Three’s Company For GTECH’s Gaming Solutions Division

Think hotdogs, beer and baseball on a Saturday afternoon. Iron, carbon and zinc forged into corrosion-resistant steel. Larry, Moe and Curly. Neapolitan ice cream. The Three Musketeers. If the whole is greater than the sum of its parts and all good things come in threes, so they say, then the GTECH/SPIELO/ATRONIC merger is nothing short of a trifecta/hat trick/triple threat in the global gaming marketplace.

But before there can be a sum, there first must come some simple addition. Before there was GTECH/SPIELO/ATRONIC, there was GTECH/SPIELO and ATRONIC; before that, GTECH, SPIELO and ATRONIC.

The galvanization of the three companies began in 2004, when lottery systems giant GTECH acquired the quietly impressive video lottery manufacturer SPIELO. At the time, GTECH was the industry leader in central lottery systems and SPIELO was one of the leading providers of games and machines within that same lottery environment. Spotting synergy between the two companies, GTECH made a strategic investment to acquire SPIELO, with the goal to create more powerful and meaningful solutions for video lottery operators worldwide. Through the acquisition, GTECH created the Gaming Solutions Division to meet this goal. It also gave GTECH the opportunity to provide an end-to-end solution for its customers.

But GTECH’s Gaming Solutions Division didn’t stop growing with just one merger. “The vision GTECH had for its Gaming Solutions Division was, and still is, expansive,” said Victor Duarte, president and CEO of SPIELO and director of GTECH’s Gaming Solutions Division. “We knew that this industry required a level of critical mass and scale, and at the time, SPIELO alone was considered sub-scale compared to its competitors in most markets. So we wanted to develop some scale as well as play off of the growing convergence between the video lottery environment and the commercial casino environment.”

The end result was the acquisition of commercial slot manufacturer ATRONIC. Only a few months after the close of the SPIELO acquisition, the GTECH’s Gaming Solutions Division made a definitive agreement to purchase the Austrian-based ATRONIC Group. And with its artsy and highly popular licensed games, ATRONIC fit perfectly into the strategic plan.

By May 2008, after nearly four years of planning, assimilation and approvals in hundreds of jurisdictions around the world—not to mention the major buyout of GTECH by Lottomatica in between—the Gaming Solutions Division of GTECH was finally complete. Since then, SPIELO and ATRONIC, which co-exist in tandem under the GTECH umbrella, have been hard at work building off of each others’ strengths and formulizing a new joint strategy to offer comprehensive gaming solutions to gaming operators around the world. “Globally, ATRONIC focused on commercial casinos,” said Duarte. “SPIELO, on the other hand, focused on the VLT market. While there are some overlaps in these two markets, including racinos, we really needed to focus on eliminating the inherent redundancies between the two companies.”

As if that wasn’t enough of an undertaking, Duarte added, “And then came the financial crash, which put a substantial amount of pressure on all of us.”

Last January, as markets crashed, hold percentages hit record lows, convention sales and attendance plummeted, and room rates dropped so far below average that anyone could afford a room at the Wynn, Duarte and ATRONIC America’s COO Ken Bossingham strategized and forged ahead with their plan to introduce the Gaming Solutions Division’s value to gaming customers around the world. “Last year was a very challenging year,” said Bossingham. “We saw a reduction in demand for slot machines and gaming technology, along with a steady decline in gaming revenues.” But those challenges guided the company toward a higher level of excellence, primarily in content design and player philosophy.

And it was the combined strengths of GTECH, SPIELO and ATRONIC that made this step possible. “When you look at the commercial casino space, you’ve got the big four,” said Bossingham of IGT, Bally, WMS and Aristocrat. “ATRONIC by itself could never really compete with the big four because of the massive size of those organizations and the overall scale of their business. But now with SPIELO and our parent companies Lottomatica and GTECH, we can conquer the scale challenges that we had before.”

“We know we have the key components in place to drive the business forward.” he added. “The areas that we have to improve upon now are focused in the content area, our operating platform and hardware. ”

To keep its content market specific and appealing  to the North American player, ATRONIC’s American headquarters, along with two game design groups, have relocated to Las Vegas from Scottsdale, Ariz. SPIELO, meanwhile, has kept its game design infrastructure in Moncton, New Brunswick, Canada, which will retain its focus on  North America and some of the other regional government-sponsored and distributed markets. “We will take that same segmented approach to our international business as well,” said Duarte. “For example, the game development that’s happening in Austria will be focused on that regional market and those player requirements. We will do the same for other markets as well, whether that’s in Asia, Latin America or Europe.”

With this analytical, player-segmented, market validation-type approach to the release and development of new products, SPIELO and ATRONIC are also taking the time to ensure those products place “quality over quantity”—that is, only moving forward with games that exhibit real player appeal and deliver ROI for operators. “We have to be innovative and extremely creative in that approach and how we bring that entertainment value forward,” Duarte noted. One of the most notable ways SPIELO and ATRONIC have combined their resources to create something innovative for both customer sets is through delivering some compelling new content on the new prodiGi Vu™ cabinet.

The prodiGi Vu, originally designed and developed at SPIELO, was already a trusted and proven game platform before the merger, with colorful high-resolution graphics, crisp digital stereo sound, well-researched ergonomics, and a reputation for reliability and ease of service. Now, with ATRONIC’s extensive library of market-proven games, and SPIELO and ATRONIC both designing for it, the prodiGi Vu is better positioned in the marketplace than ever before. It’s also cooler than ever before, with a new computer platform called “sensys™,” which can handle enhanced graphics and sound. It also is built to allow content to be imported from other platforms no matter the developer. “The prodiGi platform allows us to deliver all of ATRONIC’s proven titles to customers around the world, but in the preferred cabinet,” Bossingham explained.

That doesn’t, however, mean the end of the dual-screen e-motion™ video platform. “We still have a product roadmap developed for the e-motion boxes that are still in the field, and will continue to support the recurring base that’s presently in place,” said Bossingham. “You will continue to see some of the linked products unveiled like the The Three Stooges® and Stargate™, that are going to be released on the e-motion platform, but all of our really new, innovative, exciting products will be developed for the prodiGi Vu.”

According to Duarte, slot technicians won’t have any complaints with that plan. “They say it’s the easiest thing they’ve ever installed,” he said. “It’s easy to support and maintain. Game conversions are a snap. We’ve had great feedback from the technical folks, but we’ve also seen—and it’s early, which is why I knock on wood—great performance in the markets where it’s been released. It’s currently in several jurisdictions and has been doing two times the house average in those markets. It’s early, but we think the machine has a lot of potential.”

ATRONIC and SPIELO plan to leverage the potential of the prodiGi Vu over the next couple of years by building on the two companies’ core competencies. “We certainly don’t want to over commit to the customers and then later on disappoint them,” said Duarte. “We want to make sure that when we approach customers, we come with products they can rely on, and that perform exceptionally well for the players. That’s really the focus of our game development efforts right now.”

“As we introduce prodiGi Vu, we will build products that actually leverage the capabilities of that platform,” added Bossingham. “We are showing some good things at G2E that we will bring to market in 2010.”

As for how these new products will be branded, take your pick of GTECH/SPIELO/ATRONIC. “We see huge value and recognition in both the SPIELO brand and the ATRONIC brand,” said Bossingham. “Our customers are already very familiar with ATRONIC products and SPIELO products, so we plan to represent both product lines under  the ATRONIC brand in the commercial casino space.”

“ATRONIC is going to take the prodiGi Vu and bring it to North American commercial casino customers, sell it as its own, and SPIELO is going to do the same thing for its customers,” added Duarte.

And that’s the really good thing about trios like GTECH, SPIELO and ATRONIC: they’re all for one and one for all.

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