The program is light on product info and heavy on quality, objective educational content. The company also shows plenty of personality, and it’s not just for show. GameON was again a lot about sharing with the operators in attendance how AGS endeavors to conduct business and what its values have been and continue to be, now as a publicly-held company.
The table was set by David Lopez, AGS president and CEO, who took the audience of about 100 operators through the company’s recent history. AGS was acquired by Apollo Global Management, whose vision was to build a more robust global gaming supplier. The company was doing about $30 million in EBITDA at that time and this year that number is projected to come in around $130 million. Among the key steps in the interim was the acquisition of Cadillac Jack, which doubled the size of the company in terms of employees and game installments.
The company now has 616 employees. There are nine offices, plus another one coming. The number includes game development studios in Austin, Texas, Atlanta Ga., and Sydney, Australia. The total number of R&D employees stands at 182, up 38 percent year-over-year. “That’s about how much we’ve grown from an EBITDA point of view,” said Lopez. “We invest 13-15 percent of revenue into R&D every year, so that investment rises as revenue rises. Why? If we started pinching off that spend, our customers would feel it.”
AGS went public in January and is listed on the New York Stock Exchange. So far, so good; the stock was initially proceed at $15 per share and selling for around $25 at the time of the conference. Meantime, AGS wants its customers to know that it is keeping its eye on the ball.
“The IPO doesn’t change anything, I hope, from a customer perspective, and it certainly doesn’t change our mission and values,” said Lopez. “To pick a few, aspire to win is one of my favorites. Why? Because we hate losing. Love the game is another primary value. Our R&D folks love what they do. ‘Act like a CEO,’ is a sign outside my office. That just means that we empower our people to make decisions. If you’re ever waiting too long for an answer, text me.” He then gave his phone number out, which happened a couple of times.
Other values include a customer-centric approach to service, a collaborative approach to game design and lean manufacturing. “Lean does a bunch of things for us, one of them is getting products to customers quicker,” said Lopez.
On the service side, AGS has invested more, just as with R&D, which means putting more techs in the field, more supervisors who can help with scheduling the load that’s out there and team training and certification that gives employees levels they can graduate from in order to take on greater responsibility, said Matt Reback, executive vice president, who leads the company’s slot product operations.
“That means going to Oklahoma City and developing slot games and to Las Vegas to develop table games so that our techs are there from the very beginning and not just being trained afterwards,” Reback added. “In addition, we have a customer service center. We used to have a call center, which was a lean way to do it. We’ve actually taken that in-house because we think it’s more important to have those people available 24/7/365. They’re in Atlanta and they sit alongside our technical assistance center, our advanced engineering group, which some of you know as TAC. We want the customer service and the TAC folks to be right next to each other so that any issue that comes up is handled quickly and there’s that dialogue that is going constantly. The last thing is mobile customer service; we have invested in a piece of software that gives our techs a tool that barcode scans cabinets on your floors and sees everything they need to know about that product, order parts, open and close tickets all through a mobile device.”
WHAT MAKES A GOOD GAME?
On the slot and table game side, the conversation revolved around what makes a good game. “I grew up in Cincinnati where Proctor & Gamble is headquartered, so a lot of my friends work there,” said Andrew Burke, senior vice president—slot products. “Their whole goal is to work with companies like a Walmart to build better products. I really believe you can’t do that unless you have these types of conversations.”
In terms of what makes a good slot game, Burke said “there are a thousand things, but we really want to focus the conversation on just a handful of those factors.” These included occupancy, hold percentage, spin speed, cost to cover and volatility.
Hold percentage came in for a lot of attention. Burke discussed a project that he did in 2014, which involved 6,000 Bluberi route machines. “We thought we could take these games, which had been out in the market for 10 years, and tighten them one percentage point and be way better off financially,” he said. Burke “thought he was a genius,” until he started seeing declines and “getting lots of phone calls.”
Players took a year to a year-and-a-half to really notice that difference. Something’s different; their wallet wasn’t going as far. “At the end of the day, I wouldn’t have done that, despite the financial opportunity in 2014 and 2015. We’ve had to tread very carefully with that product since then,” said Burke.
AGS has also seen looser games produce for operators. Taking the example of a large locals property with one group of machines at 95 percent payback, “we had the highest coin-in, highest win-per day, highest theo revenue-per-day and the most number of games played on 62 units,” said Burke. “There are a lot of mitigating factors such as where they are on the floor; what kind of marketing promos are being run; but these games have been there for seven years. We keep coming back to this example to see how we can replicate it. Because with the 95 percent payback they are having a better experience; they’re getting more games played and they’re getting through the cycle of the game.
“As we think about the perfect recipe for a game there is no right answer to that. But certainly we think that hold percentage is one of the factors that we can work together on, but it’s just one of many factors. Working together and working more closely we can build better outcomes and figure out how we get that recipe just right for all of our players not just some.”
On the table game side of things, John Hemberger, senior vice president—table products, pointed to a number of ways that AGS is meeting the demands of an evolving player base. “Table games is a piece of the casino floor where there is still so much room and opportunity to evolve,” he said. “Skill-based gaming is a buzzword for the past few years; there are some companies taking shots with products. When I think about skill-based games, I think what better example than out there in the pits where folks are socializing, interacting with each other and doing a lot of the things that skill-based gaming is intending to achieve in casinos.”
Table games have already shown a capacity for reinvention. “Think back 20 years and what a blackjack table looked like,” said Hemberger. “One circle, on a felt, that allowed you to play one game. Today it looks incredibly different. There are casinos out there today that are offering four games at once on a single blackjack game. Why? It’s because we’re trying to grow revenue at the table, but that’s one element. It actually allows us to go ahead and offer to new players, Millennials, what they are looking for, something they’re comfortable with: multi-tasking. Every young person that I interact with is constantly doing three or four things at once. If you think about four things going on in a single round of blackjack, there’s no better example of multi-tasking than that.”
Hemberger pointed to craps as a model for what current and future table game development should aim for. “It creates a sense of camaraderie; we’re all rootingfor the same outcome, and we’re winning and losing together,” he said. “That is the avenue, to take these games that are inherently skill-based and grow our player base, the earning power and give players a better experience.”