The New Face of Innovation

Twenty-one-year-old Hien Nguyen sold her video slot patent to Konami Gaming in May, not long after completing the first semester of the UNLV Gaming Institute’s Gaming Innovation Program, which was conceived and taught by Dr. Mark Yoseloff, pictured right.It’s no secret that the casino gaming industry is facing a challenging future, as younger customers show more interest in the social games on their smartphones and less in traditional offerings on the gaming floor. But gaming industry manufacturers, operators and educators aren’t sitting still. In fact, the industry is seeing a new openness to innovation and fresh ideas.

One approach is to help aspiring young developers come up with new game concepts as the University of Nevada, Las Vegas’ new Gaming Innovation Program did for the first time ever this year—with surprising results.

Just a day or two after celebrating her 21st birthday in May, University of Nevada, Las Vegas William F. Harrah College of Hotel Administration student Hien Nguyen signed a deal to sell her patent for a new video wagering game to Konami Gaming. Her creation, called Domino Dragon, is a Chinese domino video wagering game that includes a new method for determining slot machine winning outcomes using elements of Pai Gow tiles.

It’s just one of many examples of how the gaming industry is looking beyond traditional avenues for new innovative concepts for gaming products that may soon prove as captivating to players as Wheel of Fortune slot games are to the traditional crop of players.

Nguyen developed the game last fall during the first semester of the Dr. Mark Yoseloff Gaming Innovation Program. The game concept caught the attention of many manufacturers, but Konami saw the commercial potential for the product.

“By evaluating and ultimately purchasing the new game patent of a young UNLV student, Konami has demonstrated that we are always looking for new sources of innovation,” said Steve Sutherland, chief operating officer and executive vice president at Konami Gaming, Inc.

For Nguyen, it’s been an incredible ride, and she is thankful for the help and support of Yoseloff and the university. “I never imagined I would have a gaming innovation I can sell,” Nguyen said. “It’s an amazing thing that happened to me. It’s like a dream come true.”

Yoseloff, former chief executive officer of SHFL Entertainment, teaches the course, which focuses on gaming commercialization concepts and technology, the patent process and successful business strategies.

Yoseloff said the sale of Nguyen’s game concept is testament to the quality of ideas coming out of the gaming innovation program. “Things are moving very quickly. When we started in the fall, I had no idea if we would even get one patent,” he said. The program’s debut course yielded not only Nguyen’s concept but also 11 other student-developed game ideas currently in the patent process.

“It’s the beginning of something I think will be really amazing,” Yoseloff said. “With the new Center for Gaming Innovation, we’re actually expanding the teaching to include the community as well.”

The course will expand to include as many as 20 community members in fall 2014 as part of the proposed new Center for Gaming Innovation. The center is supported by The Knowledge Fund, created by the Nevada Legislature in 2011, to promote research in areas Nevada has targeted for economic growth.

The Yoseloff Family Charitable Foundation initially provided $250,000 in 2013 to launch the course and to assist students with the patent process, and the John Kish Foundation provided cash prizes for the winning projects from the classroom competition.

The gaming industry needs programs such as the one at UNLV, as the industry has seen flagging interest from the younger demographics toward traditional slot games, Yoseloff said. It’s no easy process for someone to break into the industry with new concepts. “It’s been clear to me for years that the ideas come from everywhere, and we have to stop being such good gatekeepers [in the gaming industry] and maybe open up the gates a little bit,” he said. “What the operators would like is more variety. What the gamblers would like is more variety, and I think it’s going to become easier and easier for less established inventors and entities to make inroads,” he noted.

Sutherland said Konami is committed to seeking out new sources of innovation.

“The level of competition among gaming manufacturers increases every year,” he said. “In fact, we have some customers with as many as 18 slot machine brands on their floors. At the same time, our customers­­—the casino operators—are searching for ways to attract new guests to their properties. It is therefore important for Konami to find new sources of innovation in order to develop new products that can help our customers compete and have success.”

Bally Technologies’ EBS Social Link allows casinos to integrate bonusing events with social media.Sutherland noted that Konami Gaming’s parent company is uniquely positioned for success because it has multiple sources of innovation within the company.  “As a global developer, manufacturer and supplier of amusement products, video games, online entertainment, pachinko products and fitness equipment, we have the ability to tap our various R&D centers around the globe for unique concepts or game components that we can use to enable our casino products to provide innovative forms of entertainment.”

The gaming industry has reason for concern about the need for new innovation. The Las Vegas Convention and Visitors Authority’s 2013 Visitors Profile, for instance, shows visitors to Las Vegas are getting younger. The news that the average age of visitors is now just under 46—four years younger than the average age just five years ago—is disconcerting for casino operators and manufacturers because younger visitors tend to be less interested in playing slot machines and more interested in casino amenities such as nightclubs, restaurants and other entertainment. In fact the percentage of visitors who gambled also dropped to 71 percent from 83 percent just five years ago.

“We face a big challenge on the slot side innovation and how we need to get there quicker,” Melissa Price, Caesars Entertainment senior vice president of gaming, told an audience at Bally Technologies’ recent EMPOWER 2014, formerly Systems User Conference.

“We have to figure out what the heck is going on and how were going to attract these younger demographic,” she said.

Caesars recently brought a group of twenty-somethings to Caesars Palace to get their feedback on gaming trends and interests. “The stuff they told us about slots was startling to me. They had no interest in even being near a slot machine. They didn’t want to sit down in front of one. They didn’t want to walk around the slot area. They made comments from, ‘Oh, that’s not for me’ to ‘No, that’s what my mom does,’” she said. “A couple of them told us the last thing they would want is to have their photo snapped in front of a slot machine and have it posted somewhere.”

Interestingly, however, when they had a chance to play Caesars Interactive online slots for fun, “they were actually pretty excited about the content,” Price said. “I think that tells us a lot about what we don’t want and how we have to innovate to change the paradigm and how to engage the people who are coming to our casinos. We have so many great amenities and we want to be able to engage them on the game side [too].”

The industry is not taking the situation lying down, but is taking a proactive approach toward looking at new and different ways to give that younger visitor a reason to spend more time on the gaming floor.

“Younger players are not drawn to slot machines on the casino floor in the numbers the industry would like to see,” according to AGEM Executive Director Marcus Prater. “We have to think about how to change and stay current given the entertainment options that are out there. Casino visitors are trending younger and yet we’re not giving them any real options from a slot perspective.”

In June, a Nevada legislative committee heard a proposal on behalf of the Association of Gaming Equipment Manufacturers (AGEM) to change state gaming law to allow for variable payback in slot games with skill bonus features. The rule change, if enacted, would allow players who become highly proficient at the skill element bonus round to boost their payback percentage potential by as much as 5 to 7 percent or whatever range the operator selects.

The Nevada Legislative Committee to Conduct an Interim Study Concerning the Impact of Technology upon Gaming accepted the proposal, which will be presented for consideration to the 2015 Legislature.

The proposal “would expand the authority of the Nevada Gaming Commission to promulgate regulations that encourage development and deployment of gaming devices incorporating innovative, alternative and advanced technologies.”

The move is in line with Gov. Brian Sandoval’s efforts to try to open up a discussion about “what can we do as a state to make sure we remain on the forefront of gaming technology,” Prater said. “It’s a chance to change the way we think about these games without taking away from the spirit of fairness to all the players. What we’re asking in this case is to give us some flexibility to add new bonus round features that would change a player’s perspective of what a traditional slot has offered in the past. Without this change to the law it’s very difficult to innovate beyond where we’re at now.”

The hope is the change could help stem the tide of flat or downward-trending slot revenues by attracting a younger demographic that shows little interest in current slots, Prater said. The change also would allow casinos to reward its better customers in new ways. For example, a dollar player might rather have a 97 percent payback on a game than a 92 percent payback with a coupon, he said.

“This can be done in a very transparent way. For the first time the player will know what the base game pays back and that if you’re really good at shooting down enemy planes or answering trivia, you can give yourself a 97 percent payback,” Prater said. “It opens the door for competition among players.”

Prater noted that companies that have made games with skill elements haven’t been able to offer enough of a skill factor reward to make a big enough material difference in the game to create much of a following yet.

Gaming manufacturers are stepping up with all kinds of new innovative technologies and products.

A recent move that has attracted some attention is the Nevada Gaming Control Board’s recommendation for licensing approval for Glendale, Calif.-based Gamblit Gaming, a gaming developer, recently received preliminary approval for three licenses that would allow it to operate in Nevada.

In recommending approval to the Nevada Gaming Commission, the Nevada Gaming Control Board indicated the company’s concepts, including one that would combine a social gaming-type game similar to “Words With Friends” with a traditional slot, show promise as game changing for the industry. The Gaming Commission was expected to consider the recommendation June 19.

“We’re primarily a technology company and what we want to do is really have our technology be a bridge between the gambling world and the games world,” said David Chang, chief marketing officer for the Glendale, Calif.-based Gamblit.

“Gambling is a very unique industry in the sense that it’s highly regulated,” he said. “What our technology does is handle the regulated elements, the know your customer stuff, the regulated RNG and all of the things that would be really scary for a game developer to be working on. That frees up the game developer to create and produce a lot of interesting results that we think are going to be really attractive for a certain segment of the market.”

Konami Gaming’s Rapid Revolver combines a video reel experience with an oversized top box featuring six cylonic spinning reels, giving players multiple bonus features and more.At EMPOWER, Bally Technologies showcased a variety of its innovative content, including its Take ‘N Play product, which allows players to take their game “on the go” for the first time by playing a physical slot machine on the convenience of a tablet; its Mobile Wallet technology that allows players to load credits onto their game directly from a mobile phone or tablet; and its Social Link feature that is part of Bally’s Elite Bonusing Suite and enables casinos to integrate bonus events with their social media. Bally officials also referenced its recent deal to purchase Dragonplay, a leading social casino, joining International Game Technology and other manufacturers that have invested in the social gaming space.

“I think it’s an opportunity for innovation,” Bally Senior Vice President of Technology Bryan Kelly said of the need to reach out to the younger demographic of players. Bally is taking an aggressive approach to exploring elements of social gaming and other newer technologies that can drive new play, particularly from a younger demographic.

“If you stand back and look at the products that exist at the game and who they cater to, they don’t have these great experiences that they have out in the social gaming world,” Kelly said.

Gaming companies need to employ some of those social “gamification” elements, such as social bragging about achievements and community play features on the casino floor.

“In the focus groups that we’ve been doing, our customers have been telling us to do it. The casinos are going to demand they have this stuff on the floor to make their floors relevant,” he said.

In one of his presentations, Kelly pointed out the need to provide “hooks to social media.” Younger people want to have electronic connections to their friends, he said. One of the attractions, for instance, that Dragonplay offers is something called the “Slot of Fame,” which actually highlights top players’ faces.  “The social links are one of the key factors. We know that the casual gamer likes these gamification techniques, and our job is to get them on the products that we sell today,” he said.

At International Game Technology, the company also is invested in seeking out new innovative concepts, said Joe Sigrist, vice president of game development and global product management. In fact, IGT invested heavily in the social gaming arena in 2012, purchasing DoubleDown Interactive LLC, which operates DoubleDown Casino, the world’s largest free-to-play social casino.

“One of the good things we have started to do is to test concepts on DoubleDown,” Sigrist said. “There is definitely an overlap in the demographic between DoubleDown and a casino goer,” he said. “What we’ve been doing is starting to trial concepts, and especially newer concepts, to kind of push the envelope of innovation and give feedback quickly from DoubleDown players.”

This, he said, can help speed innovation to market because the company can better understand the product and its potential before investing a significant amount of resources to a casino slot game that would have to go into the entire regulatory process. “It just takes up less time to develop a concept in an online environment than putting it on an EGM. So for us DoubleDown is a great way for us to validate and especially trial concepts that are pushing the envelope of innovation on the casino floor.”

IGT also is focused on reaching out to the younger demographic through its video Reel Edge games that offer a skill element in the bonus round, Sigrist said. “So once you get to the bonus round you have a joy stick in the machine and you’re able to navigate through a path, if you will, to collect coins or whatever so that you could influence the outcome of your bonus round.”

Sigrist sees real promise in the skill area. “An area to really start thinking about even in a base game is being able to influence the outcome of a game, which I think is what the younger player wants,” he said.  “I think they also very much want to understand why they win and why they’ve lost, and on many slot games [in the industry] it’s not always clear or obvious why you’ve won or why you’ve lost,” he said.

“For a younger person who’s not attracted to slots in general, they may not have the patience, frankly, to invest the time to get to that point the other players have got to,” Sigrist said. “We need to make it more obvious so they have a greater understanding of why they’ve won and why they’ve lost, very quickly,” just as the social games experience provides.

Sigrist said IGT also is exploring bringing some of the social game concepts from DoubleDown and experimenting with them on the casino floor. “In our quest to push the envelope of innovation on the casino floor, we’re definitely going to take some risks and release them for slot machines on the casino floor,” he said.

IGT also plans to continue offering innovative games using licensed brands such as its Avatar products. “Our first Avatar game clearly attracts a broad demographic. We’ve had very strong success with [our] first Avatar game and we’re about to offer our second Avatar game,” he said.

Some iconic gaming products will likely stand the test of time. Take, for example, Wheel of Fortune, which is still going strong on casino floors more than a decade after its introduction.

IGT continues to invest in ways to keep Wheel of Fortune fresh and appealing to players young and old. “Wheel of Fortune transcends generations, “ Sigrist said.

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