Konami Gaming—Making Big Waves

Konami. It’s a Japanese word that translates to “small wave.” While it may describe Konami Gaming’s introduction into the gaming industry, I wonder how applicable it is today. Konami is making a big splash and is poised to be one of the top three slot manufacturers in North America.

Konami offers a comprehensive solution for the gaming industry. From myriad slot games in various platforms and segments, from mechanical reels to video to progressives and participation games, to slot systems, Konami is experiencing tremendous growth during a time of economic slowdown.

“We are trying to bring entertainment that the player can experience only at a casino; entertainment that is not possible at home,” explains Yuji Taniguchi, vice president of games research and development. “This is our motto and challenge. We are bringing a lot of new products to the market and working very hard to achieve that progress.”

With a new platform about to be released, a new cabinet and several new gaming models, progress is most certainly assured. “We are focusing on two key areas,” continues Taniguchi. “The first is mechanical gaming. We believe that the mechanical slot is necessary for the casino player in order to provide excitement and entertainment that is very casino-oriented. We are continuing to have new product development in the mechanical segment. The second focus is in video slots. We will be releasing many new titles, including some premium titles with real-time 3-D graphics.”

Great Today
K2V™, the current operating system and platform, provides a great base for current Konami games. For example, on Advantage 5™, it enables full-color reel backlighting and infinity lighting on the top-box. Multi-color LEDs provide enhanced lighting features, compelling attract modes and tie lighting effects to rewards features.

Konami has a diverse product line that delivers traditional gaming experiences as well as unique, must-see content. For instance, Advantage Revolution™ is a 3-reel stepper machine with two LCD panels on either side of the reels. The reel box sits on a vertical axis that actually rotates during the bonus round and during attract mode. It includes SAS 6.0 compatibility with AFT/EFT functionality. Released in April 2010, Advantage Revolution has become one of the top performers in the lease-participation category.

Better Tomorrow

Ross O’Hanley
Konami is about to release its new operating system and platform, KP3™. More powerful than its K2V predecessor, it features a CPU with 40X faster processing, a graphic engine nearly 50X faster and graphics resolution increasing from the current 800 x 600 limit to 1280 x 800 and enabling real-time 3-D graphics. There is an upgrade path from K2V to KP3 on Podium™, which benefits early adopters of the Podium cabinet. G2S standards require a powerful platform, and the processing power of KP3 fits perfectly. It will use TCP/IP communication and a G2S-based service window on the device.

“Most important is the power of the platform allowing our game designers to push creativity going forward for an enhanced gaming experience long-term,” says Steve Sutherland, executive vice president and COO. “It provides more bandwidth for the game designers, allowing them to be more creative. It also provides the ability for more additional collaborative efforts with third-party designers, but of course we look internally within the Konami family for game designs first.”

With the increased processing and graphic power comes the ability for computer graphics to be viewed from any angle. This comes from a synergy with one of Konami’s largest business units, Konami Digital Entertainment in Japan. A storied history of phenomenal arcade and entertainment devices has produced world-class graphics. Using graphic engines developed by Konami Digital Entertainment allows more freedom of graphic presentation. Using their library, the real-time physics calculation for 3-D graphics is realized. At G2E, there will be a presentation of 3-D graphics on Podium cabinets driven by KP3.

Steve Sutherland
“The Podium, Advantage 5 and Advantage Revolution cabinets have been very successful for us,” Sutherland says. “We have borrowed much from the Japanese arcade market, taking the most successful parts and incorporating them into the new products.”
In order to keep up with strong customer demand, Konami continues to increase its annual output of titles. KP3 will be released with 15 new titles with 15 further titles ported from K2V. Regulatory approval is expected prior to G2E. At G2E, 20 new titles will be introduced that will be compatible with the current K2V platform. Four new titles will be introduced for the Advantage Revolution and another 10 new titles for Advantage 5.

Podium Cabinet
“On the gaming floor, you are going to see the introduction of KP3 electronics,” says Taniguchi. “The introduction of those electronics provide us with the ability to enhance the gaming experience with the patrons on the video platform. Add in the 3-D experience and side-button panels, we will have games with more of an amusement experience, unlike anything that has been on the market before.”

Jackpot Island™, one of the first KP3 titles, incorporates elements of skill. It features two punch-outs on the side of the game that operate just like buttons on a pinball game. In the bonus round, the player will launch a ball to win extra credits. It will incorporate a subtle skill element to appeal to a younger player demographic which is familiar with video games.

Full Moon Diamond™, released on Konami’s KonXion™ platform, is one of Konami’s best-performing video titles on Podium. The new KonXion series features hexagonal-shaped symbols in a 4-5-4-5-4 configuration. The extra symbols provide more combinations and more opportunities for players to win. It is also a break from the traditional reel configuration, which distinguishes Konami from its competitors, and is easy for players to identify on the casino floor.

Tom Soukup
Podium was named with the famous Olympic medal stand in mind. This fits perfectly with Konami’s goal of being one of the top three gaming machine manufacturers. Podium is a sleek, ergonomic cabinet taking advantage of lighting and style, all packed into a smaller footprint. Perhaps the most visible feature is the 360 degree lighting panels, edge-lit by color-changing LEDs. It’s eye-catching and highly visible, backed with dual high-resolution LCD panels and a great game base.

“Podium is one of the most popular cabinets in the market,” Sutherland says. “Even considering the popularity of Advantage 5, this is our most successful cabinet to date. A new slant version, which will be debuted at G2E, is highly anticipated by our customers.”
There is a considerable renewed interest in slant-tops recently as casino operators have become more focused on the sightlines of their casino floors. The advances made in the Podium upright promise to make the Podium slant a winner. Subject to regulatory approval, the Podium slant should be released in early 2011.

Advantage 3
Advantage 3™, a new cabinet following in the footsteps of the Advantage 5, will incorporate the best of that model and utilize three spinning reels. The new cabinet enables full-color reel backlight and the infinity lighting on the top-box. Two new titles will be introduced at G2E, with a predicted eight titles released annually.

Linked Progressives and Participation

Yuji Taniguchi
Beat the Field™, Konami’s very successful entry into community-style gaming, will be followed up with Top Track™, which features a grand prix auto racing theme.

Konami has secured the intellectual property rights to the song Rock Around the Clock, best known from Bill Haley and the Comet’s 1954 recording. This will be used on Advantage Revolution and Advantage 5 cabinets. Combined with success of the song, the bonus rounds will be very exciting. Konami will display its first four titles (two on Advantage Revolution and two on Advantage 5) featuring Rock Around the Clock at G2E.

With the capabilities of KP3 will come a new linked progressive game, Fortune Chaser™, which includes a community-style bonus. Konami’s own jackpot controller will be utilized within KP3, pending jurisdictional approval.

Systems and Networking
“It takes some fine tuning and a lot of time to get a networked floor to work correctly,” explains Tom Soukup, vice president of research and development (systems). “We’ve been doing networking since 1998. We’ve been doing this for a long time and have systems maturity. Our system will scale up to a 10,000-slot casino with no problems because we’ve already done the work.”

“KCMS™ (Konami Casino Management System) has supported a fully-networked floor since 1998 and fully multilingual since 2005. Video streaming to the in-machine display, new to some manufacturers, has been used in KCMS since 2004. Multi-protocol support allowing the same in-machine hardware to talk SAS and G2S has been supported since 2007, and game-level tracking in a multi-game with multi-indexes has been functioning since 1998. The ability to do all of this is based upon the networked infrastructure,” Soukup says. “Konami made decisions back in the 1990s that would shape our networked products and solutions. Other companies are looking to do that and take credit for that, but we’ve been doing it for a long time. Since it is an integrated network system, we just did a recent analysis of the customers and determined we have a 99.99 percent uptime. Therefore, KCMS is the most reliable system in the marketplace.”

Card-Based Wagering
Yet another new feature to be introduced at G2E will be card-based wagering. Originally scheduled for high-limit rooms, it will allow players to put funds on deposit to their card with the ability to download the funds into the machine. It will first benefit players of high-denomination machines, removing the task of inserting several bills in order to build up sufficient credits for play.

Marketing
Traditional marketing incentives have included a post-visit analysis of the player’s wagering levels and direct mail programs that offer incentives to encourage a return visit. These frequently involve a monetary bonus designed to encourage future play.

Konami’s marketing system includes a variable-return, real-time marketing offering. The marketer can determine the average amount to be offered to the player within a range of bonus amounts. Perhaps a player will be offered an average of $25 in credit. The variable-return marketing bonus could be set up to give them between $1 and $50, resulting in the desired average. This would be offered to the player while they are still in the facility and playing. An interactive bonus game, played on the service window, would provide the marketing bonus, with the addition of an exciting side-game. In one animation, a dog is digging up a bone. The player can pick the location where he digs, and the reward is a variable bonus. This keeps the marketing incentive fresh and allows for a different outcome each time. This brings the marketing offer in line with an in-game bonus, where the awards are available within a range of outcomes.

“A lot of other bonus games are offered on marketing kiosks around Las Vegas,” Soukup says. “Ours is actually customized for that player and basically the display becomes the kiosk. The casino operator doesn’t have to invest in extra kiosks. By offering the marketing incentive in real time, bounce-backs give way to real-time, on-the-floor marketing.”

Card-Level Automation
One of the other items that will be showcased is card-level automation. Traditional player cards don’t offer any indication of the player level or how close they are to obtaining the next level. Players have to visit the VIP desk where information on requirements for the next card level and current entitlement is sometimes difficult to obtain. With KCMS, the player is able to instantly view their level directly at the machine. If card levels are valuated once a year, they can visually track where they are in order to retain their current level, and then once they have that, to see how many points to get to a higher level.

Random Draw
Many casinos, especially local casinos, perform random draw marketing awards. Once the draw is made, the winner is announced on the public address system and the player visits the VIP desk in order to receive their prize. The announcements can be distracting to the players and the winner may not hear the page. A new KCMS feature allows the draw to be made and a ticket printed at all machines with carded play. The winning player is announced to all eligible players. Marketers can schedule when the draws are made and greatly automate the process. The announcement goes directly to the winner and everyone else is informed about the draw.

Messaging Service
A natural step from the random-draw solution is an in-machine messaging service. Instead of paging people on the casino paging system, a message can be sent to an individual machine. This allows hosts to contact VIPs, as well as providing a non-intrusive service to groups. Announcements about a bus departure can be made to the appropriate players from that bus tour. Or, a player can be informed that a reservation at the restaurant is ready, for example, allowing them to play instead of waiting in a buffet line.

A future example of this service will be a Droid application for mobile phones. Players can be notified of events on their cell phones, as can casino staff. Hosts can get information about VIP players while they are on the floor. A slot-dispatch system could be utilized within this application to provide rapid, efficient customer service.

Players can use this application to look up their player’s club points, issue themselves a comp, change their pin number or monitor LotABucks™, Konami’s service-based community bonus that plays across all Konami slot machines. Progressive levels can be seen by players before they visit the casino. If enabled by a participating casino, a player could issue themselves a draw ticket. If they win the draw, they would be required to pick up their prize in the casino.

Networked Solutions
Some manufacturers have download/configuration servers allowing the interchange of assets to machines. This allows for remote configuration of gaming machines as well as the downloading of content and configuration, creating a dynamic slot floor. Konami has a system-to-system interface that will allow their assets to flow over these servers through the KCMS system, fully supporting networked solutions.

Ship-Share in a Bad Economy
It is no surprise that slot replacement cycles have increased and sales opportunities have decreased. “Across North America, we have experienced a growth in ship-share and we’re expecting it to continue to grow this year,” Sutherland comments.

“Konami is experiencing tremendous growth. We generated 11 percent ship-share in North America last year,” states Ross O’Hanley, senior director of game sales and marketing. “So far in the calendar year 2010, that has grown to 13 percent. If the present trends continue, we expect our share could increase beyond that 13 percent mark for calendar 2010. We just captured 18 percent of the floor at the first casino opening in Maryland, Hollywood Perryville. With 271 units shipped for that property, it was a record for us for an opening. In addition to direct sales, our participation business has grown dramatically. Two years ago, we had approximately 1,600 lease-participation units, and now we have 4,000 lease-participation units on casino floors.”

“Our key point is to ensure that when the economy turns, that we know our ship-share will continue to increase and to make sure we can increase with a normalized economic market,” explains Sutherland. “We have had significant planning over past five to six months to ensure that we can handle that. We have experienced very significant increase in volume where we are going to have to implement these plans sooner due to increased volume of ship-share.”

“We are very methodical in what we do. We are very strategic and focused. We get a number of questions about pursuing the Illinois bar/tavern market or the Italian VLT market. We have made strategic decisions in those areas that we believe offer the best ROI. We’re not distracted by non-core markets. The Illinois bar/tavern market will see approximately five games per site, and each one multi-game. This is not really consistent with our focus. At the moment, our focus is on the core Class III gaming market and bringing that entertainment to the customer. Our technology is the baseline with which we design all of our entertainment experiences. We want to ensure it’s the most current and robust technology in the market.”

Performance Gives the Answers
Konami’s recently introduced Advantage Revolution is realizing at least twice the house average in terms of performance at most locations. Some games have reached 3X to 5X house average. In Konami’s participation products, operator’s net-win (win after fees) is showing these products to be a very good value opportunity. For purchased products, many casinos’ 2 to 3 year old Konami games are still among the top 10 performers on the floor. It is a testament to Konami’s strategic goals and their execution of these goals. The realization of demanding goals is extremely difficult in a poor economic climate, yet Konami is able to gain continual forward momentum.

“We are determined to be one of the top three suppliers in the gaming industry,” Sutherland states. “We focus on understanding the efforts and actions required to achieve that goal. We’re very well positioned to be in the No. 4 position by the end of the year. We’re making steady progress toward No. 3.”

And so the small wave is making a big splash in a highly evolved, highly competitive market. True to their roots in an entertainment industry, Konami is able to apply the right formula in the proper proportions to realize their goals. They may reach that podium yet.

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