What’s New, Pussycat?

Show and tell time in Las Vegas has rolled around again. Decided to use the oldie but goodie Tom Jones song title for my article’s headline. G2E 2014 is the most prestigious gaming exhibition known to mankind, where all the latest and greatest games and technologies are showcased. Time stands still for nothing, the real money game business has reached a point in which the technology that delivers the wagering entertainment has outpaced game innovation. Everything involved with technology is moving at light speed; however, when it comes to new games, it’s been in slot slow-motion replay for years. Let’s think positive about this year’s crop of new games and hope for some introductions that rise and shine to the occasion.

For the past couple of years, billion-dollar-plus acquisition deals have been the big gaming business news with several rounds of supplier consolidations taking place. Big fish continue to eat other big fish as well as the little ones. The cause of the shark frenzy? It’s the only way these public companies can grow and obtain bumps to their market share and bottom lines. New casino projects have slowed almost to a standstill; most major markets are mature to the point of being oversaturated. Many casino operators simply don’t make the kind of money that allowed them to refresh gaming floors on a regular basis the way they did in the past. Put all these factors together, and competition for slot sales is heated. Mergers and buying out competition is not a new business strategy to the gaming industry or any other, it’s the American way. Buying another company’s revenue when yours is at record highs, stagnating or going south fast is a tried-and-true solution to pump up the numbers and gain market share. When expansion slows or comes to a grinding halt, there is only so much business to go around. In weak economies, one must buy market share if it can’t produce the kind of products that can win it.

The gaming business has fallen on hard times in a lot of places around the world. On the other side of the coin, or should I say the world, Asia is booming.

However, the big game there is live baccarat, not slots. Macau’s fantastic revenue performance continues to rock and roll. As the Internet and mobile gaming worldwide market continues to grow at a double-digit clip, the keyword is worldwide, billions upon billions of people have access. The recent U.S. Internet experiment provided dismal results for a number of reasons, but limiting it to populations within the borders of the states that said, “Let’s do it,” was a very big one. A better gauge of what the profit potential would have been taking bets from the rest of the world and not from any U.S. jurisdictions where it was still unauthorized. I guess the rest of the world’s money is no good?

Sheldon Adelson doesn’t have to fight Internet gaming; all he has to do is sit back and let the politicians run it and tax the business to death. Poker only in Nevada? Come on people. How can any company compete with net pirates who pay no taxes and have no regulations and run wide-open casino game sites?

Where is Uncle Sam? If they can turn out the lights on PokerStars, they can do it to all others running illegal sites, same goes for any government. “There’s really no entrepreneurial business opportunity involved with Internet gaming.” This quote was from one U.S. gaming mogul, and he’s right. The Internet is nothing more than a mirror of the games you see on any casino floor. Every Internet site is virtually the same, and there are thousands of them, only the name on the marquee skin is different. If you’re just going to be a cow in the thundering herd eating dust, why bother? After it’s all said and done, what’s left is chump change if you made any money at all. Everyone is looking for the edge over all the competition in this business or any other. Proprietary content is the answer; there are only two ways to skin that cat: develop it yourself or buy it from a third party outright.

In the case of gaming companies, not providing game innovation is a symptom of what I call slot-happy. Putting some much-needed pop into new game innovation area would accomplish the same thing as buying out another slot company at a much lower cost. Innovation seems all but absent; the gaming machine manufacturer’s business model dances to the same happy tune, slots, slots, and more slots. Any number of things can account for it, most notable would be disinterest in producing anything else. The capability is obviously not there or you would at least see something new occasionally. Therefore, it has to be a lot harder than it looks or everybody would be doing it. That’s the popular cliché for any company that can’t find the new game answer or even bothers looking for it. As long as nobody can step up to the plate and hit the ball out of the park, all you can expect is just more great slots and that is the name of that tune.

In conversation, I asked one of my gaming clients who he thought could enter into the big game and create some impact. Carl Faris is the owner of Gaming Dynamics, a proprietary wagering entertainment firm. He has developed the largest proprietary gaming library of its kind in the world, so I know it can be done. He is highly motivated and skilled in the art of money game development. His content covers all the major gambling games with proprietary multimillion dollar/coin progressives, bonus features and side bets, and thinks slots are kid stuff. My guess, he would have said Google, Yahoo, Microsoft, as well as some of the major video game producers. There have been rumors they were going to do this and that in real money games. As far as I know, only Yahoo has done anything about it with a social poker attempt on Facebook. The concept is you can play multiple poker games at once. It’s going nowhere in my opinion and you know what they say about opinions, everyone has one.

When I suggested those big names, he laughed and said, “They have money to burn but not a clue about money games.”

Carl asked me, “Who is the undisputed King of Spanish soap operas?” Now I get to win the bonus jackpot round, and it was a real softball question for any Mexican. Of course, it’s Televisa, with corporate headquarters in México City where I was born, raised and live now; however, he caught me by surprise with that pick, as he is American. How does he know about them? I asked, “Why Televisa?” He said, “Look at the big picture José, what do you see? I will be knocking on their door now that my library is finished. The combination of the two could be a real happening thing. All fresh big jackpot content attached to the most popular casino games. Team that up with the number one soap operas in the world for slot themes; sounds like a winner to me.”

In the case of Televisa, it’s a really big picture as in television, satellite, cable, apps and radio stations worldwide, a modern-day entertainment empire; in the Spanish-speaking world it is “número UNO.” Its broadcasted entertainment content includes original feature films, television dramas, comedy, soap operas, game shows, news, sports, music, and live entertainment. Why not add gaming to the mix? When you put them into a gaming perspective, it’s potentially a proprietary slot content bonanza with all of the state of the art delivery platforms included. The soaps have become wildly popular even in China. They are overdubbed in Chinese as well as many other languages.

The company started with a few television stations in the early 1950s. Flash forward a little more than 60 years, and it is now a giant worldwide mass multimedia, entertainment and telecommunications conglomerate. BBC, Sony, and Netflix are some new big-name entertainment partners. It’s a little-known fact that Televisa is federally licensed in Mexico to operate up to 65 casino locations and Internet wagering as well. It currently runs a number of land-based casino locations under the name of @PlayCity throughout Mexico.

Any number of Mexican companies potentially could step up and take a shot at the gaming brass ring. Many companies have the resources but are not in the same league as Televisa when it comes to IP; its entertainment library is huge. Just because it has the money, state-of-the-art delivery platforms and unlimited slot IP content doesn’t mean they will go for a swim in the shark tank. Although this business is appealing, it doesn’t fall under the free enterprise system. There are a lot of impediments when you get into the mainstream.

As we all know, the dominant business model for major gaming machine manufacturers for the past 20 years is to use TV, movie, and celebrity IP themes. It’s an endless parade of so-called iconic slot content that rarely lasts longer than six months on any gaming floor. Once in a while, something clicks for longer. The big question remains, is there more to wagering entertainment than just movie and TV game show slots? The powers to be aren’t providing any other alternatives, and the table game world is very, very stale. It’s amazing how many different ways there are to go down the same well-beaten path of mediocrity and failure. Unique content is the key to entering the business; buying a ticket on the Internet and the mobile high-speed train has become an extremely important growth strategy and imperative to the long-term success of any gaming company. The object of the game is to hit the long ball and do it consistently. If you got game, bring it and let’s see if you have what it takes to become the new sultan of swat.

Most of my articles are related to what’s happening in Mexico’s gaming business, so here’s a quick update. In this September (2014) the new gaming bill will be introduced to Congress. The bill is endorsed by President Enrique Peña Nieto, who has made some sweeping changes in the business landscape of Mexico. This bill installs recognized worldwide gaming industry regulations as well as enforcement of them. I expect after a lively debate for it to then pass into the law of the land and México will be on the road to becoming a world-class gaming destination. I will have more on this topic in a later column.

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