Eastern European suppliers target Asia gaming floors

Published in: Latest Intelligence

Gaming suppliers from across the globe have set their sights on Asia, though one set seems to be pushing particularly hard to gain a foothold in the region, as companies from across Eastern Europe move aggressively to shore up stagnant growth at home. A recent report by UBS estimated that gross gaming revenue in Asia’s big five markets is likely to rise about 11 percent a year on a compound average basis to reach $98 billion in 2018, from $59 billion in 2013.

The UBS research also points out that Macau and the Philippines could deliver the fastest growth in the short term among the region’s major markets, which include Singapore, Malaysia and South Korea.

That compares with projections for growth of just 4 percent from 2011 to 2015, when revenue is expected to hit €13 billion ($17.4 billion), according to the European Commission.

“Europe is in deep crisis and coming out of this crisis might be a lengthy and painful process,” Julia Barbakadze, advertising manager of Latvia-based DLV said. “Regions such as Latin America and Asia Pacific, on the contrary, follow the course of active development, and these regions are receiving significant investments.”

Slovenia-based supplier Comtrade Gaming told AGB that the company is currently exploring options for opening an office in Asia from early 2015.

Tougher operating conditions and stiffening competition in traditional gaming centers have increased the allure of Asia and sparked a recent wave of consolidation amongst suppliers elsewhere. For example, Italy’s GTECH recently announced plans to buy International Game Technology for $4.7 billion while Australia’s Aristocrat Leisure said it bought all the assets of Paltronics Inc., a supplier of complimentary gaming products and systems based in Crystal Lake, Illinois.

Slovenia-based Alfastreet Gaming sales manager Ana Zlender says the Asian market accounts for a significant number of the 50,000 electronic table games it has sold so far.

In addition to the five major jurisdictions highlighted by UBS, Eastern European suppliers also see opportunities in some smaller emerging markets. Bulgaria-based Casino Technology, for example, is looking towards Cambodia, Laos and Vietnam.

Slovenia-based Interblock is another example. The company successfully installed Queen Roulette with 10 play stations, the company’s third-generation of electro-mechanical roulette, inside Vegas Club in Ho Chi Minh City, Vietnam in mid April last year.

Hyunho Cha, Director of Investments at Vegas Club, said: "Our club is definitely convinced that newly installed Queen 10 (will) show the satisfactory performance as the other two products from the Interblock family from G3 and G4 generation did."

"That is why our club does not wish to have any other brand in the roulette sector beside the Interblock brand," he added.

Currently Interblock products are installed in the Philippines, Vietnam, Singapore, Malaysia and Macau.

However, as the booming market attracts more global investment, so competition has mounted, with Slovenia-based Spintec’s regional sales manager Petra Remec calling it “the most challenging gaming environment for suppliers” in recent years.

Remec said operators and players are highly demanding and as such only suppliers with guaranteed reliability, access to authentic, up-to-date equipment and in-depth industry knowledge can gain a competitive edge in the market.

Boštjan Krašovec of Slovenia-based Gold Club highlighted the need to understand the Asian mentality, as well as keeping pace with ever-changing legislation, as two key challenges facing suppliers coming into the region. He cited Macau as an example, saying the frequent changes to legislative requirements on gaming equipment, forcing suppliers to adjust their products, can be costly.

For example, in 2012, the Macau Government for the first time enacted a set of local rules requiring all new slot machines to fully comply with the new standards. With the objective of ensuring fairness, security, reliability and auditability, all games are now required to have a dual version of game rules, instructions and prompts in Chinese and English. For gaming machines which simulate a live casino game, they must have an identical return to player rate (RTP).

Krašovec said small-to-medium sized suppliers may have the edge when it comes to adapting to a changing landscape as they are able to be more flexible than bigger companies.

Rumiana Parusheva of Casino Technology said the company conducts “careful research and in-depth analysis of local specifics, trends and attitudes” in order to adapt its products to local tastes. This year Casino Technology has launched a series of Asian-themed games with reference to Chinese mythology, such as the Peacock and Dragon.

Barbakadze said that DLV also takes local culture into consideration when the company designs its products. For instance, DLV has a three-level Dragon Jackpot with a combination of red and yellow color tunes customized for Asian audiences.

Apart from adaptation, some suppliers focus on product functionality. KARMA, Spintec’s product for example, is an automated roulette with a virtual wheel and live table connection installation. Remec said the product is designed to offer extreme comfort to players and thus to guarantee longer gaming sessions.

Testifying to the success of marketing its products to operators, Remec cited Spintec’s partnership with Asia Pioneer Entertainment in Macau that has seen Remec products installed in key gaming floors including the City of Dreams, Mocha Clubs, The Venetian, The Grand Lisboa, and Macau Galaxy.