The power of Pong is the power of a free and open marketplace. By contrast, our gaming industry was built upon privileged licensure, which resulted in limited competition and limited innovation.



The Cosmopolitan, Las Vegas’s newest-and perhaps last-multi-billion dollar property is an impressive venue that markets to a younger, hipper, consumer than traditional strip casinos. With the median U.S. population’s age at 36.8 years, targeting that consumer makes good sense. Indeed, Cosmo’s bars, shops, restaurants and lounges are impressively crowded with prosperous, young professionals.

Equally impressive is the emptiness of Cosmo’s slot floor, almost as if an invisible barricade surrounds it. In past decades, consumers within the age group of Cosmo’s customers loved playing slots, so what’s the problem? Hint: the answer is much bigger than Cosmo..

Let’s look back to 1972, exactly when slot machines became truly popular. Slot play is nothing if not simple: Make a wager, watch reels spin, watch reels stop, hope for a lucky outcome and repeat until pockets are empty.

Back then a typical 37 year-old consumer-let’s call him Dan-didn’t expect much from entertainment. Dan spent childhood evenings listening to radio broadcasts of the Lone Ranger, reached middle age without sending an email and imagined computers only as room-sized complexities. Back then a trip to Las Vegas (Nevada was the only place in the country with legalized gambling) was exciting and exotic. Slots didn’t have to do much to keep Dan happy.

Dan’s children grew up different. They had television, pinball and, in that pivotal year of 1972, were introduced to a video tennis game called Pong. Despite its crude sound and simple black and white graphics, the game was an instant hit in bowling alleys, bars and arcades everywhere.

Home game consoles made such content conveniently available in living rooms and bedrooms everywhere, thereby assuring that no person under the age of 25 escaped exposure.

Even as video games evolved, so did gambling. Thanks to legislative changes, casinos spread throughout the country. Thanks to electronics, slots became more reliable and able to handle greater volumes of wagers. Slot management was about choosing denominations, selecting payback percentages and finding the ideal location to place each machine. As slot popularity skyrocketed, there was little need to experiment with truly new content or concepts.

Meanwhile, game consoles grew ever more powerful. Home computers became home necessities and improved with astonishingly rapid increases in capability and decreases in cost.

Then came the big bang-the Internet-perhaps the single most important invention in history. That Internet brought choice, convenience and low price to anyone brave enough to explore its territories-and the young are almost always brave.

Cell phones brought yet greater expectation. Like it or not, we could now reach out-and be reached-wherever we roamed.

As technology changed, it changed us. We abandoned printed books, music stores, magazines and newspapers.

We chatter on Facebook and Twitter, spending time on what many consider to be wasteful technology that lacks purpose or benefit. How though do we explain its pivotal role in 2008’s Presidential elections, this year’s overthrow of Egypt’s government or the ongoing revolution in Libya? None of these were possible without the Internet and the Internet traces its lineage directly back to Pong.

The power of Pong, while built upon circuitry and software, is not found there. Its power emanates from a huge community of contributors, each one free to use the open standards of Internet technology to conjure their own creations. Consumers are likewise free to sample, adapt or reject each of these creations.

The power of Pong then, is the power of a free and open marketplace. By contrast, our gaming industry was built upon privileged licensure, which resulted in limited competition and limited innovation. Although we initially profited from these birthrights, they ultimately weakened us more.

The first indicators of this weakness were exposed by the economic recession of 2007. Slot floors that are bereft of younger players at Cosmo, and most everywhere else, simply makes clear how woefully unprepared for the future our industry is.

Of course, there are still a lot of Dan-like customers remaining on this earth and we can survive a while longer by serving them. Survival though, is not prosperity and prosperity belongs only to those that serve Dan’s children.

We can achieve that prosperity only by embracing the power of Pong. SM