Ch 1: The Beginning - The Positive Gaming Story

07 - 11 - 2012

Ch 1: The Beginning - The Positive Gaming Story

This chapter goes back to the very beginning, and covers highlights until the end of 2001.

Positive Gaming was started in 2001. Life had been very intense for me the years before that, for a number of reasons, not the least because of the other business I had at that time.

I started my first company in 1994, only 22 years old, it was focused on health food, natural skin care products, and from 1996 onwards with the primary focus on products made from grapefruit seed extract. I travelled around on a daily basis from health food store to health food store, offering products of excellent quality via different sources, but products not known in Norway and without marketing materials or brand value. I had no education within business or sales, but learned as I went along. In 1995 my one person company sold products for about 25.000 EUR, and It was hard work.

In 1996 I started up with a product called Citrosept (grapefruit seed extract), and that was my first success story. We sold for 600.000 EUR in Norway that year, and were all over the media etc. I won’t go into detail about all that led to that here, other than mention that it helped me a lot years later when Positive Gaming got started in Norway. The years following I expected continued growth, but ended up spreading the focus too thin, taking on more employees than made sense, and ended up struggling for survival in 1999 despite a continued turnover of about EUR 600.000 – 1.000.000 per year. In June 1999 the others in the company had a meeting between themselves while I was travelling, deciding between themselves that this wouldn’t work any longer. When I got back they confronted me with this, and I ended up restructuring everything and handling what 8 people could do via 3 people full time and a few part time. In year 2000 Citrosept broke through in Poland, and we ended up with our best year ever, after being in the news repeatedly and present in 10.000 pharmacies in Poland alone. The success of Citrosept continued for another 5 years with me in charge of it, spreading into a number of other countries and with continued strong presence in countries like Poland and Norway, but for different reasons I got less interested and inspired by that business during 2001, and started thinking about a new way of moving forward with my business life.

Discovery of Photo Play

In the summer of year 2000, I travelled with my good friend Jones from Denmark to Amsterdam. There we found a very exciting touch screen game machine called Photo Play – Positive Games. We played this machine together, on a number of different games based on skill, memory, speed, quizzes etc, and it was very stimulating in a positive way. I decided in 1993 that any business I would start should have focus on creating something positive on as many angles as possible, from the manufacturer to the distributor to the customer and consumer. Although I always played and liked computer games since I was very small, I never thought I could manage to satisfy my demands for purity of products based on computer games, but realized via Photo Play that this was possible. I still only had it as a hobby, and when I saw the product introduced in Norway later on in 2000 I played it more and more.

In the summer of 2001, I invited an old friend of mine from college called Thomas to play together with me in a Photo Play tournament, since the game that was featured was more suitable for 2 than one player. We played it daily for several weeks, and got to an almost shocking level of skill, we never thought it was possible…I had already been top level in several other games, but in this one we outdid any expectations. We both thought that it must be very interesting to do business with Photo Play, and at one point we decided to contact the Norwegian importer of the machines and see if there was a business opportunity there.

While we were playing this game, there was another machine that made a lot of noise in the arcade where we played, called Dancing Stage Euromix 1. I had tried that game a few times, and thought it amusing…but I figured it was pretty useless, since only the first levels seemed actually possible to play. Thomas and me also found the music to be annoying, and we wanted to ask the arcade owners to turn down the volume, and switch off the annoying teaser that played regularly. That was the first time we were confronted with a dance game, little did we know how involved we would be with such machines and dance game products in general in the years to come.

Shortly after, my biggest competitor in the game met up with me in the place I usually played, his name is Daniel. He was 16 at the time, very sharp and fast. When I mentioned my idea of doing business with Photo Play, he said he could fix any machine and that he wanted to be the technician if anything ever happened.

In early September 2001, I called the importer of Photo Play for Norway. I mentioned that I had built up a successful business in the past and that we were looking for business opportunities with Photo Play, and the first thing the man I spoke with asked was if we wanted to buy the business from them. I said that we would be interested in discussing that, and we agreed to travel to their city to meet up with them and discuss.

So on the most famous day in modern history, September 11th 2001, Thomas, Jones and myself found ourselves in Trondheim to meet with Jan Erik Krogstad from Norsk Lotteridrift (NLD), a billion EUR company that had its’ main business with slot machines. We arrived at noon and met for about 2 hours, both parties interested to continue the talks. On our drive back to Oslo on that day, my wife at that time informed me that two planes had hit the World Trade center in New York. A crazy event for the day of Positive gaming’s first meeting.

NLD owned 438 Photo Play machines spread across the country, and had paid about 1,5 million EUR for all their machines. They suggested a 2nd hand price of 600.000, since they really wanted to invest in the slot machine business, which gave them most of their income and was going crazy in Norway at that time. We said we were interested, but needed to learn more about the industry, suppliers, our own future position towards the suppliers etc.

The next step was a trip for Thomas and myself to Wiesbaden in Germany, to meet with the people from Funworld and Fun Net International, the companies that owned Photo Play and the tournament system for it. We visited there in October 2001, and Jan Erik from NLD was there at the same time, he was meeting with them before us. He had obviously told them that we would buy NLD’s machines, as well as buying 500 new machines from Funworld, something that was not our plan at all. We didn’t know this, so we came into the meeting and were excited to announce that we wanted to buy the machines from NLD, and maybe buy 50 more machines from Funworld in the coming 6-12 months. The reaction from one of the Funworld representatives was unlike any other I experienced in business. He stated looking at the ceiling, sighed heavily, then stood up, saying “I can no longer be at this meeting. I was told you would buy 500 machines”. Then he got up and left the room. Thomas and me, dumbfounded since we thought it was good news that we wanted to take over the business in Norway and start buying more machines, just looked at each other. The other guys from Funworld were not authorized to make any decisions, so they were confused as well. They tried to continue the meeting by asking some questions etc, but they also didn’t know where their company stood. The main guy came back in some minutes later, apologized, but said that he had been too shocked to be able to continue the talks. He gradually regained his composure. We left the meeting not sure what to expect. One thing that came up was that they had already given the rights for selling machines in Norway to a Danish company called Elite Gaming, which had a daughter company in Norway. The Norwegian company was run by a man named Ingolv Bru, who actually many years later became very involved with iDANCE. We were told that we had to buy any new machines via Compu-Game Norway.

When back in Norway, Jan Erik, the guy we had met with from NLD, was quitting his job. Another man called Lars Furu took over the negotiations, and we sat down in the arcade where we usually played Photo Play for a meeting. The participants were Lars, a man from NLD called Nicolai Scanche, Thomas, my father (who was our lawyer) and myself. During those meetings we wanted to discuss the details should we purchase the Photo Play business, and it was pretty complex. We wanted to know fully what we were getting ourselves into, and at one point Lars suggested that we just take a “Spanish one”, which in Norwegian means shortcut. My father, ever the man to accept no nonsense at all, just said: “No one will take a Spanish one”. I still remember that…we the small guys with no history in the business, Lars the marketing manager of a billion EUR company, and the guy cringed like an eel and said “Ok”.

After that, we went back and forth, and no actual offers were being made yet by any of the parties, mainly because of a problem with licenses to be permitted to place out Photo Play machines in Norway. Because of the boom of the slot machine market, all new licenses were usually used on such machines, and the ceiling in each district was reached, so if we bought all the Photo Play machines we would not be permitted to place them out. This was a possible deal breaker.

So when we reached the end of 2001, we were at a stage where we still needed to negotiate price and conditions for a potential deal with NLD, we were trying to ensure that we would have licenses for the machines should we make a deal with NLD and we were trying to make sure we could purchase machines directly from Fun World in the future, not having to go through Compu-Game Norway in order to purchase machines. Around this time I lived for 6 months in Hamburg, and Thomas came to visit me there. We agreed that he would be my right hand in the company and that we would do this together, and he quit the studies he was doing at that time. Although faced with some pretty big obstacles that few thought we would overcome, we decided for an internal mission statement between us, which read something like “We don’t give up that easily, you know”. Well, the story will show that there is a lot of truth in that statement :).

One of the last things we did in 2001 was to contact the Norwegian licensing authorities for arcade and slot machines, and we set up a meeting with them on January 2nd, 2002, which was the first working day of the year. We also booked our tickets to the ATEI arcade and slot machine trade show at Earl’s Court in London in the end of January, to meet up with Funworld, Compu-Game etc.

With that I end the first chapter of the PG Story, stay tuned for the continuation next week :).  

 


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