NTN Buzztime, Inc.
NTN Buzztime, Inc.
Incorporated: 1984 as Alroy Industries, Inc.
Sales: $40.76 million (2005)
Stock Exchanges: American
Ticker Symbol: NTN
NAIC: 513120 Television Broadcasting; 513220 Cable and Other Program Distribution
NTN Buzztime, Inc., formerly known as NTN Communications, Inc., is a leader in interactive entertainment. It is perhaps best known for its trivia games displayed on televisions in bars and restaurants throughout the country. Buzztime games are distributed to the company’s Buzztime Entertainment Network (formerly called the NTN iTV Network) of more than 4,000 bars and restaurants in the United States and Canada.
The company is also a leading provider of onsite guest paging systems. Its NTN Wireless unit supplies these to roughly 3,000 casual dining restaurants, many owned by national chains. The Software Solutions unit produces customized products for the hospitality industry. Buzztime Entertainment creates the games for the NTN iTV Network as well as consumer-oriented platforms such as digital cable and mobile phones.
NTN Buzztime, Inc., based in Carlsbad, California, was formed in the early 1980s by brothers Patrick J. and Daniel C. Downs. Its chairman for a time was Donald C. Klosterman, a former player and manager in the National Football League (NFL). CEO Pat Downs subsequently assumed the duties of chairman, handing off the role of company president to his brother.
NTN was originally incorporated, in Delaware, as Alroy Industries, Inc., in April 1984. It went public several months later, raising $1 million. After acquiring National Telecommunicator Network, Inc., in April 1985, the company was renamed NTN Communications, Inc.
The company had begun developing a game called QB1 in 1983. This allowed television viewers to predict which plays would be called during live broadcasts of NFL games. They could compare results with others on the network.
The consumer entertainment field was crowded and expensive to crack. NTN initially chose to focus on a market it had to itself: the hospitality industry. Bars, restaurants, and hotels turned to the company’s games in order to enhance their value as gathering places, without requiring the hiring of additional staff.
It cost a couple thousand dollars to equip a location with a satellite dish and up to 20 handheld wireless controllers called Playmakers. A subscription was another several hundred dollars each month. Another source of revenue for NTN was on-screen advertising. By 1987, the company had 100 subscribers in the United States and Canada.
QB1 proved an enduring success. NTN expanded into play-along games for other types of sports like baseball. It also got involved in online wagering. Its biggest hit, however, was the Countdown trivia show introduced in 1987. Initially broadcast three times a week from Carlsbad, California, it had thousands of players at taverns from coast to coast racing to provide the correct answers.
By the early 1990s, NTN was active in Canada and the United Kingdom. Licensing deals were announced to bring the business to Australia and Latin America. The company’s shares migrated from the NASDAQ to the American Stock Exchange in October 1992.
NTN bought video game company New World Computing Inc. for $10 million in stock in 1993. New World, which also produced titles for Sega and Nintendo systems, had 25 employees and revenues of $7 million. NTN divested New World in 1996. Other short-lived ventures were LearnStar, Inc., and IWN, Inc., dedicated to the educational and gaming markets respectively. Both of these were formed by NTN in 1994 and operated for just a few years.
In 1990 NTN lost $2 million on revenues of $4 million, but by 1995, revenues were up to $31.8 million. The company then had about 120 employees and was hiring dozens more. NTN was spending up to $2 million a year on research and development. While the satellite network represented a significant investment, it covered all of North America and connecting additional subscribers was simple. NTN’s games were available at about 2,400 bars and restaurants in 1995; there were about 15,000 Playmaker controllers in circulation.
GROWING INTO THE HOME MARKET
NTN took to the Internet in 1995 by leasing access to its game show library to America Online (AOL). While this arrangement represented fees of less than $1 million a year, it introduced thousands of new users to NTN. A deal with CompuServe Inc. followed a year later.
Around the same time, dozens of start-ups and established communications companies were chasing the elusive dream of interactive television. This concept largely failed to materialize by the time the tech bubble burst. In these challenging times, online lottery systems giant Gtech Holdings announced plans to buy NTN for $140 million in 1997; the deal, however, was canceled.
The company had grown but was struggling with losses and a lagging share price in the mid-1990s. NTN hired Gerald Sokol, Jr., formerly treasurer with cable giant TeleCommunications, Inc. (TCI), as CFO in July 1996. He took over as president several months later when company founders the Downs brothers stepped down from their executive positions. Insiders characterized the transition as entrepreneurs making way for more professional management to take NTN to the next stage in its growth.
Stanley B. Kinsey was appointed the company’s next chairman and CEO in October 1998 after being on the board of directors for about a year. He had previously held senior management positions with the Walt Disney Company and was a cofounder of IWERKS Entertainment.
In 2000, NTN rebranded its interactive content under the BUZZTIME label. It was hoping to build brand awareness across multiple platforms. The company’s original four-year contract with AOL was replaced with a nonexclusive arrangement allowing NTN to explore other channels on the Internet.
Our mission is to build Buzztime into an increasingly popular entertainment experience for people who are looking for competition, social interaction and escape, generating income from distribution, advertisers and our players. As the most broadly distributed massively multi-platform gaming experience, Buzztime will build an increasingly loyal player community by making its feature-rich play-along entertainment available any time via television, personal computer, mobile phone or favorite restaurant or sports bar.
NTN’s trivia games were introduced on the Sprint mobile phone network around the beginning of 2001. Mobile phone users could compare their results with others on the Sprint network. Several other wireless networks soon followed. The company looked to increase its sales to the hospitality industry by offering wireless paging systems. NTN acquired Georgia-based ZOOM Communications from Brandmakers Inc. in April 2002.
NTN acquired restaurant industry hardware and software supplier Breakaway International, Inc., in July 2003. Later in the year, the company bought its Canadian licensee NTN Interactive Network, Inc., from Chell Group Corporation Inc. NTN also began connecting new hospitality customers via DSL Internet connections toward the end of 2004, because this was more cost-effective than securing satellite airtime.
INTERACTIVE TELEVISION IN THE NEW MILLENNIUM
The interactive television (ITV) concept was slow to develop but was reinvigorated with the mass deployment of digital set-top boxes by the cable industry. Though somewhat limited in bandwidth and memory, they allowed NTN to roll out its BUZZTIME channel, which offered users a choice of six different trivia categories. Like the bar version, this ranked players against others both in their vicinity and nationally. The ITV offering was being tried out in several smaller markets in 2005 via Comcast, Time Warner, and Susquehanna Communications.
The company lost $2 million on revenues of about $41 million in 2005. During the year the corporate name was changed from NTN Communications, Inc., to NTN Buzztime, Inc. The company combined its NTN iTV and Buzztime Entertainment businesses into one unit called the Buzztime iTV Network. NTN was making inroads among the pubs of Great Britain with 40 pub subscribers by the end of 2005.
NTN continued to develop new multiplayer games for the bar scene. These included Texas Hold’em and Billiards. Also under development was a 2.6 GHz Playmaker to replace the existing 900 MHz wireless controllers. By this time, there were about 72,000 control units in use in all.
Stan Kinsey stepped down as CEO in mid-2006 after eight years in charge. He was replaced by Dario L. Santana, who had worked in the cable industry before becoming president of Tyco Fire & Security-Latin America.
Frederick C. Ingram
Buzztime Entertainment, Inc.; NTN Wireless Communications, Inc.; NTN Software Solutions, Inc.; NTN Canada, Inc.
PRINCIPAL OPERATING UNITS
NTN Interactive Television Network (NTN iTV Network); NTN Wireless Communications (NTN Wireless); NTN Software Solutions (Software Solutions); Buzztime Entertainment, Inc. (Buzztime Entertainment).
AirPlay Network Inc.; Long Range Systems, Inc.; MICROS Systems, Inc.; OpenTable, Inc.; Skyzone Entertainment, Inc.
- Company begins developing QB1 interactive sports game.
- Trivia games introduced.
- Shares migrate from the NASDAQ to the American Stock Exchange.
- NTN games enter the Internet via America Online.
- NTN games begin to appear on mobile phone networks.
- Corporate name changed to NTN Buzztime, Inc., as it groups interactive content under a common brand.
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