First, some background on SYNKROS… can you share with us some data points on your market presence, how it has grown over time and future growth targets?
BERTSCH: SYNKROS is installed in approximately 100,000 connections across about 60 customers in close to 120 locations worldwide. Like many manufacturers, Konami has a diverse customer set; from big casinos to the route business, which includes taverns in Las Vegas and the club-and-pub market in Australia. A key metric that we look at is new growth. In the last three to five years, we have realized annual growth between 10 and 15 percent with respect to new connections coming online. Our systems team has more than doubled in the past 10 years, and by more than 30 percent since 2015. We don’t see our sales growth rate changing anytime soon. We’ve been experiencing some excellent momentum with some of the customers that we’ve brought on of late.
What factors would you point to as growth drivers for SYNKROS?
BERTSCH: A couple of things—support levels and customer experience is paramount for us. I’m very proud of our reputation in the market; customers speak very highly of our product and, most importantly, of our people. A lot of the products in the market have unique features, but here at Konami we really look at serviceability as a key differentiator.
On the people side of the equation, what would you point to as a key to success?
BERTSCH: Years ago we made a philosophical change in our recruiting process in terms of the types of people we hired. Not that we don’t hire engineers anymore, because we still hire a lot of people with an engineering-type background. We’re shifting from not only hiring high-quality engineers but also people who have a lot of operations experience, meaning people who have worked in the casinos. We see ourselves as a software company, but it was really important for us, in order to get to that world-class customer experience, to bring on people who have run or been a part of the operations. Understanding how operators speak, how they run their business, and then adapting solutions, support and service accordingly. Having people with substantial operations experience has been a key thing for us as of late.
Did you target any particular part of operations and/or job titles?
BERTSCH: We’ve hired slot, marketing, cage, and title 31 professionals, with experience in high-profile corporate operations. They’ve been part of not only our sales team, but also our support and engineering teams.
How do you prioritize your sales effort in term of new business and growing business at existing accounts?
BERTSCH: Unlike the other three system providers, we haven’t acquired a lot of customers through acquisitions to increase our install base. SYNKROS is the only product in the market that started from scratch, with the latest technology architectures. So bringing on new customers is obviously important for our growth to ensure that we can continue to invest in the product innovation. Konami doesn’t want to prioritize any particular part of the sales effort over the other however, bringing on new customers is equally important as maintaining our existing install base.
Changing out one system for another is an enormous undertaking that operators don’t enter into lightly. When they do make that decision, what are some of the underlying factors in your experience?
BERTSCH: The systems market has evolved quite a bit over the past decade; it has kind of gone full circle. Previously it was about complex integration and robust features—one optimal product that would drive customer experiences. I think that’s changing now. Operators are looking for simple, easy-to-configure solutions with stability. I think that’s where Konami brings some uniqueness to the market. We can provide a simple solution that brings a lot of integration points into casino operations. So operators are willing to take that leap into a new system because they’re getting a simplified and robust solution that they might not have today.
The second part of that ties into some of the previous points about serviceability and customer experience. Many promises are made in the sales cycle and it’s important not to over-extend yourself. Considering Konami’s heritage and corporate culture, we believe it is fundamentally important to say what we do and do what we say. That has always been a foundational component for Konami.
Lastly, on integration, I think what we’re seeing in the casino management systems space is a lot of complex product and environments. With that, operators are trying to find ways to deliver a different experience. Right now, it’s all about the integrated resort—unifying the player experience across gaming and non-gaming. Konami has invested very heavily in this area and we think we’re able to bring a unique experience to the casino floor and all the way through the rest of the integrated resort.
Training is a big area for systems, from getting up and running to continuing education that helps operators optimize results. Describe the training philosophy at SYNKROS. How important is training generally and how have your programs evolved over time?
BERTSCH: Training is a key piece of the relationship and I think we take a little bit of a different approach in the sense that we don’t have a huge professional services arm. This is fully intentional, because we don’t view it as a revenue stream. We know from speaking with our customers that training has to be an ongoing effort; it’s not, “Let’s launch and in a week or two we’re out of here.” It’s about implementation with an eye on three-month training increments for next year.
We also see a lot of turnover at the operator level, which presents a challenge for the manufacturer. We do a lot of training at headquarters; we run classes all the time through what we call Konami University, and the customer response rate to those opportunities has been exceptional.
I’m interested in your reaction to a couple of comments that I’ve heard from longtime end users of slot systems. First one is, “All systems suffer from basically poor reporting functions...”
BERTSCH: “Basic reporting” could mean a lot of different things to different people. I think that’s where the complexity comes in. When you talk about reporting, who’s asking the question? When I’m asked what our reporting is like, I always ask what department is it, what level of experience they have with respect to analyzing data; and, of that data, what are they trying to do with it. If you could get the answer to a couple of those questions, it changes the response.
“Basic reporting” to an executive could be very different than for the person at the players club who is just trying to get a transactional data set, versus someone who is looking at slot performance and is trying to do a complex report that may be “basic” to them. Because of how complex reporting can get, Konami’s approach has always been to give operators access to as much data as they want—and there I think SYNKROS does a great job—then let them choose the best tools that will optimize their preferred business outcomes.
It’s often said that the slot floor is an extremely data-rich environment. Does that create its own challenges?
BERTSCH: We have to recognize that gaming can be pretty complicated. If you look at banking reports, debits and credits are pretty simple, but that’s not necessarily how it works in our industry. You have win, net win, theo… all these different matrixes that get analyzed and that’s another area of complexity. People can be looking at reports on “win,” but one is looking at net win and the other is looking at theo win. And another question could be is it audited data or unaudited data.
One of the things we’ve tried to do to address this problem is every single report inside of our system, when they’re running it through SYNKROS, the user can bring up the Help menu and it will tell you how those particular fields are being calculated. That may sound silly, but when you’re looking at the number of reports in these systems and the number of complexities when it comes to the analysis of data sets, you have to do that.
During your 14-year tenure, many markets have become saturated and gaming has grown more marketing intensive. Talk about how that has impacted your end of the business on the product development side…
BERTSCH: It all comes down to data—how properties are looking at it and what types of experiences they are trying to drive. Time-on-device is only as good as the carded play percentage. And, within that, how much revenue does uncarded play account for? Tools like SYNKROS and what we call SYNK Vision give customers the answers to some of those questions. As they’re drilling down into their business to understand the data behind carded play and uncarded play, by using our facial recognition technology and some of the base products, customers can dive into areas that they’ve never been able to explore before. Looking at uncarded play and trends across particular devices will change the way operators market to their guests, given the competitive nature of many markets.
It’s commonly said that operators only use a fraction of a slot system’s capabilities. Do you agree and, if so, how do you advise operators to get the most out of your system?
BERTSCH: We hear that a lot as well. I always say this: Operators use the fractions of the system that are most important to them. Our cruise line customers use the system in ways that are very different from a customer in Michigan. Reviewing marketing plans and getting like-minded operators to collaborate with one another is very important to us. Advisory boards and users groups are great ways to get customers to talk with each other so they can maximize capabilities within the system. Over the last three years, we have heavily invested in ways to get customers together. That has been just a as good an education process for them as it is for us.
Is it the manufacturer’s responsibility to educate them on every single thing? Maybe, maybe not. We’re really pushing our customers to take ownership of the user groups, rather than Konami driving the process. We have some great customers today that are helping us push that forward.
A slot system touches marketing and IT in addition to slots. Can you talk about what intradepartmental cooperation could mean to successful system implementation and optimization?
BERTSCH: Konami takes a lot of pride in bringing people from these departments together and getting them to share information. Again, I will point to the people inside Konami’s SYNKROS team. They do a great job building relationships and trust across individual departments, which is really the foundation for collaboration. We go in as a partner and bring a lot of these departments together by sharing information.
It’s all about hiring the right people, asking the right questions, and then bridging the intradepartmental gaps. We bring someone in who has been in charge of a slot department and can say, “I’ve done your job before, I know the pain that you’re feeling. Here are the things that keep you up at night and here’s how I’m going to help you solve them.” That’s a whole different conversation than, “We’re installing this product, so you need to get on board and by the way, you need to do this, this, and this.” Our people have walked in their shoes. Being able to speak their language means we can build trust more effectively.
What is Konami’s artificial intelligence (AI) strategy and how will it impact SYNKROS going forward?
BERTSCH: AI is an important tool that we are definitely investing in at this time. Not only do we see that AI needs to be considered for the future but giving these systems enough time with proper data sets is critical. As an example, we offer SYNK Vision, which is facial recognition AI. This is only going to be successful from a technology perspective when more images are run through this appliance. They’re only going to become more effective with more data sets, more calibration and more time in the field.
When you look at AI engines for data analytics and auto marketing promotion creation as an example, monitoring their output is paramount. I think we’re a little ways away from that yet, but it’s definitely something that Konami continues to look at and, hopefully very shortly, we’ll be releasing some of that to the market.