Coming up aces

Located in the most unlikely of places, the Cedar Valley's own Phantom EFX has made a name for itself in the video game world

RICK CHASE Marty VanZee, left, Darin Beck, Aaron Schurman, Jim Thompson and Danny Stokes have made Phantom's PC games the best selling in the casino genre.

By Joel Palmer

SIX YEARS AGO, AARON Schurman had money and a dream harbored since adolescence. He wanted to involve his life-long friend and fellow Janesville High School graduate Danny Stokes, who had plans of his own: He was about to enter veterinary school at Iowa State.

Schurman invited Stokes for dinner at McDonald's to make his pitch. He wanted Stokes' help in designing a video game.

"I've always had a dream of making video games," said Schurman. "It's been a dream of mine since I was a kid."

His idea was to produce a game of a more adult nature, specifically gambling. Alas, neither he nor Stokes possessed the knowledge to take on such an endeavor.

Schurman came the closest. During his tenure in the U.S. Air Force, he was a computer programmer with NASA's space command division.

"That really didn't teach me how to program games," he admits. "And the stuff I learned in college was all business application. Those first few months were a slap in the face. We taught ourselves about art and programming. We hounded a lot of game companies, calling and e-mailing them until they got pretty sick of us. We read a lot of manuals."

Fast forward nearly six years and a company formed over Big Macs with little more than desire and some equity now produces the No. 1 selling casino game for PCs. Perhaps even more incredible is that the game isn't designed in California or Las Vegas. Its home is Cedar Falls, Iowa.

The company is Phantom EFX, creator and publisher of the "Reel Deal" line of slot machine and casino style video games for PCs and McIntosh computer systems. In October the company's "Nickel Alley" game claimed the title of best-selling game in its genre, wresting it from Sierra's Hoyle Casino, according to NPD Intellect, which tracks PC and Mac game sales.

"From the beginning, we wanted to make a unique product," said Schurman. His idea was to combine casino games with the staple of video games: the pursuit of reaching different levels and attaining prizes for those accomplishments. So instead of playing blackjack for the sake of scoring 21, players continue to reap rewards the more successful they are. "As far as we were concerned, there was nothing out there like it. The industry didn't think it was that important."

In 2000, just as the Christmas shopping season was kicking off, "Reel Deal Slots & Video Poker," the company's first game, was on the shelves of national software, office supply and electronics stores. It took only months for the game to be one of the best selling PC titles.

"That was totally euphoric," said Schurman about the first time he saw his creation on a store shelf. "Going to Best Buy and seeing 40 copies of your game on the shelf is a feeling of disbelief. You strive for so many years to see something like that happen. Every day has been better than the one before for the past four years."

And better days are ahead. Phantom's revenues have grown 250 percent a year the last three years, and shows no signs of letting up, says Darin Beck, local restaurateur and one of company's four principals. The company plans to add three titles a year to its current roster of six. An online venture is also in the works.

A decision made early on in the company's genesis could reap larger rewards in the coming years. Phantom's principals decided they didn't want to pay any royalties on the games they sold, which meant having to develop a game with a truly unique identity. The crew spent countless hours researching patents on game styles, looks and payback features.

Now their "Reel Deal" line has become so popular that Phantom has been approached by a pair of manufacturers of real slot machines to license the game's concepts.

"Every time a casino buys a bank of slot machines, not only will we be paid a licensing fee, but also a percentage of the number of machines sold." said Beck. "This could turn out to be the most lucrative part of our company in 2004."

Beck became part of the venture six months after Stokes and Schurman got started. They contacted Beck and Marty VanZee, who co-owned Genesis Digital Studios. VanZee was known for his artistic ability. Beck had the production equipment and spare office space required.

A partnership was formed. Genesis became the parent company of Phantom, and the four principals split into 25-percent slices.

They say it's been an ideal partnership. Schurman and Stokes lead the production, while VanZee handles the graphic end. Beck provides the marketing muscle.

RICK CHASE Tight quarters for Phantom's programmers warrants a future expansion of the company's headquarters.

Schurman and Stokes originally pitched their game to software publishers and toy companies, but prospects either weren't biting or weren't offering enough loot. So Phantom went the unique route of becoming both the designer and publisher of its game.

"Phantom EFX writes all the code, designs all the graphics, produces the sound and produces all the games we sell," said Beck. "Most software developers are not publishers and most publishers are not developers. We happen to be both."

From its inception, Phantom has been heavily marketed. Beck, along with Jim Thompson, Phantom's director of business operations, have for the past four year attended Interchange, a networking event held by the leading PC game distributor. Last summer's event, held in Coeur d'Alene, Idaho, was attended by 350 software publishers and retail representatives.

"This event determines who's going to carry your product during Christmas time," said Beck, while watching a DVD with highlights from the August session.

By getting its name out among retailers, Phantom has from day one been able to get shelf space at national retailers like Best Buy, Wal-Mart and Musicland, not to mention online at Amazon.com.

"We have our finger on the pulse of the industry," said Beck. "Most of the retailers would have no idea we're in Iowa. Almost everybody else they talk to are in California or Canada."

The fact he helps run a company of this nature from Iowa is one Beck's proudest accomplishments. He hopes more tech-based companies either grow in the Cedar Valley or plant themselves here. For unselfish reasons, he simply wants his adopted hometown to prosper. Selfishly, he wants a larger labor pool to draw from.

"Nobody here is making less than $30,000," he said. "A few people are pushing six figures. These are good jobs. We're living proof it can be done in Iowa."

The company has grown to 18 employees. Four of the lead creators are crammed desk-to-desk in a small office, while its tech support person works from the network closet. But expansion plans at this point are small.

"We'd love to be in the technology park right now, but it doesn't make sense to do so," he said. "We're taking that money we would invest out there and investing it in people."