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March 2015

RePlay MArch 2015 - Betson's 80th Anniversary

Adapting to a New Era

H. Betti Celebrates 80th Anniversary By Embracing FEC-Centric Market

At last fall’s IAAPA, Peter Betti, chairman of H. Betti Industries, gave a speech to customers gathered at a special anniversary celebration. On the eve of the conglomerate’s 80th anniversary, the third-generation industry member noted that Betson Distributing, the nationwide game dealership, is actually the youngest member of the Betti network of entities.

Yet that newcomer has moved into the company’s eighth decade in existence by embracing the newest trend in the amusement trade, the rise of the family entertainment center as their core market. In fact, the history of H. Betti constitutes a series of similar evolutions as the company grew and prospered by remaining nimble enough to respond to an ever-changing world.

H. Betti Industries was founded by Peter’s grandfather, Humbert Betti, in 1934, when the Greenwich Village restaurateur and tavern owner started operating jukeboxes in both his own business as well as other nearby taverns. Humbert was already something of an international success; the South American native was raised in Italy and emigrated as a young man to England, where he launched a successful chain of ice cream parlors and raised a family (including two daughters and four sons who worked in the business, Bert, Hugh, Eddie and Louis) with his wife Catherine.

“They must have done pretty well even before they got to this country,” Peter told the crowd at the IAAPA anniversary party, “because my aunt tells me they bought a Rolls Royce when they got here even though none of them could drive.”
Once launched, the jukebox operation also thrived, and the family moved away from running the Village restaurant and bar to running jukeboxes and amusement equipment in others’ locations, mainly in New York City and New Jersey. At its height, the Betti route had over 7,000 pieces of equipment on the street.

The Evolution of H. Betti Industries

Peter Betti’s own connection to the firm founded by his grandfather extends more than a half a century into the past. And in more recent years, Peter has spent time visiting his father’s sister, who turned 99 this past December. She was crucial to the survival of the business during World War II, when Peter’s father Bert and his brothers were enrolled in the service fighting for their family’s adopted country.

“She says they were always excited to find an able bodied man to work around the shop during that period,” he related.

Peter remembers working for the family route as a kid, getting his first pay envelope in 1963 as a 14-year-old. “We were basically a big route operation then,” he recalled. “They loved to have me around in the summer because I could lug around cases of canned soda. I worked on the route trucks. I was a fairly big, strong kid so I lugged pinballs and shuffle alleys and pool tables. I was really good with a hand truck. I once unloaded an entire trailer load of Fisher tables with a ramp and a hand truck. It’s a matter of leverage.”

Carrying on that same tradition today, Peter’s son Jon works for the business, overseeing the emergence of a whole new way of working with a burgeoning landscape of family entertainment centers. His daughter Catherine also recently joined Betson’s finance department, having worked outside of the industry for a number of years. But we’re getting ahead of ourselves.

When Humbert Betti retired in the 1950s, he returned to Italy, leaving his son Bert in charge of the route. During that same period, H. Betti & Sons, as the company was known at the time, also began supplying components, including slate, for bumper and six-pocket pool tables.

The new division was known as Eastern Novelty, and its efforts were aided in no small part by Humbert’s relationship with several Italian slate quarries. Eastern Novelty is known today as Imperial International, which supplies a universe of billiard and other amusement related goods, including NFL, MLB and NHL branded items, for consumers. That business operates from two hubs, Carlstadt, N.J., on the east coast, and Buena Park, Calif., out west.

By the late 1950s, the family had begun equipment distribution, handling first the Fisher pool table line and then later games from Midway, Chicago Coin and others. The newly christened Betson also took on Rock-Ola jukeboxes as a sub-distributor for another dealer.
For the next 60 years, Betson Distrib­u­ting has grown across the country, becoming the dominant distributor in the amusement industry.

Betson has enjoyed steady growth largely through acquisition of other dealers including Runyon Sales (New Jersey), Portale Automatic (California), Eastern Music (Pennsylvania), State Sales and Service (Maryland) and Spirit Distributing (Texas). Betson has also grown by establishing new offices in various locales around the U.S. including New England, Georgia, Florida, Illinois and Utah. Today, Betson covers most of the U.S. in one way or another.

Along the way, Betson has also forged partnerships to provide proprietary product from game developers like Elaut, Konami, Chicago Gaming, Jennison Entertainment and most recently Raw Thrills and Play Mechanix. Today, Betson serves as the master distributor for video games and other products developed by the creative whizzes at Raw Thrills and Play Mechanix.

Betson is also active on the global stage, distributing games for companies like Raw Thrills and most recently Team Play with its new popular redemption title Fishbowl Frenzy. Representatives of the company also travel extensively to international trade events to seek out new product opportunities. “It’s always been a worldwide industry, but today we have to be out there and be active in all of these markets,” said Peter.

Even as the company emerged as a global force, H. Betti also faced a rapidly transforming market here on its home turf, requiring the firm to accommodate the emergence of a new, important customer, the FEC, in its many varieties.

Entering The FEC Era

Longtime H. Betti President Bob Geschine said the company found itself at a crucial crossroads about a decade ago. “We looked at the changing landscape, particularly the consolidation of amusement distribution,” he said. “I can remember a time not too long ago when there were five and six times the number of distributors we have today.

“We realized we had to become more centralized and eliminate some redundancies. Instead of having 10 parts departments and 10 service offices around the country, we centralized into hubs in Buena Park and New Jersey,” Bob explained. “We responded by restructuring and reinventing our company. For starters, we made a significant investment in our parts inventory and our service expertise. We have become self sufficient so we could avoid the time and the cost of sending parts back to the manufacturer for repair.”
Betson bolstered its financial services business – essentially an in-house financing and leasing company – in order to remain as flexible as possible in meeting operator needs for new product.

The distributorship also responded to a clear new trend, the rise of FEC locations that owned and operated their own games. While continuing to serve its longstanding route operator customers, Betson also geared up to take on this new business.

“We saw sales to FECs rapidly growing both in terms of new projects and conversions of existing facilities specifically in the bowling and the FEC industries,” said Bob. “We realized that we needed to look at these opportunities as whole projects from inception to completion. That means design, layout, a turnkey game solution, financing and leasing and, most importantly, after sale monitoring to ensure top performance of the games we provided.”

According to Peter, FEC locations constitute more than 80% of the firm’s game sales today, a dramatic difference from a time in the not-too-distant past when Betson sold the vast majority of its games to route operators who place games in locations on a revenue share basis.

“The business began to morph around 2006, and the FEC really boomed after the big bust, the Financial Crisis of 2008, because a lot of real estate became affordable and the owners of the buildings, many of them former big box stores, were looking for ways to exploit or capitalize on their property,” explained Peter. “The coin-operated experience is viewed as being part of a broader entertainment experience today. You can’t have a freestanding arcade these days. The revenues don’t really justify it.”

That being said, Peter pushed back against the conventional wisdom that FEC game rooms should be dominated by redemption. “I know a lot of the consultants are out there preaching all redemption, but you see companies like Main Event and Dave & Buster’s using a higher percentage of video than most FECs,” he said. “They look at utilization as well as income. Video serves to broaden the entertainment attraction for the overall arcade. If Mom and Dad walk into the arcade with Junior and Sis, when one person gets bored, the whole family leaves.”

In order to serve FECs around the U.S., Betson has developed a team of specialists to work closely with locations. The dealership was recently called upon to set up two major FECs at the same time including the new Round One location in Arlington, Texas, and the latest Main Event FEC in Oklahoma City. When it ships games to a location, Betson sends along its own mobile tech shop, followed by staff members to guide the location through the process.

“It’s like getting the camel through the eye of the needle,” joked Peter. “We know what to bring. We know what the timelines are. We’ve become very good at that part of the business. The value-add that we supply is a soup-to-nuts solution for people who want to be in the arcade business. We are a good resource before the sale, during the sale and after the sale. Our parts and service are also an integral part of the ongoing relationship with our customers.”

Internally, Betson coordinates these efforts by using an advanced software suite to track potential and ongoing customers. “This whole new section of Betson is project-based, and we have a fluid team of eight or more people focused exclusively on the FEC side of the business,” added Bob Geschine. “We are heading into a Golden Age of FEC development, but you have to focus on each of these projects in the context of their own unique timelines. It’s a whole different management process.”

Jon Betti, who is intimately involved in tracking Betson’s ongoing relations with FEC customers, says the new approach is consistent with something he often heard from his grandfather, Bert Betti. “We are only as successful as our customers. That’s what my grandfather used to say,” explained Jon. “It doesn’t benefit us to sell anybody a bad game. We are evolving from being a distributor in the traditional sense to playing a consultative role.”

By developing a repository of data and sales history through the firm’s software system, the Betson staff can follow up with the right game recommendations and other profitable resources. “It’s a way of being more efficient and effective for the benefit of our customers,” said Jon.

Betson has also developed something it calls the Wellness Campaign, which helps track and monitor the way an FEC’s games are performing once they are up and running. “I think we’ve done it historically in a less formal way,” said Jon. “Now, we are able to look at a universe of data coming from the card systems to make sure locations are using the right game settings and to adjust the mix to a location’s evolving demographics. This is a lot more powerful than just having a salesman drop in every six months to sell the location a few new games. We’re a products company, but we are also a service company. I think that’s the future of the industry.”

What Lies Ahead

As H. Betti Industries celebrates its 80th anniversary, the company remains focused on several core businesses including its Imperial parts house and the Betson distribution business, which maintains a traditional sales staff around the country serving street operators as well as its much newer team of FEC experts. So what lies ahead for the company and the industry it serves?

Peter Betti seems content in the knowledge that the arc of business will always involve change. The most important issue, he noted, is how one responds to that change.

“We spent our first 30 years as operators, and then the company went through a drawn out transition from the mid-1960s to the early 1980s when we became a full-fledged distributor,” he said. “We’ve seen considerable consolidation since that time both operators, and more so, distributors. There aren’t nearly as many viable locations around either, particularly for jukeboxes. At the peak, I think there were probably four times as many jukebox locations as there are today. A lot of local bar culture has evaporated because of the rise of branded chains, and a box and a tube just don’t work in those places. We must figure out the right game or experience that will be exciting enough to compete with what people have to offer on their smart phones.”

Bob Geschine believes the emergence of the FEC provides some clues to what the rest of the industry needs to do in order to adapt. “Why is this FEC trend so successful?” he asked rhetorically. “An FEC is more closely related to the way the public pays for its goods and services. People just don’t walk around with a pocketful of currency any more. Yet the manufacturers are still cranking out games that accept coins as the core method of payment.

“We need to translate this same style of doing business to smaller venues,” he continued. “The card system is a wonderful way to manage your spending and even walk away with credits for a future visit. We need to bring that solution to smaller venues in order to recapture casual play. I believe that’s tantamount to the continued success of this industry. Obviously, we are also keeping a close eye on the emergence of various developments in mobile payment technology including smart phone solutions and mobile wallets.”

Jon Betti, the fourth generation family member, concurred with the analysis provided by his father Peter and Bob Geschine and expressed a deep sense of optimism that the Betson network is prepared to tackle the challenges that lay ahead.

“We’ve built a strong organization of people with a lot of depth of knowledge and experience to help address the questions that are constantly coming our way,” Jon concluded. “And we are always focused on bringing in new and talented people because it’s really the people who make the company. It’s been a pretty amazing journey from my great grandfather’s first jukebox to where we are today, and the people who have worked here at Betson have made it all possible. To quote my own grandfather again, ‘company in Italian translates loosely as family.’”



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