Here to Stay: Ainsworth’s Commitment to the Americas

Ainsworth Game Technology executives and Nevada Gov. Brian Sandoval celebrate the groundbreaking on the company’s 300,000-square-foot North American headquarters on land southwest of the Las Vegas Strip. From left are Mike Dreitzer, president of North American operations; Nevada Gov. Brian Sandoval; company founder Len Ainsworth and Ainsworth CEO Danny Gladstone.
Ainsworth Game Technology executives and Nevada Gov. Brian Sandoval celebrate the groundbreaking on the company’s 300,000-square-foot North American headquarters on land southwest of the Las Vegas Strip. From left are Mike Dreitzer, president of North American operations; Nevada Gov. Brian Sandoval; company founder Len Ainsworth and Ainsworth CEO Danny Gladstone.
Just a day after the 2014 Global Gaming Expo came to a close, dignitaries and invited guests gathered under white tents and a blue sky for a groundbreaking celebration kicking off construction on Australian gaming manufacturer Ainsworth Game Technology’s future North American headquarters in Las Vegas.

The groundbreaking, which featured speeches by Gov. Brian Sandoval and other Nevada officials, was more than a celebration of the planned 300,000-square-foot building southwest of the Las Vegas Strip. It was a strong signal that Ainsworth, active in the market for the better part of a decade, has established firm footing for success with solidly performing products and a small but growing market share in North America.

“It tells them we’re on the march, and we’re here to stay,” company founder Len Ainsworth said at a groundbreaking reception nearby. “We’re doing good business here in Nevada and all down through the South American countries and it’s steadily building up. Rome was not built in a day, but we’re doing very good business.”

The company’s success comes down to quality products, said the 91-year-old gaming industry pioneer active in the industry for the past six decades. “We make good quality equipment—it’s not the cheapest and we don’t want it to be—but it’s quality equipment that performs well, works and importantly we service it ourselves,” he said.

Mike Dreitzer, president of Ainsworth’s North American operations, said the construction project underscores the company’s commitment to the North American market. “While we are an Australian company by heritage, I think it’s important for everybody to know that we are now emerging center stage here in North America,” he said. “With this new state-of-the-art, full-service manufacturing, sales, service and operations facility we are building, we want customers to know we’ve made a major long term commitment to this market and that we are here to stay.”

Ainsworth CEO Danny Gladstone noted that the company’s growth in the Americas is a work in progress. Gladstone, who came to the company about eight years ago, said Ainsworth is much more strategically focused after undergoing a realignment a few years ago that established the company solidly in its home markets in Australia, maintained or grew its presence in Asia and South America and then focused the company back on where it believed the future lay—North America.

“We realigned everything so we’d have everything focused on when we would have product to compete,” he said. The company put a strategy in place to line up product, get its licenses and to build a small sales team. “We had a lot to learn about how business was done over here, not necessarily about dollars and cents; it was more about communicating with customers.”

As it assimilated those lessons, Ainsworth began to make inroads with its SL cabinet, which featured a 26-inch screen, “a little different than what we have now,” which is a 32-inch screen, Gladstone noted. “We got some of our games and our math models to work, and from there, everything else was still coming into place,” getting more licenses and introducing the A560™ model. Gladstone moved to Nevada to set up a small sales team in Las Vegas and help move licensing efforts forward. “Today we’re not a major player, but we’re a player in the marketplace.” One of the milestones, he said, was getting its Nevada license in 2010.

Among the early supporters and adopters of Ainsworth’s products in North America were casino operators in Southern California and Florida, as well as the Ontario Lottery Gaming Corp. More recently in Nevada, it was local company Station Casinos that helped drive the company forward, with a commitment in 2012 to buy 300 machines.

“That really gave us some larger exposure across the state of Nevada in a really hard market to get machines to perform because the local market’s a bit challenged,” Gladstone said.

While the company remains strong in Australia and New Zealand, it has made significant inroads in Asian markets and has found success in European markets such as Germany and France, Gladstone said it is North America and South America that offer the most promise. “We want to crack every market. We want to be licensed in every jurisdiction; we want to supply to every tribe,” he said.

In North America, Ainsworth has 26 state licenses, with another three pending, and some 130 tribal licenses.

Ainsworth devotes a lot of money in research and development and is investing more into adding to its currently small North American development team, Gladstone said. “That’s going to grow over the next 15 to 18 months.”

Rumble Rumble™ has proven one of Ainsworth’s most popular titles.
Rumble Rumble™ has proven one of Ainsworth’s most popular titles.
Dreitzer noted that when he started with Ainsworth in the fall of 2013, it was clear that “this is very much a marathon, not a sprint,” and to that end the company is continuing to lay foundations for success, such as the building that will open in 2016, as well as bolstering its sales force, including adding a corporate accounts manager and other key sales, product and marketing personnel.

“We know we’ve had some good success in North America, and we’re going to continue to build on that,” he said.

One of the reasons for Ainsworth’s success, Dreitzer said, is the company’s management team’s “many, many years of experience collectively and so we make excellent games that players want to play and that are very profitable for the casinos.”

“We realize that as a smaller company in the North American market we have to try harder, and it’s important that we do everything we can to make a good experience for the player and to support the properties. So it’s a mix of excellent product, great people, strong customer service and working with the casino customers as partners to make sure they get the games that suit them best and that they are configured in ways that make the most sense for their floors,” he said.

“Casino operators are looking to optimize their floors and earn maximum revenues from limited real estate,” Dreitzer said. “When you have performing product and approach it from the standpoint of being a partner with the properties, they’re willing to give you a shot.”

Rooted in a Good Gamble
Len Ainsworth is bullish on the outlook for the company and for the gaming market in general. “The whole world market is increasing, and governments these days absolutely depend on the revenue to keep governments going,” he said.

While markets and player tastes differ, there is a common thread and balance to achieve, Ainsworth said.

“You must provide entertainment but then you must provide entertainment within the limitations of the machine turning out and earning enough money to be worth the floor space it’s sitting on,” he said. “I think essentially people should get a good run for their money and feel like they’ve obtained good value.”

Mike Dreitzer, president of Ainsworth Game Technology’s North American operations, sees blue sky ahead for the company in North America, where the company has steadily made inroads over the last few years.
Mike Dreitzer, president of Ainsworth Game Technology’s North American operations, sees blue sky ahead for the company in North America, where the company has steadily made inroads over the last few years.
Dreitzer cited strong performance of Ainsworth’s product lines as key to its success. “For example at G2E we featured the A560SL®, which is the cabinet with a 32-inch vertical screen. Currently we have more than 16 titles approved for this particular cabinet, with more on the way. This product has been a real game changer for us,” Dreitzer said. One of the titles, Rumble Rumble™, performs more than two times house average “almost everywhere it goes. And we have other titles such as Flying Horse™ that have been showing real strength behind that.”

The company also offers its A560 dual screen cabinet as well as traditional slant top and a new bench-top slant top that has the footprint of the dual cabinet but the player experience of a slant top. In addition, the company’s popular Wide Boy™ cabinet showcases some of its premium IP titles, such as Magnificent Sevens™ and newer ones such as Magnificent Sevens Reloaded™, The Sound of Music™ and Showgirls™.

“We’ve got a whole host of products that, depending upon what your need is on your casino floor, you can pick and choose among them, and so we’re giving the customer and the players what they want but also in a variety of hardware and a very, very deep library of games.”

But what do the executives out on the slot floor think?

Respected slot executives Chuck Hickey and Buddy Frank both say Ainsworth’s products live up to their promise.

Executives noticed a surprising trend about four years ago when Barona Resort & Casino added some newer Ainsworth’s games, said Hickey, vice president of slot operations at Barona. “We started testing them, and as we watched them over time, we started to see something different from the typical slot machine that can have a pretty steep curve in popularity and then they drop off like they fell off a cliff,” he said.

In Ainsworth’s case, the games started off a little slowly but built momentum, as game play was “steadily and consistently rising over time over two years,” he said. “They stood out like a sore thumb because they were contrary to almost every other manufacturer,” Hickey said.

Barona has continued to add more Ainsworth games over time, and now has about 116, he said, “and they continue to perform well, almost without exception.”

A key expectation for players is that whatever their budget is, they can hit an attainable reward, Hickey said. “It’s like a four-of-a-kind in a poker machine.” If a player hits a four-of-a-kind within their time and money budgeted, that player feels pretty successful, he said. With its slot machines, Ainsworth delivers upon that promise. “They can fit into a person’s budget, and it still allows them [players] to hit something that is attainable. I think Ainsworth does that better than anybody.”

Frank, vice president of slot operations for Pechanga Resort & Casino, also is bullish on the Ainsworth games. “It took them a few years, but Ainsworth now seems to have captured the same magic that their founder and namesake, Len Ainsworth, pioneered when he was the head of Aristocrat,” he said. “His team is producing games that have strong bonuses and really appeal to a broad range of players. Most importantly, the games are designed not only to attract players, but also to keep them coming back time and again. Many call it the magic of Australian math, but maybe it is really just the magic of Len Ainsworth.”

In addition, Frank noted that the Ainsworth premium products also are gaining in popularity. “Beginning with Reels of Wheels™, this new series with large and attractive top boxes is bringing new players to a brand that was once reserved for high-repeat players,” he said.

Consolidation Considerations
At a time when industry consolidation has created some uncertainty over megamergers that swallowed industry titans Bally Technologies and IGT, Ainsworth rolls on its forward march. “We’ve got no identity crisis over who we are and what we do,” Gladstone said. “Everyone knows exactly what we are, what we’re doing, and where we’re going and where we’ll be,” he said. “Right at the moment when we talk to customers, that’s a good thing. They like that.”

Ainsworth’s Reel of Wheels™ game.
Ainsworth’s Reel of Wheels™ game.
Customers, Gladstone said, have questions about what’s going to happen to the companies post-merger, particularly about whether their previous purchases of hardware and games will be supported or are destined for obsolescence. “At the end of the day if these companies are going to work, they’re going to have to have synergies that work,” he said. Such synergies could include trimming the number of platforms and variety of products offered, he said.

In Dreitzer’s estimation, consolidation opens up the door for smaller companies, as casino operators are concerned about the effect on competition. “They want to have other alternatives besides one or two really, really large ones.”

Dreitzer said the company remains focused. “Given our newer position in the market and the fact that there’s a lot of jurisdictions that are new to us, such as Arizona, Missouri and Mississippi, there’s ample opportunity to grow our share of product on floors across North America,” he said.

Ultimately, both Gladstone and Dreitzer noted that success lies with the performance of the games. “Good performance will get you more share, and if you’re not performing as well as you hoped, it’s how you react to it, whether there are games in your library that can help you get there.”

Asked about how to reach out to the millennial generation, which has tended to eschew slot machines in favor of nightclubs and other forms of entertainment, Dreitzer acknowledged the challenge. “You’re talking about the generation that grew up playing Nintendo. They’re looking for a highly interactive, highly entertaining experience with a lot of bells and whistles. There have been some attempts on the regulatory level to try to get some changes and modifications to laws to enable games to be more responsive to the millennials with things such as skill-based features,” he said.

While noting some of Ainsworth’s games, such as its A560SL and other newer products, do have more interaction and entertainment value, Dreitzer said the company’s core belief is there will always be something timeless about a good gamble. “And if you can have a game that has exceptional math, that offers an opportunity to win an amount of significance, that’s something that every generation of player will take to, enjoy and continue to come back to,” he said.

Keeping Options Open
Ainsworth is also dipping its toe in the online market, Gladstone noted. Early on, the company was courted to supply game content online. “We put some games out there with a third party in the European casinos, and we found that we weren’t satisfied with the way that worked. We went off and bought technology so we could develop games online on our own platform. We bought an RGS, that way we didn’t have to pass our games off to someone else and we could maintain the games’ quality,” Gladstone said.

“We’ve done that, and we’ve been very selective to where we’ve gone. We signed our first contract with Playtech, and we’re looking at others,” he said. “And that’s the way we want to deliver our games. In that sort of controlled environment where we still can keep doing a lot of development in making the games as good a quality as they are in land-based [casinos] when we put them online as well.”

“At the moment, we’ve got probably a dozen engineers working on online products, and we’ll see where it stands. At this point we’re not making any money on it. But if it does evolve, we think we’re in a better place delivering our own content on our own platform,” Gladstone said.

Aristocrat Game Technology founder and Executive Chairman Len Ainsworth is bullish on the company’s North American prospects and for the gaming industry in general.
Aristocrat Game Technology founder and Executive Chairman Len Ainsworth is bullish on the company’s North American prospects and for the gaming industry in general.
Strong and Stable
Going forward, Gladstone said casino operators can take comfort in the company’s stability and growth trajectory. “We can’t be acquired because of Len and his shareholding,” he added. Ainsworth has no debt and could acquire a company if the right one came along that fit Ainsworth’s needs. “It’s got to be the right sort of deal,” Gladstone noted. “We don’t see an acquisition that fits us being a company that makes Class III machines, same as we do—we want something that’s an additive product or something that will enhance or expand our operations.”

Customer service is another area in which Ainsworth strives to differentiate itself from the competition. “One of the things the industry doesn’t see is the number of service technicians we’ve got in North and South America,” he said. “We’re quite proud of the service our technical people provide.”

It only makes good business sense to go above and beyond for its products, since Ainsworth is primarily focused on games, Gladstone said. “We’re a product-driven company. We’ve got one income so we’ve got to make sure we get it right or we’re never going to get there,” he said.

Within five years, he said, the company hopes to have a significant ship-share in North America close to 10 percent. “We would like the company to probably expand and have made an astute acquisition in that period,” while holding on to market share in capped markets such as Australia and New Zealand.

“We’ve got the potential here, and we’re building infrastructure to grow here so that’s the number one priority,” Gladstone said.