Revenue share slot machines continue to dominate G2E
Is bigger really better? Does the size of the equipment on your floor have any bearing on the quality of the content it provides? Further, does the familiarity of the content’s subject matter truly enhance the player experience? The answer clearly depends on whom you ask; while the opinions of a group of slot operators might vary, a cursory review of the casino industry’s annual trade show would leave no question as to how the manufacturers would respond.
After walking the exhibition floor at the Sands Expo and Convention Center last year, I noted in my review that it was overrun with revenue-share titles centered on entertainment brands. I wrote of my certainty that cabinets couldn’t possibly get any larger and that the revenue-share selection of gaming titles had reached saturation point and would begin to diminish. After attending G2E this year, I feel compelled to report I was completely wrong on both counts.
If you are looking for larger cabinets to spruce up your floor, look no further than Bally Technologies. The company’s Reel Blast product on display at this year’s show featured a two-person bench seat and a cabinet that appeared to be approximately 10 feet high.
Not to be outdone, Konami went gargantuan showing off the suitably named Podium Goliath in addition to Titan 360, an eight-person circular bank design.
The manufacturers also renewed their interest with licensed content. Major movie and TV themes seemed to be the current fixation.
These familiar game titles and themes combined with technology allow for movie clips and music to be played as part of the bonus-round features. Slot manufacturers utilize this strategy to bolster their revenue streams as slot machine sales slowed by the recession have yet to fully recover.
I have to admit the manufacturers outdid themselves by providing compelling licensed content in massive platforms that are both impressive and intriguing. However, what do casino operators really want from a game, and more importantly, what do casino patrons really want?
While it is true that people are more apt to play a new game when they recognize the subject matter, they are already inside the casino and it was most likely not the new game title that brought them in. The revenue produced by the game is decremental in nature.
Let me explain.
You have already paid for, or budgeted for the cost of, the standard games and titles on your floor along with the expense to operate them in terms of fixed cost and labor. You realize that in order to bring the new (totally imaginary) Abe Lincoln, Vampire Slayer slot machine to your floor requires entering into a revenue-share agreement with a manufacturer. The manufacturer will offer to deliver and place the game, upkeep it and even change out the title if the win starts to fall, all for a small percentage of the total coin-in or a percentage of the game’s daily win.
No matter the details of the agreement, this game will steal the attention and wallet of patrons that would otherwise have been content to play the already purchased titles on your floor. This unanticipated detour on the part of the player reduces your net win at the end of the day, effectively pilfering from your operation to give the money to the manufacturer.
While there are reasons to operate a significant percentage of your floor utilizing revenue share agreements, most are associated to limitations regarding the department’s capital purchasing ability. Most operators in this situation need to refresh their floor as a result of an extended replacement cycle. Utilizing revenue-share agreements in this manner provides your operation the ability to increase revenue without a huge capital outlay.
As slot professionals our ultimate goal should be increasing incremental revenue on our floor every day, not decreasing it by pushing the clients we have already captured to games that will lower our expected win. Even when we purchase new games for our floor it is extremely difficult to show a clear return on investment, as it is hard to determine if we are cannibalizing play from the other games on our floor. By adding revenue share just for the sake of a flashy title, we assure it.