Executive Q & A: Spielo and Atronic leveraging each other’s strengths to deliver top slot products

Spielo and Atronic have high hopes for the new prodiGi Vu cabinet.

Spielo and Atronic – both part of GTECH – have revealed a new strategy that builds on each other’s strengths with the goal of delivering more engaging, top-performing slot products. Victor Duarte, GTECH vice president, gaming solutions, and Spielo president and CEO, and Ken Bossingham, chief operating officer, Atronic Americas, talked with Slot Manager Editor Marian Green and Casino Journal Editor James Rutherford, offering their insights on the new direction. GTECH, which had previously acquired Spielo, completed its acquisition of Atronic Americas in 2008.

Why don’t you start off by discussing the new strategy for Atronic and Spielo?

Bossingham:We have a long history because originally GTECH tendered an offer to purchase Atronic in December of 2004. We closed May of 2008, so we had almost a three and a half year closing cycle, and that was due to regulatory issues. That probably hurt us in creating the kind of momentum that we had planned in our gaming strategy but we’re excited now because now we’ve made a lot of decisions since May of 2008. We shut down the Scottsdale location and we’ve really now made a decision to locate the Atronic Americas organization to Las Vegas and we’re now in the Spencer and Grier locations. For the commercial casino customer, Spielo had a plan where they came into the casino market, leveraging some of the strengths that they had already shown in the government sponsored and distributed markets in Canada, and throughout the U.S.

We look at both brands as being very valuable and recognizable, and now we’re able to leverage the strengths of Atronic and Spielo. For Atronic, we believe the strengths are in the premium product and linked gaming space, and then for Spielo in the government-sponsored and distributed markets. Atronic was a very global focused company with R&D in Graz Austria, and really from a product perspective not a lot of focus on the North American playing customer. Going forward now, with our move, we’ve put two game development groups in place in Las Vegas which will have a North American centric player focus in all of our future content development and will be able to leverage the strengths that exist in Moncton [New Brunswick, Canada] with the game design group there and also with a well-placed game development group here in Las Vegas.

Are there particular trends that you’re focusing on in terms of products?

Bossingham:In the past I think there was a much more quantity-driven approach – there was always a feeling in the industry that you needed a certain amount of product to compete, a certain number of core games, a certain number of linked and premium-type products. Going forward, we’re taking a much more quality-driven approach, a lot of market validation work on new concepts, player segmentation. We’re going to really do the analytics that are required to make sure that when you launch a product that it’s already truly tested in the marketplace, and we have a high degree of probability that that concept is going to work with the North American player.

How have you been able to integrate what you do at Spielo with what you do at Atronic? Is there a lot of crossover?

Duarte:It’s kind of interesting. Last year when GTECH bought Atronic Group, which included international and the Americas, there wasn’t a lot of overlap. Spielo had pretty much focused on the government-sponsored, VLT space. And that was two flavors – one was the flavor of bars and restaurants, taverns, things like that, primarily in Canada but maybe only four states in the United States, places like Oregon, Louisiana, Montana, and South Dakota, hopefully soon in Illinois. But there was another area where there was strong convergence between casino-style play and VLT style, places like Delaware, New York and Rhode Island. They were called VLTs but really they operate like slot machines. And we had strong presence in that because that had evolved from VLT-style games that were put in large venues into casino-style games. So we had a presence and we had a requirement to build games for slot players at that point in time. As a result we felt if we build a product for that space, we should leverage our R&D in multiple markets not just in those three markets where we had existing markets.

So prior to the acquisition of Atronic, Spielo already had a kind of niche player-type strategy in the commercial casino business. When we closed with Atronic, we realized that that was the biggest opportunity initially was to put a strong sales and distribution force through Atronic Americas for the commercial casino business, and Spielo would focus on distribution for the government-sponsored customers, on VLTs, distributed and vendor based That was the first step we took toward integration.

Over the last 18 months we’ve been working together, we realized there is a further opportunity, and that’s really to pool resources and jointly develop products. Spielo was in the process of launching a brand-new cabinet for venue-based VLT customers, casino-style games, we were developing a new platform called sensys, and we’re developing a number of games to support our install base in places like Rhode Island, Delaware and New York. On the other hand, Atronic Americas was moving to Nevada, which is a great pool of talent that we could pick from. So what we’re doing right now is pooling resources and jointly developing products, primarily around game design and development that will sit on top of the platform and cabinet that has been developed for the casino market.

Are there fruits of that you can talk about now?

Bossingham:We’re really just12 months into this. [The new cabinet] prodiGi Vu–we just got that approved in GLI, so we just launched the product within the last 30 days. The performance on the box has been very good. We’ve got five locations live and consistently performing well over two times floor average. The way we’re approaching this now is this is baby steps. We’re really creating new momentum in the business. We ran with the e-motion platform for well over six years. This is the release of our new platform that’s got game content on the initial release that is Spielo developed, North American centric player developed, which is something that’s new for us, from a North American casino customer. And we’ve already made decisions on our game roadmap where we have Atronic-developed product that is being imported onto the prodiGi Vu box. We have a very nice pipeline. With every customer, we’re trying to get that first opportunity to make this first impression with the new box. What I always tell the team, is this is our first baby step and in every case we want to make a positive impression. That’s why we’ve taken a much more conservative view in how we roll product out, because we don’t want to roll out anything, unless it’s already been market validated, tested and proven at a level that we feel can compete in the commercial casino space.

You’re launching in severe economic headwinds. What particular challenges does that create, and what are you hearing from operators in terms of their enthusiasm for new game product?

Duarte:It’s a horrible economy, everyone knows that. Probably the worst recession we’ll see in our lifetimes. But we’re trying to grow in this market, and every market has opportunity. Every market does, even terrible markets like this create opportunities. They’re different than perhaps they were two or three years ago, but as a company with some modest expectations we’re trying to get in with some new products and grab some mind share, it’s a great opportunity for us because people are open right now, saying, “…It’s a different world right now. Is there something you can do to help me out of this? Is there something innovative that you can bring to me?” We have an opportunity right now so I think the fact that we are a bit of an upstart in the market, we have more to gain than we do to lose.

Bossingham:I completely agree with Victor. Where the company stands today with the state of the economy, we have much more to gain than to lose… And the baseline of where we stand right now is all driven by the quality of our innovation, our technology, our content, and that’s where all our focus is going. As far as operators, certainly as you go out and talk to every operator, everyone’s capital constrained. You look at occupancies on the casino floor, they’re down overall across most jurisdictions, but I never really let that stop our ability to go out there and identify our opportunities because within all those challenges, there always exist opportunities. You just have to go out there and view the market positively and search for those. We’ve certainly found those in the first six months of the year. We’re happy with the success of our business year to date in 2009, and with the new platform, that only opens up new opportunities for us. It’s a tough market, but for good product in a performance-driven environment like we live in the commercial casino space, there’s always room for innovation, there’s always room for good-performing product.