Entertainment and engagement seen as key drivers for Macau machine market

Gaming equipment suppliers are upbeat about the prospects for Macau with $27 billion worth of new properties coming onstream in the next few years but, as the market shifts towards the mass player, entertainment value and player engagement may be the key to the winning hand.

The six Macau operators will all be opening new properties over the next two years and with the government indicating it will stick firmly to its cap of not allowing a more than 3 percent annual increase in gaming tables, operators will be looking at alternatives to fill the floors.

At the recent G2E Asia, there was an impressive array of content designed and built specifically for Asia, after companies realized a few tweaks to U.S. products wouldn’t be enough to appeal to the Asian imagination.

However, the Macau market continues to evolve from the dominance of VIP-driven table games to the mass market and to players increasingly looking for interactivity with the games they are playing, creating challenges and opportunities for suppliers.

“Even though gross gambling revenue in Macau is down, with six new properties opening we’re going to get some sales because they need products on floors,” Ken Jolly, vice president of Scientific Games Asia said in an interview with AGB.

He said electronic table games and slots will be the obvious winners, however, casinos will seek to be more creative in an attempt to differentiate themselves.

“That mass market person is going to be looking for theming and a different style of experience. That’s probably why Sands has decided to develop a Parisian theme compared with what it was originally planning to do because they know that captures the imagination of the mass player, who is really just a visitor to Macau who ends up playing because they are in the casino.”  

Scientific Games was showing off the latest version of its successful Duo Fu Duo Cai with a new Asian-themed progressive link called Da Fu Da Gui, which means “big riches, big honors. The game features the original babies, but now grown into toddlers. The company has installed more than 6000 of the original game worldwide since it was introduced two years ago.

Sabby Gill, senior vice president international sales at International Game Technology also said he was confident the company now has the right products for the Asian market and is optimistic about the group’s prospects in the new casinos.

“The games we have now come out with and that we are showcasing are a completely different animal from those anywhere else around the world. The math is different and they are specifically built for the local market here in Macau.”

“The games that we are finally coming out with over the past six to seven months are really starting to make waves and gain traction in the local market,” he told AGB.

Gill said Galaxy Entertainment has upped its originally planned purchase order for Phase 2 based on the successful performance of games in its existing casino. The company is introducing several of its linked progressive machines and new games such as San Xing Bao Xi.

On a panel discussion, IGT CEO of international Walter Bugno said the company has high expectations for the San Xing product, which features two base game themes, Dragon Dynasty and Golden Frog, and boasts a series of play mechanics designed to elevate player excitement and encourage players to bet up.

“There’s an entertainment value and more increasingly so an engagement value. People want to engage with the game beyond the tapping of a button and that’s where a lot of our efforts go, towards creating a level of engagement through our various bonus opportunities that are built into the game,” he said.

After the recent wave of consolidation in the industry, the companies agreed that they are not necessarily better placed in terms of bargaining power with the operators, but that economies of scale had allowed for greater depth in the research and development budgets.

“Scale enables you to focus your R&D on future developments,” Scientific Games president and CEO Gavin Isaacs said in the panel session. “You are only as good as your last game. You want to make sure that the company you are making the investment with has the content to support that cabinet for the life of how long the operator wants it to be there.”

“In the old days, they wanted to keep a cabinet for five years and then throw it away, that doesn’t happen any more. These days a customer would like to keep a cabinet on the floor for 100 years.”

Gill agrees, saying companies now need a big library and an investment plan. “We will be introducing a continuous amount of new games over the next six to nine months all based on the version 1.1 standard and really getting those out to market.”

Scientific Games, which completed its $5.1 billion merger with Bally Technologies in November last year, says it’s on track to achieve the $235 million in cost synergies expected from the transaction.

IGT completed its $4.7 billion merger with Italy’s GTECH in April, with projected cost synergies of $280 million by the third year after closing, while Aristocrat Leisure last year said it was merging with Video Gaming Technologies for $1.23 billion.

“Big companies have different strengths,” Jamie Odell, CEO and managing director of Aristocrat Entertainment said during the panel. “In terms of the value chain across the operators and ourselves, it will come down to the product that gets the best return on investment. If we can make more money and the operators make more money, then you will get the pricing power.”

Much discussion at the show revolved around potential new product developments, with the possibility of skill-based games, which have just been approved in Nevada and the convergence of mobile and social gaming. The companies are also looking at tablet style devices that can be used anywhere within a licensed casino, including restaurants and smoking rooms.

“With the mobile technology, with the innovation in all of these things, that’s where we’re going to really benefit in the long term,” Gill said. “We are excited about some of the opportunities going forward.”