Stern's Strategy

In the SW Pin treads there are a lot speculation about Stern's motives. Most of the speculation are way off base; both from a generating marketing perspective as well as from Stern itself. In the June 17th interview of Gary Stern on Head2Head Pinball, Stern was very clear about their strategy and business drivers. I went back and took a few notes.

"This is a business with a 72 page business plan"
- this is not a hobby for Stern or operators
- Stern is looking to sustain it's "core" and increase the base
- We have budgets; we allow creativity when designing the machines, but the game features need to be "prioritized" and fit within the budget
- "if you don't grow you shrink"
- "we're dedicated to improving the technology, you gotta make money to do it"
- We have to keep 350 people to keep working
- The Pro model is under priced to sustain the marketplace

Market Segments
- "we have a broad market"
- serve both advanced player and casual player market
- co-branded machines/private label; there are two formulas [product lines] for this market
- 20 something barcade players; research shows they more frequently go out than their parents did
- 40 year old rec room buyer, suburbanites are your rec room buyers
- 45 year old enthusiast
- Operators
- Barcade owners
- 45% are international sales

Market Trends
- feel they are a "lifestyle brand"
- pinball is more "retro" than "nostalgic"
- You have to have rules/product offerings for both advanced and casual players
- studio and vaults are not fillers, they're part of the marketing plan
- the current form factor of pinball is set - playfield size; we're not changing the size of the "tennis court"
- barcades are driving growth, owners driven by barcade players; in barcades, "we're the entertainment" versus bands and DJs from previous eras

The home edition pin is
- "a different business"
- we're "learning each time"
- "we're in a formula and understand the product"
- less expensive and not for enthusiasts
- supposed to be fun
- full size playfield with shrunken cabinet (see the tennis court common)

I think there is a lot you can tease out and discuss from Gary Stern's comments. Their strategy is broad and more nuanced. You might be wrong to examine every new pin through the lens of the advanced player/collector/enthusiast market segments.

Now that I've posted the facts... my speculation from Stern's comments is that if you examined their annual business plan you would see a set of market segments or marketing personas, a product line mix (HE, Pro, Premium, LE) and marketing channels (distributors, direct sales, retail) that addresses each. I would likely having an international sales plan as that is obviously a huge segment that cross cuts the personas. You would want to cross cut multiple price points as well.

That's why I feel The Pin is a great idea for expanding the base targeting the rec room buyer at the low end. Stern's is doing exactly what a good marketing team should do. Test out a new market segment, find out what that audience will pay, establish metrics/leading indicators for that market segment. If there is a market but you haven't quite hit it directly then you iterate and pivot to what the market wants and is willing to pay.

I posted this thread because I’m interesting in marketing and thought it would be fun to chat in an intelligent way based on what we know. I listened to the Stern interview with through a marketing lens and what I know about marketing. If you’re not interested so be it. Move on.

As to having insight, of course we have insight. That’s the whole point. We know Stern has been growing at double digits for at least 3 years. And we have Gary Stern telling us their company’s strategies and segments. Certainly enough to speculate where they see market opportunities and what their plan is. That helps us speculate where they’ll be going in the future.