I talk to a lot of people involved with the casino industry: financial analysts; operators; equipment suppliers; and even players. Lately, one topic is central (except with players), and that’s of something IGT calls SB, or server-based gaming. No one is quite sure what SB is, or even what it does; they just know it might be the future.

Competing systems providers - Bally, Konami and Aristocrat - are left to explain why and how they’ll be relevant. One analyst even doubted Bally - currently the leading systems provider - would ever sell another system because SB is so, well, so IGT. History and cash tell us IGT is important, and therefore, SB must be too.

A successful gaming product serves three constituencies. In order of importance, these are: players, casino operators and investors. Interestingly, the investor community is driving most of the SB discussion (when I use the initials SB, I refer specifically to the IGT product). To the investor community, SB conjures thought of another “replacement cycle,” wherein a new technology causes rapid replacement of large numbers of gaming machines. The investor community thinks only in terms of financial results - or projections thereof.

Financial analysts are people who get paid to research, predict, guess about (or throw darts at) ideas, opportunities and technology that could cause a company’s stock price to rise. Analysts seek to identify emerging trends that will cause rapid and unexpected change in a market and invest accordingly.

In researching the gaming market, analysts see that IGT products have spurred at least two prior replacement cycles: bill acceptors and ticket in/ticket out (TITO). Each created important efficiencies for casinos and provided more enjoyable experiences for players. Because the benefits were so powerful and immediate, casinos quickly replaced all their machines to take advantage - once when bill acceptors came available and again to accomplish TITO. Manufacturers profited, too; particularly IGT. Share prices rose. Everyone - player, casino and investor - won.

For humans, the number three holds universal appeal. “Three times a charm” is oft-spoken. Europeans use the phrase “Ménage a tois”-which I understand means something in French about the specialness of three friends together - though I might have lost something in the translation. Anyway, investment analysts are only human, and they tend to search for patterns of three.

Since IGT had accomplished two replacement cycles already, could SB complete the hat trick?

The temptation to count SB as a trifecta sure winner is nearly irresistible. And our industry wants innovation. Gaming revenues are flat in most jurisdictions and falling in a few. Expansion of gaming has slowed. Something is needed to spur new growth.

Hopes and dreams, though, do not realities make. The last two replacement cycles offered clear and immediate benefit. Does SB offer the same? Well, that all depends on what SB is, or, more accurately, what it becomes. That’s because SB is not yet a commercial product and is still very much a work in progress.

Two years ago, SB was estimated at 18 to 24 months away. Today, it remains at least 12 to 18 months from reality. Such delays are common to new technology, of course, and a later delivery date does not mean SB will fail. But the simple embrace of the analyst community does not guarantee success, either. You see, two constituencies have yet to sign off on the SB proposition: players and casinos. The system of the future must deliver an improved player experience because rapid expansion over the last 15 years has increased the supply of gaming machines faster than it has created new demand. Machines are underutilized during much of each week, yet casino shareholders continue to expect profit growth. We need technology to cause existing players to spend more of their entertainment dollar at recreational gambling, while simultaneously making the gaming experience more appealing to adults who do not now gamble.

I helped build the first player tracking system back in 1983. Had I fallen asleep after its completion and awakened today, I would be amazed, not so much by how system technology has improved as by how actual benefit delivered to the player - the system content - has not.

Our original system included a card reader, display and interconnecting communication network - just like today’s systems, but much slower. A quarter-century ago, we awarded points as a kind of rebate for continued play. Today, it’s exactly the same. Back then, we communicated basic information such as point tallies and player greetings through a tiny monochrome display. Now, we use a larger, but still relatively small, color video screen to present that very same information.

Some systems today do allow conversion of points to free play and pay additional bonuses to loyal players, and those were not a part of our original design. That said, system bonuses were conceived more than 15 years ago and are themselves rather elderly.

What new capabilities does SB promise? I’ve heard four: downloadable games, configurable denomination, something called the service window and another feature called interoperability or “open systems.”

Downloadable technology allows you to reconfigure games electronically instead of manually changing a memory chip. Technically, downloadable isn’t new, as anyone who’s updated a personal computer over the Internet already knows.

Configurable denomination is the marriage of downloadable technology with the age-old practice of changing placards on table games to raise minimum bets during busy times. Nothing really new here.

The service window is a bit more interesting. Instead of installing a separate player tracking display, an information window is placed onto the existing game screen where it is cheaper to implement and easier for players to see. Technical skeptics will tell you that Steve Jobs and Bill Gates used this idea 25 years ago to create the Macintosh and Windows operating systems that are so familiar today, and the concept was borrowed from Xerox, which created it many years earlier.

Interoperability, or “open systems,” is about making a system that adheres to standards and allowing independent vendors to develop specific applications that will run on that system without interfering with other applications already running. The only news here is that IGT at last embraces the concept that the Gaming Standards Association (GSA) has championed for the past 10 years.

In fairness to IGT, it makes no claim of inventing these concepts. It also doesn’t claim to have invented bill acceptors or TITO. What IGT did brilliantly was to implement those initial concepts in commercially viable packages. Its products pleased players, casinos and investors. No easy task to accomplish; it’s why IGT has been the industry leader.

Of course, no player ever sat down at a bill validator to gamble. And no player ever thought, “Gee, this machine prints out bar-coded tickets - what fun!” These technologies were successful because they removed barriers that stood between players and their desire to gamble. That drove play volume higher, which improved profits, which made the analysts happy. It cannot happen in reverse, and analysts cannot prognosticate or predict what the next killer product on the gaming floor will be because they know little of what players want.

SB must deliver real benefits to players, and those benefits must bring real profits to operators, or it is doomed to fail.

What benefits are to be derived from SB? That depends entirely on how these new technologies are used to deliver player benefits and/or lower the casino’s cost of operation. Community gambling, improved customer communications through better database implementation and skill-based games are whispered possibilities. Certainly each has real potential. Just as certainly, none have been defined, demonstrated or tested, much less delivered. Competitors, such as Bally, are not conceding the next generation of systems to IGT without a fight, and Bally, for one, has a potent arsenal of weapons. Bally is the current leader in both installed base and percentage of new sales for systems. Bally says it can deliver each and every benefit promised by SB - without the cost, complexity and wait for the someday delivery SB imposes.

Bally says it can deliver each of the four capabilities promised for SB in evolutionary steps - that is, without the requirement of wholesale system and game replacement. Many have questioned Bally’s ability to deliver the service window without being crippled by royalty payments to IGT that reportedly run around $1,500 per game.

Bally answers by demonstrating a very attractive graphics interface board that shifts the game image into a smaller screen area to make visible a service window. Bally says this technique does not trod upon IGT’s patents, requires no royalty payments, and can be retrofitted into existing games.

If Bally can deliver this technology - and officials say it’ll be out on test this summer, a full year ahead of SB products - it will offer casinos most of the promised SB benefits at a far lower cost. Some analysts don’t like the evolutionary approach because it does not instigate an immediate replacement cycle. Worth saying again: What analysts like is pretty much irrelevant; it’s what players do that counts.

IGT has proven its ability to flex knowledge, effort and finances in building games of wonderful ability. When it comes to systems, though, Bally isn’t the leader by accident, and IGT will have to play its very best game going forward if it wants to unseat this reigning champion.

While the Bally-IGT battle will be fun to watch, I’m focusing on how to use these new systems to attract new players and retain existing ones. The next generation of networks, whether delivered by Bally, IGT, Konami or another, will certainly be faster, more reliable, more standardized, more open and more interactive.

If those systems are truly open to third- party developers, we’ll see a new generation of benefits. That’s because new ways to please players don’t come from mainstream manufacturers, such as IGT. They come from small groups of innovators with a passion for a particular problem.

I’ve long believed an organization’s creativity is inversely proportional to its size. Large companies require rules and regulations to keep everyone moving in the same direction. That’s essential when manufacturing something as complex and highly regulated as a gaming machine or gaming system. But it isn’t conducive to new ideas.

New ideas always start small and almost always challenge conventional wisdom - the operator’s manual for big companies. For that, smaller, even tiny, groups of talented, passionate people perform best. Though small groups can have great ideas, they must partner with large organizations to deliver on the scale, and with the reliability, today’s casino operator demands.

If this next generation of systems provides development tools for creative teams to build their new ideas upon, we’ll all enjoy a thunderstorm of innovation. With Bally, IGT and others competing to deliver the system of tomorrow, we’ll also have more powerful platforms for these creative teams to build upon.

With creativity and capability, we’ll have the tools needed to meet the very real challenges our industry faces over the next several years. And that’s good news for everybody.

From my perspective, the ultimate system will treat each player as an individual. Desired symbols, volatility and price are highly variable from one player to another and even from one hour to the next for any given player. We need a system that caters to each player in a manner analogous to how a great host treats his high-roller clientele.

Ultimately, none of us wants to be a number. We all yearn to be important. I believe our systems can grow to treat players as people with individualized promotions, games, bonuses and configurations.

I call this “personalized gaming” and this new generation of systems will at last make this concept a reality. Great times are ahead!