Mike Halvorson is chief development officer, Sunshine Games, the sister company of Merkur Gaming Americas that was formed in 2016 to make games for the U.S. market and lead the Gauselmann Group’s charge into the highly competitive North American slot business. 

Casino Journal’s Executive Editor Charles Anderer recently spoke with Halvorson, focusing on the path he has taken to Sunshine Games, and what he and his team are doing to deliver entertaining games and build an American-made success story for Merkur. Below are some excerpts from this conversation.

You’ve been at this for two decades now. How did you get into the business of developing slot games?

HALVORSON: I went to school to play football; I was an athlete. I was always an artist as well. My father was in the 3D software business so I had an Amiga computer in my bedroom. My dad wanted me to learn two things: piano and graphics.  I still can’t play piano, but I’m a very good graphic artist. 

We moved out to Las Vegas in the late 1990s. My dad had a client who had purchased the 3D software and they had some video topper stuff. It was the very early days of utilizing plasmas. He asked if we could do programming. We started with some motion graphics and we did an interactive combo display. With WMS’ early games there was a small delay between the bonus and the base game because they used CRT back then. We built an interpolator to take that signal and when it went to a bonus round we displayed it on the top screen. As we progressed into this we did other things like writing code for touchscreen drivers and wide-area progressives. We also did signage and glass… a lot of glass. 

Around that time, there were a lot of companies doing third-party game development. We hired a guy who did casino math. He had been in the business for literally 45 years. He built the very first Big Bertha. We slow-rolled into game development and I worked with Sigma, Shufflemaster, Cyberview and IGT. Over the years I’ve worked with literally every company, building games for them—either graphics or the entire design. When the economic downturn hit, many third-party game development companies went out of business. I eventually got a job at IGT where I was a level three engineer, building service window solutions for them. That was a little narrow for me; I like to do a whole bunch of different stuff. I went up to Reno to work with Kent Young at Spin Games. We took that from three people in a small room to 60 people working for two companies. 

What did you like about this business?

HALVORSON: When I started in the gaming business, I was young and I didn’t know anything about gaming. I learned the history of the business from people who were actually there, like Mickey Wichinsky from Games of Nevada who I spent a lot of time around. That’s what drove me to get more involved in the business than just being a graphic artist… I did a lot of sound development, I got more into the development of the software and the architecture of designing hardware. I got to do that all over the world. I was one of the first providers when legal gaming opened up in Mexico. I’ve made games for companies in Brazil when it was legal, Russia and the Philippines… all over the place. I got to see the world view of gaming from the standpoint of the player.

The history of gaming and what it meant to be part of this community is what did it for me. You get a job in software and you get a job at Facebook; that’s still kind of brand new. You’re developing the forefront of technology that people will look at in 20 or 30 years and say that was really cool. That’s what I enjoy about being in gaming. You can be part of the course of change and there are not a lot of providers. I make all the games for Merkur in the U.S. It’s really cool to be able to set the standard of how our drive into the U.S. market is going to go. Working at Spin, I was able to do a lot of cool things that many people weren’t able to do because we were coming into the business fresh. That’s what’s intriguing about the gaming business—being a part of the community and being a part of what will be the history of it.

Being able to do multiple things sounds like a motivator for you as well…

HALVORSON: Yes, I like to be integral in all parts of what we do here. I work anywhere from 12 to 14 hours a day and I don’t take vacations because I absolutely love what I do. I take great pride in providing content and entertainment for players who enjoy playing games. These are the people I build games for. 

What makes a good game?

HALVORSON: If I knew what makes a great game, I wouldn’t be here. I’m sure any designer of games would say that. I’d be designing games for myself in Hawaii or the south of France. I got this from my father: it isn’t about the destination, it’s about the chase. I love starting a game, coming up with a concept, doing the initial graphics, planning out the intellectual property… all of those pieces until the game is released are the most fun to me. That’s why I make the games.

Sunshine is really a ground-up endeavor. What are some things you would point to that define the kind of company you are building?

HALVORSON: I’ve got 13 employees here; it’s an absolutely fantastic team. Everybody I hire, I tell them don’t look at this like a job, look at this like it’s your business. I don’t punch a clock and I don’t want them to either. I want them to be excited about this as much as they possibly can and I’ve been able to do that. I’ve not had a ton of staff turnover, the people I have here have been here almost since the beginning. A lot of them have worked for me before. Everyone here is really prideful about what we do. It’s an easy, relaxed environment. If somebody’s late, I don’t yell at them, they just have to buy donuts. It’s all about the passion forwhat we’re doing. You have to have it because what we’re doing is like building a car with no instructions. We think we have all the pieces, and now we have to put it together. That’s the most fun about it.

None of my developers ever developed a slot machine before they got here, which is what I did at Spin. I don’t think it’s necessary for somebody to have 10 years of developing or graphic experience to make a slot game. Sure, that’s an additive help, but specifically here, there’s a Sunshine way that we do things. We have our own road map; I don’t really want to hear what you did at another slot manufacturer. That’s fantastic if you have it and I will take that input, but I want to do it our way. I’m not saying that’s always the best way, but I want us to all be on the same path. 

There are a lot of strategies that I used at Spin that I do not use here. I build a strategy to my team, I don’t build a strategy and then put my team into the strategy. That really can’t work because this is a very different operation. It’s an international company, one of the largest privately-held gaming companies in the world. We have to be innovative and intellectual property is very important to us. 

How much progress have you made on the IP front?

HALVORSON: We really started operations in early 2017. It took a while to ramp up because we didn’t really have a grip on the platform of our German-based counterparts. About halfway through 2017, we had a bunch of intellectual property that we wanted to do but we didn’t have an intellectual property team yet. Charles [Hiten, chief executive for Merkur Gaming Americas] brought on Keith Moore from VGT to handle our intellectual property. Since he arrived, we have filed over 25 pieces of intellectual property and been granted five. There are another 15 in the cooker. We churn those ideas out for an element of protection, but we’re also trying to be innovative and come up with things that nobody has seen or done before.

There are a fair number of slot providers chasing mature markets in the U.S. How have operators responded to your games?

HALVORSON: The feeling that I’m getting from operators and our initial market in South Florida is that, yes, they have a lot of choices, but they always could use more. A good working relationship between operators and slot manufacturers is in high demand. A lot of our competitors have been providing games for a very long time and—the one thing I will say about operators that I’ve found to be true with almost all of them—they’re always receptive to new stuff. New stuff on the floor means they have the potential for a hit. A hit for us is a hit for them, so they’re as supportive of new stuff as they possibly can be. 

Do you develop games with a specific market in mind or are you just looking to develop a good game?

HALVORSON: You already know your market when you develop a game; I don’t develop a game for a 21-year-old. Our game Taco Tuesday, which is a name that we trademarked for use in gaming, is cartoony, but the player base that thinks it’s fun is our demographic of players; females and males over 50 who have the money to play slots. They think it’s cute and fun. It isn’t over-the-top male or female. We don’t make over-the-top games for either gender, we make middle-of-the-road content. The one thing we probably pay closest attention to is the themes that are working on the floor. There’s gambling-centric and realistic-centric content which we have, and the somewhat fanciful content that we develop. Those themes usually revolve around Egypt, Africa, Asia and animals. We go into it not really worrying about the demographic of the player because it’s ingrained. We think about the themes, the feature sets and how they will trigger the player when they play the game. We take them on a roller coaster ride. At the end of the ride they either stop, get out and leave, or they cash out their money. If we leave them on a high, it means they’ve lost their money but they’re still like, “oh, this is a great game.” 

My dad used to always say, “My favorite slot machine is the last one I won on.” That really is the truth and the great part about the psychology of the slot player—they will retain those positives, even though it’s innate in human nature to always remember the negatives.

Does that factor into your approach to game development? In other words, do you try to keep the hit frequency at a certain rate or do you skew toward big bonus wins?

HALVORSON: In the early days of slot machines it was either you won or you didn’t… and you didn’t win a lot. A lot of the ways games play today is based upon somebody getting lucky with an idea, and then that skews the market. This is a very weird time in our business. Lightning Link was introduced three years ago. It was a slow roll, and we all know what it’s doing right now. Lightning Link has skewed the marketplace. It has driven IP in a lot of companies as well as the tactile feel of game content when you’re actually playing it. The games are more volatile on the base game, the bonus rounds are heavy and when you get there you know you’re going to get a payoff. You may still lose that money, but you know that payoff is really good. 

Most players you talk to about those games know they’re not going to win that top progressive. They’re not even worried about that. They just want that feeling of actually hitting that bonus round. I’ve seen people win $200 when they only put in $20, but they end up losing all that money. They didn’t get the total payoff, on that bonus but they got enough to keep them going and be excited about it. 

That has skewed the market more than I’ve ever seen before. There was a time in the early 2000s where purchased IP product, like all the things that IGT did with movie titles, was a really big deal, but that died.  What we’re seeing right now is player-driven; they want these peaks and valleys, take us on a roller coaster ride. For a long time it was sort of a roller coaster ride that might go down or up, but it was a time-on-device game. We don’t have that anymore. Players still want peaks and valleys—they want to be entertained—but they also want bonus rounds that are great features. And that’s what we’re really driving to right now. 

That flow is really carrying over. I think a lot of people believe that it’s being driven by linked and wide-area progressives. I tend not to believe that… I think it’s really that feeling of winning. What you put into the base game and take out of it as a bonus has to be skillfully done and you have to take a lot of care and time with that. 

When you design a game, what kind of assumptions are you making about player bankrolls?

HALVORSON: We start off at a very base level, $40 or $60. It’s really based on the market you’re in. South Florida is a heavy market. It’s like Connecticut was when people were waiting in line to play games. The casinos are always busy and they’re doing very, very well. Or northern California, where the intake of money per day is huge and their average bet is higher than most places, including Vegas. 

Instead of saying players will walk in with $100, we take $40 or $60 and run our simulations on one or two thousand players based on that. We’ll see what kind of ride the players are going to get, whether it’s a cash-out event, and we’ll play with that. 

What do you do to make your games stand out from the crowd?

HALVORSON: We put forth our best effort. I’m a firm believer that if somebody thinks it cost a lot of money to make, you’ll be more than happy to sit in that car. When you get into a Kia and you shut that door and hear a weird sound, that’s going to be in your head. That’s a slot machine. When you sit down on that chair and the first time you push that button it feels right, plays right and the reels spin the right way. All of those little things that happen in the first few seconds of a game are so important. And then it’s the ride that you take them on. Whether they like it or not is a shot in the dark for all of us.

What can people expect from your studio for the balance of this year?

HALVORSON: Our content sets that we’re going to be putting out in the next few months are far better than our initial offerings because we’re now catching up to where the market really is. It was easier for a lot of other manufacturers to change because their motor was already running. One of the things we saw is what’s happening with line pays… their importance is going way down. People want to see wins, so we give them the droughts, but when we give them the peaks, we throw those at them with feature bonuses in the base game. And we save up a large portion of that for the bonus. On the base game, we give you a lot of cool effects and flashy graphics and then the big hit.

For instance, with Jewels of the Nile, we’ve created a really cool interaction between the second screen and the first screen game where there’s a symbol conversion. On Striking Fortunes, dragons come to life and add scatter wins. Big Wheel Deal uses a combination half-wheel symbol spin that merges into one. We have a patent on that. It will have jackpot meters on it and multiple wheels on the screen in the bonus round. Rapid Thunder has two different parts; jackpots that you win in the bonus round and coin events. It’s more of a roller coaster ride game. When you get these multiplier orbs on-screen and a Rapid Thunder symbol, it gives you the multiple of your total bet. If you get three of them you can win some big money on the reels. It’s decreasing the importance of the reel game because the player really isn’t concerned with that anymore; they want that bonus hit feel. 

All these games should be in the field in the third quarter of this year.