During times of economic downturn, investment and long-term strategic planning is critical. Just over 18 months ago, Aristocrat developed and has been executing its new business transformation program, “Play to Win.” The Play to Win initiative is centered around ensuring that the company is focused on building the right products for the right markets. “We wanted to refocus on our key markets, with special attention being placed on the Americas,” states Seamus McGill, COO Americas. “We launched the initiative with our ‘Building for the Future’ campaign in 2009, and have built on this message with the ‘Are You Ready…’ messaging in 2010. We successfully launched several major products and new game play categories at G2E and got tremendous feedback from our customers as a result.”
Aristocrat took an all-encompassing approach to initiating their plan by creating forums and workgroups with gaming operators in order to gain greater insights to player game preferences. The primary goals were to improve the player experience, and equally as important, to provide superior performance to the operator.
“Play to Win is all about making sure we are focused on building the absolute right products for the right markets. North America is our biggest region, which produces two thirds of Aristocrat’s profitability,” explains Americas President Nick Khin. While Aristocrat Americas has traditionally been an importer of Australian games, over the past few years they have changed their tactics and are now focused on making sure games were being designed and developed specifically for the North American market. In addition to this, they have been building and strengthening their D&D (design and development) capabilities in North America. They have opened four D&D studios in Las Vegas and one in Argentina. These studios are dedicated to video game development, mechanical reel games and an advanced concept lab that was responsible for the development of the award winning VERVEhd™ cabinet. “We have spent a lot of time building and developing our local game studios to complement our great Australian game library,” Khin says. “In fact, a significant amount of the product at G2E in 2010 was developed right here in Las Vegas.”
“Last year was a difficult and challenging one for the industry as a whole,” states Khin. “While we as an organization had a relatively strong first six months, the third quarter saw soft results across the entire industry. The total unit sales for the four major suppliers across North America were the lowest since we’ve been keeping records for the past 12 years. The number of new casinos and new slots going into those casinos was significantly lower than 2009, and there wasn’t enough pickup in the replacement cycle to cover that shortfall. We expect the first half of 2011 to remain fairly challenging, with even fewer new casinos than last year. While we are expecting a small increase in the replacement cycle, we have seen gaming revenues from several states and there have been some positive trends in a number of them. However, we believe that the replacement increase will not be large enough to offset the decline in the number of new casinos coming on line.”
Aristocrat also sees tremendous potential in other regions. One of those areas is the Argentinean market, where they have only scratched the surface. “Over the next 12 months, we are going to focus a lot of our attention in this market,” explains McGill. “The other Latin American markets, while mature, are still buyers of Aristocrat high-earning products. We have a studio in Argentina to better support our Latin products, and the initial response to our development strategy for this region has been extremely positive.”
The gaming industry in Mexico is estimated to double in size over the next three to five years, and Aristocrat is properly positioned to take advantage of the anticipated growth. In May 2010, Aristocrat opened their full-service office in Mexico City to support the market. “We are shipping products to Mexico and our game performance in this region is very strong,” McGill said.
“We are closely monitoring new markets that are opening up,” says Khin. “For example, we have a very competitive solution for the new Illinois route market. Since the announcement of that piece of legislation, we have been working very hard on developing products for this market. We have selected Moss Gaming to act as our distributor, and we are ready to go, upon the approval of the final regulations and issuance of licenses by the regulators. Aristocrat is very excited about the Illinois route market, as today we enjoy a very high percentage of the video product and strong brand recognition in the Illinois riverboats and surrounding states.”
Aristocrat has introduced three new cabinets, starting with the VIRIDIAN WS™, which was introduced in April 2009. This features high-resolution, recessed 22-inch LCD monitors. Player synergy is created by privacy panels. The buttons, removed from the previous VIRIDIAN™ cabinet, have returned, due to player and operator input. Player tracking, currency validator and ticket printer locations have been moved to make the case more ergonomic and easier for players. A new sound system and improved speakers round out the rich multimedia experience for the player. Powered by the flexible GEN7™ platform, Aristocrat games offer a better entertainment experience for the player, creating comfort and enjoyment.
The Vii™ Slant cabinet offers a traditional slant-top solution. It includes many of the features of the VIRIDIAN WS, such as the 22-inch monitor and improved sound. Ambient lighting is found on either side of the monitor and top glass to produce eye-catching special effects. The lighting, coupled with soft edges and an improved leather texture, adds to the player enjoyment and comfort.
Perhaps the most stunning addition is the VERVEhd cabinet. Available in two configurations—dual 21.5-inch LCD monitors or 31.5-inch portrait LCD—the cabinet was selected as one of the top 20 most innovative gaming technology products in 2009. It has a sleek, futuristic look, somewhat resembling a giant iPod®. 3-D panoramic user-adjustable sound, interactive edge lighting and the sleek, ergonomic design catch player attention from a distance.
The new Nteractive™ LCD programmable button panel steps beyond traditional LCD button panels. The industry’s first color buttons complement cabinet edge lighting and include animations and rotating messages to interact with the player.
A gaming operations department was formed almost two years ago in order to provide a strategic ownership of Aristocrat’s participation portfolio. “We weren’t delivering enough content consistently, so we have really focused on delivering the right amount of products in order to enhance our market share in the gaming operations space,” Khin said.
“One of the most satisfying aspects of G2E was that we demonstrated our commitment and dedication to our high-end participation products through product support and diversification.” Khin stated. “We feel very comfortable that our customers will try these new categories knowing that we can support them and have their needs addressed moving forward. Our game design teams in both Australia and the U.S. have really stepped up and are delivering more complex and highly entertaining products than ever before.”
“Some of the new products include: Reel Tall Tales™ and Stuntman Sam™, in our VIRIDIAN WS Feature Top Box cabinet; Big top Jackpot™ and All Puffed Up™ in our Hyperloop category; Beijing Bonanza™ and Crazy Taxi™, which feature a communal style of gaming, as well as some new and exciting licensed product such as Tarzan: Lord of the Jungle™ and Mission Impossible. We have also made a commitment to support some of our most successful brands by releasing new versions to market in 2011. These brands include Cashman Fever™ and Cash Express Gold Class™,” he continued.
“We have also added a dedicated strategic architecture group,” states Khin. “This is a small group that follows new technology, such as those recently displayed at the CES show here in Las Vegas to see how we can use it and develop it within our products and platforms.” The group ensures that Aristocrat continues to push the technological envelope. “We want to identify new categories,” says Khin. “We developed VERTEX™, our proprietary controller, so that our game developers can bring community gaming, tournaments, our Xtreme Mystery™ solution, episodic and adaptive gaming to the floor. With each category we have advanced functionality to differentiate our products from our competitors.”
Workshops, Focus Groups and Customers
Around the same time the gaming operations department was created, an internal strategy was developed to facilitate the science behind decision making. A study was conducted in which 3,000 players were surveyed across North America, which is the largest player initiative Aristocrat has undertaken to date. A comprehensive endeavor determined player likes/dislikes, preferences and other specific items to help the gaming development teams to get more information about the people they are designing games for. “We have player research and demographic data for gender, race and age to test. We test third-party licenses, the brand appeal that these licenses provide and benchmark our products against our competitors. We focus test every one of our games, including testing with players, operators and our own employees,” says Jason Walbridge, senior vice president of D&D, integration and service. “This comprehensive testing allows development decisions to be based upon scientific data, directly related to the operators, players and the industry as a whole.”
Aristocrat has also formed a customer user group that meets once or twice a year. Focus testing is conducted with operators and is broken into three modules: stand-alone games, player demographics and insights, and technology. Each operator is rotated through each of the modules, in which Aristocrat staff and the operators have an open dialogue regarding the topic. The VIRIDIAN widescreen was a result of the cooperative exchange of ideas. “These structured workshops and the insights we have got from them have changed a lot of our development priorities,” states Khin. “The VIRIDIAN WS and the enhancements made to the cabinet were a direct result of the input and feedback from our customers and players.”
Over the past two years, the company has also conducted “best-games workshops” that bring employees from all of their global resources and across all functional teams together for intensive workshops. Game designers, engineers, sales teams, marketers, executives and other employees from every division share in the ability to address trends in the industry, identify competitor trends and the company portfolio. It allows the company as a whole to ensure that it is on track and aware of which direction it should be taking. “This really moved the direction of the company to develop our new strategy and to move forward, developing what we needed internally,” says Walbridge. “After G2E, we conduct our global forum, after NIGA we hold a regional forum, and after each major event, such as G2E Asia and the Australian Gaming Expo, we get regional groups together. Over the course of the year, we cover regular intervals for a pulse-check on the direction of our portfolio, new regulations and competitor activities. It has proven very beneficial for us.”
All of the efforts appear to be succeeding. Aristocrat reports that their products are performing well in the marketplace. On the new MegaPay™, their games received 2.5 to 4 times the floor average in many jurisdictions. Other games such as Rockin’ Olives™ are seeing similar results. “All of our product planning, which has been led by Mitchell Bowen, VP of marketing, and Dallas Orchard, VP of gaming operations, is starting to come to fruition. Our product performance is strong and has been for several months. This is very encouraging and this tells us that we’re on the right path and going in the correct direction,” says Walbridge.
Software and Systems
“We have two principles for our games,” says Julius Patta, CTO. “The first is to improve the player experience, and the second is to deliver the best performance to the operator with performance and efficiency. We’re leveraging connectivity and interoperability as the enablers of new game forms and operational information-driven efficiencies.”
Aristocrat fully subscribes to GSA’s efforts for open systems and promotes the best-of-breed approach for gaming solutions for their clients. “This is a lot of desire, but unless you do something with the technology it’s not going to happen. GDK (game development kits) and SDK (software development kits) are key,” says Patta. The idea is similar to gaming console development for home entertainment. Any developer—not just Aristocrat employees—can develop content for their platform. While publishing and licensing agreements have to be signed, and strict gaming compliance adhered to, it allows a virtually unlimited ability of content creation for the various platforms. “The world is very creative and we want to be a catalyst to get the creativity out there. If we open up the doors by publishing a GDK and SDK, then we have a great opportunity to harness the world’s talent and make this talent available as Aristocrat solutions for our customers,” explains Patta.
The commitment to research and development on physical technology pushes the envelope on player interface. Where models used to be created for slot machines, new models encompass personal virtual immersion, allowing social media and devices such as an iPhone® to work with a gaming model. The games themselves offer much more than just spinning reels, and begin to connect with the player wherever they are, in a form that the player desires.
Alive is Aristocrat’s Live Network™ technology. It’s a long-term strategy based upon the following five pillars:
1 – Core Class III gaming space
2 – Downloadable gaming
3 – Networked connected gaming
4 – Server-based gaming
5 – Internet gaming
In the near future, all of the games and systems will be built upon the network model, providing an interoperability solution connecting all of the dots. While the EGM may be in the casino, the network allows player contact beyond the physical walls. Through the Alive network, the player can continue a session at home—for bragging rights and amusement, not revenue—while connecting to the casino game. They can accrue player points and for episodic games where levels are unlocked, they can continue to make progress and unlock new content.
“In The Islands of Moolah™, to be released soon, the player registers their user name and password, and can then connect through the game’s website. They can review their standing in the episodic game, download an app to a smartphone and unlock a bonus feature inside the EGM as they play the game for amusement,” says Patta. “Back in the casino, you log in, you play and when you trigger a bonus game you have new features available. This doesn’t change the game’s win/lose odds, just unlocks new features to experience on the casino game.”
Server-based gaming, including technology to download games to an EGM, goes well beyond the basics. Central-determination games allow customers to run nationwide or Internet-based gaming, having full control and security within the server room. The player operates on an interface, unable to change the programming or game determination.
While many operators think of server-based gaming as downloading content to the slot machine, it is much more. Downloading is really a transport mechanism using servers and networks that allows games previously installed on an EPROM to be more efficiently delivered to the machine. Server-based gaming is a required standard for remote gaming operations (such as over the Internet) where all decisions are made within the gaming facility, while the players operate from remote locations. An example of this is VLT operators who have terminals connecting to a central-determination server, where all game outcomes are decided. The player doesn’t realize where the decisions are being made as the process is transparent to them. Both central-determination solutions as well as traditional machine-based determination will continue to be used as each has their own strengths and weaknesses, as well as relevant application. The operating requirements will dictate which one is used. For any operator wanting to reach beyond their physical walls, however, a server-based solution is required.
“The Alive network brings it all together. The operators don’t want to have disparate systems,” says Patta. “Different solutions, implemented through Alive, can link internal and external players, their systems, into one management solution for the operator. For instance, Aristocrat’s TruServ™ technology can manage VLT or remote gaming operations alongside Oasis 360 traditional Class III casino operations. With Alive, all of the information can be brought together from the various gaming solutions under one management umbrella.
Interoperability will also give the operator the flexibility to pick and chose their solutions. Third-party solutions can be used through the underlying network structure. The market is heading in this direction, driven by the consumer marketplace, such as downloading of apps to smartphones. Operators may not select all of their applications from one vendor, but will have the flexibility and freedom of choice.
As an example of gaming operations beyond the casino walls, Aristocrat has developed three games that are now available on Apple iTunes® for the iPhone and iPad™. Sun & Moon™, Geisha™ and Imperial House™ have been created and have received tremendous response. While these games are for amusement only—with no revenue capability at this time—it does bring the player experience outside of the casino facility, and hopefully encourages the player to look for these games when they return.
“We have a substantial systems business, which we are very proud of. More than 265 casinos in North America use Oasis 360 and that customer base continues to grow,” states Khin. Over the last year, Aristocrat has been busy developing new modules to expand the functionality of the system and to offer more power to the operator. One new solution, nCompass™, is a powerful engine that expands the capabilities of legacy equipment. It provides greater processing power and increased storage capacity for multimedia content. nCompass gives current equipment the ability to offer a service window with touchscreen interactivity. From player point lookup and display on-screen to customer multimedia content developed by the operator, the value to the player increases.
The second exciting new module is called nVision™ and is a business intelligence solution. “We studied our BI requirements and determined that we could try to develop one in-house, partner with a niche company like some of our competitors have, or we could go with the alternative, and we chose the latter,” says Khin. “We partnered with one of the giants in BI who provide business intelligence solutions to almost all of the world’s top retailers, most of the big financial institutions, and we’re building it into Oasis 360. The solution is being piloted at an operator’s site right now.” The solutions will provide dashboard navigation, KPI displays from across the property and insights into both current and historical data. Advanced reporting will provide performance data on any metric in the data warehouse.
With a history of strong-performing products and proven math models, the company’s tagline of “It’s not just a game, it’s an Aristocrat game” rings clear. More than 230 Aristocrat games were displayed at G2E. The marketing and gaming operations teams determine all aspects of game requirements, from stand-alone to linked progressives, community gaming, multi-games, varying volatility and myriad new innovative solutions to provide more entertainment and value to the player. “We have two main strategies for our game development,” explains Walbridge. “The first is to support our existing footprint through incremental innovation. Categories like Reel Power™, 50 Lines™ and Xtra Reel Power™ can have new content created to provide support and innovation. The second strategy is to create innovative game play that the industry hasn’t seen yet. For example, MEGA PAY™ is a brand that essentially provides more than one game and builds on a collection-style feature. WIN YOUR WAY™ allows the player to choose their own volatility—low, medium or high. And with REMIX™, we have tried to find a different way to reward the player in the feature. The player is awarded symbols, or reels are shuffled and wins paid. It gives an exciting new perspective on their gaming experience.”
A number of other games and categories have been introduced. DRAG ‘N’ DROP WILD™ gives players the opportunity to select the wild position and multiplier options during the feature game. Players drag the wild symbol onto any position on reels two through five and can select different multiplier options.
Emperor Penguin™ is a double stand-alone progressive using two high-definition LCD screens and interactive bonus games. The base games, Polynesian Bounty™ or Harlequin Hearts™, share the Emperor Penguin’s five bonuses and jackpot feature. The bonus games are triggered an average of every 50 games for fast-paced excitement.
We Are Ready
“We have done a good job of retaining and in some quarters, growing our overall ship-share of sales,” says Khin. “In 2009, we grew our ship-share by 2 percentage points, and in the first six months of 2010, grew another percentage point. We are encouraged by the fact that we have been able to retain our position and make some gains in ship-share. The competition has increased over the last few years, coupled with a poor economy, so for us to increase is tremendous. We are tracking a significant number of our new VIRIDIAN WS games since they first launched in April 2010 and our game performance overall has been very encouraging.”
“While the market is still difficult,” states McGill, “we are well-positioned for the next few years and we feel that when the market turns we will be ready to take advantage of the opportunities. We are investing tremendously in D&D in the anticipation of a turnaround in the overall gaming market and the economy.”
“The key—in terms of our strategy—is to remain focused on developing the right product for the North America market,” states Khin. “We’re making sure we are a lot more player-led and technology-driven. We have a good pipeline of product in the gaming operations space to help us drive and grow that part of the business. We have a great opportunity ahead of us.”
“When the going gets tough,” goes the old saying, “The tough get going.” While the economic climate over the past year or two has been less than ideal, and certainly a considerable challenge not only for manufacturers, operators, the industry as a whole, but the players as well, Aristocrat saw this as an opportunity. A serious effort was made to move in a positive direction and to analyze the strategic direction every step of the way. From the involvement of players, to operators, Aristocrat has asked what they can do better, and are dedicated to continuous improvement. From this has come innovation in every area of their operations, which translates to innovation and technology for the operators, and in turn for the players.
When the economy turns around, Aristocrat hopes to be in a position of strength, which will allow it to capitalize on the opportunities an economic recovery will bring. A time of poor economy has translated to a time of preparation, retooling, new insight and pushing forward. The various new cabinets, platforms, game titles and categories speak for themselves. There’s a bright future for Aristocrat.