Walking the floor at this year’s Global Gaming Expo (G2E), it’s easy to see just how busy the gaming manufacturers have been over the past year.  As always, there was a wealth of new products on display, creating sensory overload as you walked across the show floor. These gaming products are all designed to attract and retain players by creating excitement and building loyalty, all with the hopes of increased revenue for the casino operator. There is no shortage of research and development investment into new gaming platforms, new math models and better bonusing, all of which incorporate a mix of high-definition graphics, stereo surround sound, eye-catching lighting packages and enhanced cabinets and top boxes. In addition, there are new themes and new licensing agreement themes with names like Sons of Anarchy, Ellen DeGeneres, The Flintstones, Wonder Woman and Dungeons and Dragons. 

Incorporating new technologies was not limited to just the slot machine manufacturers, either. Player tracking system developers, peripheral providers, and associated equipment vendors with products like bill acceptors, ticket printers, bonusing systems, kiosks and promotional incentive devices incorporate new ways to reward, interact and communicate with the guest while delivering a higher perceived value and convenience during their visit.

 

MERGE CONCERNS

The consolidation through the merger and acquisition of gaming companies was foremost on both buyers and sellers minds as they toured the floor.  The merger and acquisition of Scientific Games/WMS/Bally and GTECH/IGT will essentially create two 800-pound gorillas in the room.  Post-merger, the combined companies could share upwards of 75 percent, or greater, of market share in any given jurisdiction.  Recognizing that competition is a good thing, benefiting both buyers and sellers in the marketplace, questions abound about the future of the competitive gaming manufacturing market.  For buyers, competition drives product diversity and innovation, allows for market variety and uniqueness, and helps to stabilize pricing. For sellers, competition provides the manufacturer the ability to offer a bundled suite of products which can include “for sale” games, gaming operations games, conversions, systems, and services.  Together these products can be offered with more favorable pricing and aggressive discounts based on quantity, term or game/product mix. At the same time this bundling of products could help to reduce or limit certain competitive factors felt in the market.

Questions remain about the result of these large gaming manufacturer mergers. With so much control and presence within the gaming marketplace, will these new giantscontinue to maintain the power, recognition and allure of each of their individual brands going forward?  Will some or all of their brands be consolidated, diminished or even eliminated?  And what will become of future innovations?  

The hope is that the new, larger, stronger companies will place the same emphasis on the development of new games, platforms and systems that have been pillars of the individual companies in their pasts. It’s also hoped that the evolving mega-companies will continue to maintain the uniqueness of the various brands to provide players and operators the products they want and need. Only time will tell how these and many more questions and scenarios will play out and what the consolidation of so many gaming companies will mean to the long-term innovation and diversity of the industry.

Regardless of the direction taken through mergers and acquisitions, there is an upside for the remaining manufacturers. Bigger is not always better. Although companies like Aristocrat Technologies, Konami Gaming, Aruze Gaming America, and Ainsworth Game Technology may be smaller manufacturers, they are nonetheless a significant part of any casino game mix.  Casino operators have profited through the innovation and uniqueness of these manufacturer’s product lines, math models and game features. Driven by competition, these medium and smaller manufacturers have found their niche within the marketplace and will continue to develop games and features tailored to fit their segments and remain competitive.

 

SEEKING A GAME CHANGER   

Realistically, not much has changed over the last 10 years in game design and development.  Manufacturers continue to pour research and development dollars into the traditional format of a slot machine, whether it’s a spinning-reel game, video-reel slot or a poker machine. The addition of curved LCDs, transmissive technology, lighted reels and increased bonusing is not as much about innovation as it is about enhancements. Unfortunately for the gaming industry, there has been no real technological game changer since the introduction of ticket-in/ticket-out technology in the 1990s. The availability of more advanced technology and consumer products have provided manufacturers with the tools to enhance, upgrade and reinvent their product lines but little has been done to develop and present any real innovation that will become the next great game changer for the industry. 

With the primary demographic of slot players being Baby Boomers who are aging and playing less, slot manufacturers need to find ways to lure and satisfy the next generation of gamblers, Generation X and Generation Y/Millennials who, based on age, will become the primary demographic of slot players in the near future. The economic position, social consciousness and entertainment habits of these Gen X and Gen Y adults are quite different from those of Baby Boomers; traditional casino gaming is not a natural leisure activity they actively pursue. 

The question for the industry will be to determine if the current path of slot machine development and innovation will be enough to entertain and capture the long-term attention of this new player demographic, or if they will require something more or something completely different. Could it be possible that the complexity and pressures of their everyday lives of balancing work, career, relationships, family, leisure time and finances drives them to the simplicity of the traditional slot machine? Only time will tell.

 One thing is for certain; technology is changing our lives every day and it will continue to shape who we are, what we do, and how we do it. If the gaming industry is to continue to grow and prosper in this new technology-driven age and support the upcoming gamers, we will need a game changer. Our industry will need a new “wow” that will transform the marketplace as we know it and catapult us into the future.