibson patented the Flying V guitar.

Meanwhile, 7,488 miles away, the first true freeway in Australia, the Cahill Expressway, opened; Gary Player won the Australian Open; Qantas Airways introduced air service from Australia to London; and Australian engineer Dr. David Warren constructed a prototype of the world’s first flight recorder, now an aircraft necessity known as the “black box.”

And it was the year that Malcolm Steinberg began Leisure and Allied Industries (LAI) in Australia. At first, LAI operated Timezone entertainment centers, and then it developed into an innovator of amusement equipment (think Stacker, Lighthouse, and Timebuster) with its LAI Games division, and became a major supplier of an integrated debit card and Point of Sale system with its Embed division.      

Malcom Steinberg, Founder of LAI, 
at the 50th Anniversary celebration

Anniversary celebrations are planned throughout the year, on local and international levels, some to coincide with industry trade shows, to allow LAI’s valued customers an opportunity to share in the company’s success.

Alan Freimuth, CEO of LAI Games, spoke about Steinberg’s entrepreneurial spirit, and the reasons for the company’s success: “Malcolm is a visionary, an eternal optimist, a big-picture guy who always looks for opportunities that the market has not yet discovered.” As an example, he mentioned Steinberg’s expansion into six Southeast Asian countries where “family entertainment center (FEC) developments were basically nonexistent before he introduced his Timezone FEC operation.”

Freimuth added, “One of Malcolm’s many good attributes that made the company what it is today is that he is a very good delegator. He delegates responsibility to his people and lets them make decisions on behalf of the company.”

To continue coming out with intriguing new games, LAI Games must place emphasis on R&D. Freimuth said, “We have a large R&D team, and some very talented individuals, who have a great knack for creating good game concepts. A committee reviews each idea, and if the idea gets the nod we ask the team for a more detailed development plan for final approval. If we don’t like it, it gets thumbs down; it happens.” 

LAI comes to the U.S.

In 2006, it became clear that LAI Games should have an office in the U.S. Freimuth explained, “LAI Games had distribution arrangements in the U.S., originally with Lasertron, until it was sold in 2003, and then with Valley-Dynamo, which was responsible for launching Lighthouse and Stacker in the U.S. These companies did a great job representing our prize merchandising line of products. The last arrangement expired in 2006.”

He continued, “At LAI Games, we wanted to find a way to introduce our complete line of products, including our high quality ticket redemption games and kiddie rides. After extensive research, we concluded that we should open the U.S. office and represent our own products.”

Freimuth had been the General Manager for LAI Games since its inception, and had been headquartered in LAI’s Singapore office since 1999. He and Steinberg decided to establish a branch in the world’s biggest coin-op market, and set up a sales, distribution, and service facility to grow the business.

Freimuth explained, “It was a five-year plan; the goal from the beginning was always to hand it over to local talent, and for me to move back to Southeast Asia. As with any long-term plans, they change. The U.S. office was set up within 18 months, and attracted 15 very talented people who understand the coin-op business and know how to grow the market for our games.”

Dallas, Texas, was selected for the office, based on several factors: central time zone, and accessibility by air, road, and rail to all major destinations in the U.S. Freimuth quipped, “Plus, it’s not so cold like the northern U.S.; we Australians are accustomed to warmer climates!” 

Setting up the office was no picnic. Bureaucracy presented the biggest challenge. Freimuth recounted the difficulties, from obtaining a working visa to establishing business bank accounts and local and international phone accounts. In the end it was worth the effort.

A centrally located U.S. office was also an ideal place for the parent company’s Embed division, which located in nearby Carrollton, Texas. There are definite benefits to having both divisions so close. “We believe strongly in good service and backup support,” noted Freimuth. “Being a foreign producer, it was difficult in the past to provide fast, efficient service to our U.S. customers. Now we can offer same day service, and customers appreciate the quick response they get from our technical support team headed by Carl McKinney and parts department managed by Tom Miller.”

Pete Gustafson has been promoted to LAI Games General Manager, while still handling many of the International Sales responsibilities for the company.” Freimuth said, “We are sure that Pete will bring new ideas to the table to grow our business. It will be up to him to find ways to achieve his budgeted goals with the help of his team. LAI has a history of empowering its people to make decisions at the local level, so Pete has a lot of autonomy and leeway to make things happen.”

Joining Gustafson are Debbie Gonzalez, Sales Manager, and Chris Kinney, Marketing Manager. Freimuth recounted their qualities: “We had always been impressed with Debbie’s passion for the industry, her knowledge of the market, and her incredible memory for everyone she knows in the industry. Chris joined us in February 2007 and quickly got up to speed on what’s needed to market and promote our games to operators, distributors, and players. His fresh perspective and approach to the coin-op industry has challenged us all to think outside the box in order to increase revenue.”

On the coin-op map

There is no doubt that the popular games Stacker, Lighthouse, and Timebuster permanently established the name LAI Games in the U.S. Why have they been so successful?  “We always felt that players were not interested in winning often, if only to get cheap items they could buy for a few dollars at the local factory closeout store,” said Freimuth. “They want to play for highly desirable prizes that they can’t buy for a few bucks, so playing for higher odds was not a problem. The latest mobile phones, and prizes of a similar value, proved to be worth playing for. Initially, operators were skeptical and thought we were crazy, but now with over 20,000 LAI prize vendors in the market, that concept is well accepted by the operator.”

            The company offers a wide range of games, many for small children. Is that an area where LAI Games feels the market needs more innovation? “Not really,” said Freimuth, adding, “we have been very successful creating games that are targeted at younger audiences, but you will see several new products coming up that focus on a more mature audience with much wider appeal.”

Soon it will be time for the Amusement and Music Operators (AMOA) International Expo and the Fun Expo in September, and the International Association of Amusement Parks and Attractions (IAAPA) Expo in November. Does the company have any surprises in store? Freimuth kept it close to the vest: “That’s a yes on surprises and a no on hints.” He added that LAI Games’ ideas have been copied by others, and that “in reality, these companies will be responsible for a downturn in innovation by manufacturers, and that in turn will hurt the operators.”

Never one to be content with past successes, the company debuted a worthy successor to Stacker with Stacker Double Up at the recent Amusement Showcase International (ASI), The sleek cabinet design draws players to the game, and is an example of the forward thinking characteristic of LAI Games.

Freimuth discussed the value of trade shows: “Our international strategy is to attend all trade shows around the world; it’s one of the ways to get our games in front of the operators so they can touch, feel, and play them. We are proud of the high quality and attention to detail that goes into every game we build, and trade shows give us an opportunity to display these attributes. We try to bring something new to every show we attend. Our marketing strategy for the U.S. is also heavily weighted with trade shows, but we must make sure that these shows are heavily attended by qualified buyers to justify continuing down this path.”

When asked where he would like to see the company in five years, Freimuth replied, “We have a four-year business plan, and a goal to become a leading supplier of innovative game concepts. At the present time, we focus our efforts on the ticket and vending machine market, where we have already experienced success. Our talented R&D team is working on projects that will, in time, get us into the lucrative non-coin-op game market. We also see opportunities to establish offices in other parts of the world, in an effort to support our distributors and customers in their own time zones.”

Embed USA

Sister company Embed International is responsible for the Embed System, which offers redemption management, POS, and debit card functions that address all areas of entertainment center operations. A key group of LAI employees worked on the card system for years. The name, suggested by the Chief Engineer, derived from the architecture of LAI’s electronic hardware, which includes “embedded” hardware and software solutions.

Mark Easte is the General Manager for Embed USA. Easte and his staff have found their office in the Dallas-Fort Worth Metroplex to be a convenient location. Easte noted, “A number of major industry operators are based in this area, and we have continued to earn more of their business with our ability to service their needs more readily than if we were in the next city, state, or beyond.”

The proximity to the LAI Games office offers a number of advantages. Easte commented, “While we are two separate companies, we share similar business rules, and this allows us to occasionally share some costs, and of course the occasional inter-company barbecue.” 

The Embed system was first designed for the Timezone chain. Did the designers ever envision how successful it would become, now with over 280 locations worldwide? “It was never a goal to have a product with as far reaching appeal,” said Easte. “However, it quickly became clear that the Embed System delivered very positive results for Timezone, and we knew that operators worldwide could benefit from the system as well. It’s important to note that almost all of the early developers are still with us today, and continue to cultivate our expanding range of products and services, as well as share in our success.”

Easte explained why the Embed System is a popular choice: “While there are a number of special features delivered by Embed, our success is not only driven by our product line but also by the company behind the product. “Through our affiliation with LAI and Timezone, Embed benefits from the hands-on experience that is gained from being a large-scale operator. Through this, innovations such as our Color-Glo Swiper, wireless technology, and extensive loyalty component have come to be. In addition, the fact that Embed offers a well-rounded POS application broadens our appeal.”

Growth potential

The Embed System has been installed in a wide range of venues, with growth in many areas. “We are seeing substantial demand from the bowling-anchored FEC sector, as well as from resorts and other entertainment destinations that are looking to add FEC-style attractions,” said Easte. “Embed has been proud to achieve record growth in each of the past quarters, and the growth has come from all market segments.”  

Easte has an extensive operations background, having started with the LAI Group in 1992. He was a principle architect in the direction and development of the card system from the very early stages, and continues to inspire the product development teams today. Freimuth commented, “Mark’s intimate knowledge of Embed’s products and services, combined with a strong operations background, were all the right ingredients the leadership of our U.S. business required.” 

Merrik Keller, Sales Manager for Embed, has of over 15 years of experience within the family entertainment industry, nearly a decade in sales and debit card implementation, POS, and redemption management systems. He comes from an extensive operations background as well, having co-developed and managed numerous entertainment facilities throughout the Northeast.

Embed USA currently has close to a dozen staff members that comprise the installation and support services team, in addition to administrative and logistics personnel also based in the Texas office.

Embed works with a number of industry partners, from consultants to prize merchandise suppliers. “We definitely feel our clients benefit from the industry partnerships that we have forged,” said Keller. “In our own internal climate, we try very hard to take an educational approach and not a ‘sales’ approach. We try to match our strengths and system benefits to the needs and goals of our clients. We take the same stance when working with industry partners; we look to work with proven leaders in their respective areas, and deliver a higher quality service and/or product as a result of each relationship.”

Like LAI Games, Embed believes in the value of trade events. “We view any time we can get up close and personal with people who are looking to learn about what we offer as a valuable opportunity,” explained Easte. “We exhibit at all of the major shows, as well as sponsor the leading industry educational programs, such as Foundations University, Birthday University, Trainertainment, and Fun Academy.”

Education

What are trade show attendees seeking when they stop at the Embed booth?  Easte said, “Most people are looking to learn more about our fully integrated debit card, POS, and redemption management solution. A high percentage of prospects have heard about Embed through another industry channel, and some are just stopping to see what we are all about. We are happy to talk with those already in the business, and those that may be a number of years away from opening their doors.”

While cashless systems have been around for a while, not everyone is familiar with them. What are some of the most commonly asked questions? “That’s one of the biggest challenges, as many people do not know the right questions to ask,” said Easte. “The question, ‘How much does it cost?’ is often a lead in, as some do not know how an Embed System can become one of the most important marketing and promotional tools for their business. We look to educate a prospective buyer on how Embed can be used to reduce operating costs and drive revenue.”

Is price still the stumbling block for small operations? Easte said, “Certainly price is a factor for everyone, but smaller operations are much more price conscious. Fortunately, Embed delivers an attractive cost of ownership and we work with prospects on evaluating the potential investment. In some cases, the system may not be the best solution for a certain size or style operation, and we are the first to communicate that to the buyer.”

Are prices coming down a bit due to technology, and are any new systems in place for small facilities? “Yes, the cost of ownership is as streamlined as it has ever been,” remarked Easte. “Embed Systems are scalable and therefore cost effective for many small facilities. We offer a variety of options that can reduce the cost barriers that face smaller facilities.”

We asked Easte to look into his crystal ball. Where would he like to see the company in five years? “Embed has a documented five-year plan that positions us as the leading supplier of innovative industry solutions centered around our already successful debit card system, as well as several new management and payment systems.

“These plans are possible through the exploitation of our internal development resources, and acquisitions of companies closely aligned with our objectives. The lead up to these goals has our talented R&D teams busy with our next and future generations of software and hardware systems. The next five years will be an exciting period for us, as we implement our aggressive plans to market our systems and services in other advanced entertainment markets, such as Europe and the Middle East.”

The decades ahead look bright for this innovative company and its LAI Games division and Embed division. The addition of the U.S. offices, combined with an established international presence, has positioned LAI for unprecedented growth in the future.

Peter Gustafson - General Manager and International Sales Manager

Pete, a 27-year industry veteran, joined LAI Games after serving two years as Vice President of Business Development at Face Place. Prior to that, he spent 11 years as National Sales Director for Sega Amusements USA, and earlier spent 10 years with Data East Video and Pinball and Aladdin's Castle. Gustafson began his coin-op career in 1980 working for Bally Pinball as a Field Service Representative. He is active in the American Amusement Machine Association (AAMA), and serves as Treasurer of AAMA and Secretary of the AAMA Charitable Foundation (AAMCF).

Michael Wang - Controller and Business Manager

Michael is responsible for finance, accounting, auditing, 
tax, treasury, human resources, and administration. 
He has over 20 years of professional experience, 
including 10 years at the executive level.

Chris Kinney - Marketing Manager

Chris is responsible for developing and implementing strategic marketing and communication objectives, with an emphasis on increasing market share. He brings more than eight years of marketing and leadership experience to LAI Games. Chris has an impressive track record cultivating marketing programs from the ground up, which adds depth to his marketing abilities. Prior to joining the company, he spent five years with JDA Software as Marketing Manager, helping them establish a foothold as a leader in Enterprise Workforce Management Software.

Debbie Gonzalez - US Sales Manager

Debbie has been in the redemption game industry for over 14 years, and has gained an extensive background in prize vending and redemption equipment. She began her coin-op career with Planet Earth Entertainment and the Flip N Win game, the first prize vending machine offered in the mid-1990s. Debbie then went on to assist in the launch of Dinoscore, a ticket redemption game, and later bulk vending products from O.K. Mfg., maker of Gravity Hill.

Chad Hughes - Regional Sales Manager

Chad is taking on a new role and is responsible for developing and implementing strategic sales objectives for the Pacific Northwest and Central U.S. territories, including Washington, Colorado, Ohio, and Texas. He joined LAI Games after seven years with TD Rowe, where he became well versed in operations and moved up through the ranks to the post of Vice President of Sales. Chad brings a valuable perspective and insight, since he understands the expectations of operators and the challenges they face.

Carl McKinney - Technical Support Manager, Global Services

Carl was among the first employees at the U.S. office. He is responsible for day-to-day support for the entire LAI Games product line globally. Carl has a wealth of experience and knowledge in the field of electronics and mechanics, and maintains exceptional customer service skills. In just under two years at LAI Games, Carl has developed an acute knowledge of all the products, which allows him to quickly resolve customer issues.

Tom Miller

Warehouse and Parts Manger

Tom brings a diverse background of experience in customer service, operations, and logistics to LAI Games. His hands-on experience with coin-op routes, parts, and customer support ensures that games and parts ship in a timely manner, and that products continue to operate and earn great revenue for customers. Prior to joining LAI Games, Tom held the position of Customer Service Manager for PRG Lighting, an entertainment lighting company, where he provided critical parts and services to concert tours, television shows, and many other entertainment venues.

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