It has been a year since Harald Neumann was named CEO at Novomatic, the Austria-based global gaming giant. Speaking at G2E, Neumann assessed the early goals and achievements of his tenure, as well as the company’s near-term outlook in a conversation with Casino Journal Executive Editor Charles Anderer.

Looking back at 2015, are you pleased with where you are in relation to your goals for the year?

Neumann: I joined the company as managing director of Austrian Gaming Industries (AGI) four years ago, and thus I had the chance to get more familiar with it within the first three years. It’s a huge company and, at the beginning, I was completely new to the gaming business. That three-year period helped me understand the issues we face and get to know my colleagues at the board level. With their support and that of professor Graf, it was much easier for me to solve open issues in the first year. Plus we were already in good shape.

We made some slight organizational changes; putting one vice president in charge of each of the North and South American markets, which was very important. We also made our strategy more clear. We have a dual strategy; on the one side producing and developing gaming solutions, on the other operating our own gaming locations. We decided that operations should mainly take place in Europe because it’s easier to control something when it’s closer.

In the rest of the world we have strengthened our distribution competence. We increased our lottery presence by acquiring Betware, a lottery solutions provider, and the subsequent foundation of Novomatic Lottery Solutions so we now have a full portfolio of products for all segments of the industry; casino and LPM/AWP machines, video lottery terminals, omni-channel lottery and betting solutions as well as online, mobile and social B2B and B2C solutions.

As a fully-integrated global gaming supplier, what sort of new organizational challenges do you face?

Neumann: The way of selling gaming products is changing completely. You are not selling products anymore; most of the time it is solutions. In a casino, you’re not selling one machine; you’re selling the different systems behind it. This is where my IT and telecommunications background helped me, because the same evolution happened there, moving from selling computers to IT solutions. When you look at the current large sales opportunities in gaming, those are the large combinations of products and solutions. At the show just yesterday one of the most interesting discussions we had involved a deal of betting and online products linked via a network to one payment system.

This requires new skills for our sales organization. We streamlined the organization in Austria, merging two groups into one, resulting in better communication and cost savings. So, again, it was a well running organization and, in 12 months, I have been able to fine tune several issues.

We’re also a year into the consolidation of two of your major competitors, now Sci Games and IGT. What impact did this have on the overall urgency for Novomatic to get better at selling integrated solutions?

Neumann: What we are already doing at Novomatic is the same thing that Scientific Games and IGT must do. I think the same changes have occurred with their client offerings. For us it’s a little bit easier; we don’t have to bring such big organizations together. We have also made a lot of acquisitions in the past, but never such big ones. We are acquiring a 40 percent stake in Casinos Austria since this summer, and a 24 percent share of their lottery operating company “Österreichische Lotterien.” The cost was several hundred million euros, which is our biggest acquisition to date, but still small in comparison.

The challenge at IGT and Sci Games is to bring their organizations together, which is a massive internal exercise. Our objective remains to provide our clients with the products and solutions that they require. The spirit of Novomatic has always been that of a high-technology pioneering company, starting with Novomatic’s founder and majority shareholder professor Graf, who is a technical genius. The mission is to provide the best technical solutions for our clients.

What are your strategic priorities and opportunities when you look at the global market?

Neumann: We have two top priorities. As a European company, Europe is the top priority. The other is North America. There are some very good markets in South America, like Peru and Colombia, but you still have unstable political situations. If you take Argentina, that was a great market, then the politics changed and now everyone is waiting for the next election in November and its consequences for the country’s industry. There are some political problems in Mexico, where nobody knows in which direction it is going. It’s the same on the African continent; we have a very well performing subsidiary in South Africa, but the rest of Africa is unstable; both politically and economically. It’s not like in Europe and the U.S., where you have stable political situations. So, for us, the clear decision was Europe first and North America second. The rest is opportunity driven.

Within Europe, what are some of the highlights from the past year?

Neumann: We had some ‘white spots’ on the map in Europe, for example in Spain. In the last 12 months we acquired 40 arcades in Madrid and we will continue to acquire additional operations in the Spanish market. We have also made acquisitions in the UK, where our employee count has risen over the years from a few hundred to 3,000 presently. We acquired Playnation, which operates 20,000 machines in multiple locations.

The four big markets in Europe are the UK, where we now have 50,000 machines under contract; Germany, where we are number one with more than 120,000 machines rented out; Italy, where we are the biggest VLT supplier; and Spain, where our market share is now 25 percent. The clear target was to further strengthen and cement our position in those four core markets, but we also made an acquisition in the Netherlands and are now working on the completion of the acquisitions in Austria. In Eastern Europe, the situation is similar to South America; everything depends on the political situation. We are number one in that region. In Europe overall, we have very good coverage in the slot business and are now focused on adding our lottery, betting and online products depending on legislative developments.

How would you characterize the opportunity for Novomatic on the social casino side of things through your Greentube division?

Neumann: We are using social casino product where we cannot offer cash games. Where you can offer cash games, it doesn’t make too much sense to offer social games.

It’s a good way to promote your games to clients, especially in the U.S., as it is a very good way to stay in touch with your players and to further promote the land-based offering to potential clients in the digital word. We have kicked off that effort with Foxwoods Casino where we recently signed an important exclusive contract.

What are you seeing in terms of Novomatic’s progress in the U.S.?

Neumann: This is my fourth G2E and I think it’s the first year where you see a movement back to classic slot games. You don’t see too many big themed games anymore. Last year you had big themed games at the show here that you don’t see on casino floors. These games cost a lot in R&D and licensing. The return of traditional slot machines is an advantage for us.

We have moved our headquarters from Florida to Chicago because Chicago is the second biggest gaming market in the country in terms of gaming locations and it is much easier for us to hire competent people there than in Fort Lauderdale. We have hired gaming developers there and will hire more to establish a game development boutique in this country. We will bring our successful European games to the U.S. and adapt and fine tune them with math models that suit the preferences of the guests in this specific market. It takes time and we have to get the feedback of the local casino floors and use local expertise to adapt the games. One advantage we have is that our big competitors are still busy on their own organizational issues.

Where do you want to be a year from now?

Neumann: That’s easy: we want to have many more machines in the U.S. markets than we do now. In the smaller European countries it takes two years to establish yourself. In the U.S., we are still going through the licensing processes and adapting our games, so it is at least a five-year plan.

What’s your best market in the U.S.?

Neumann: It’s the video gaming terminal (VGT) market in Illinois. And that’s one of the strategies we have; today the VGT market is the most important target market for Novomatic Americas.