Many casino operators are facing challenges when contemplating the best strategy for investing in gaming floor technology, and there doesn’t appear to be an easy or safe option among the technology investment choices an operator can make. There are a number of factors to consider:
• An uncertain economy has raised sensitivity to increasing operations costs, and some might view maintaining or decreasing operations costs as the best way to increase revenues.
• Casino floors are populated with aging gaming machines; new platforms can leverage much of the existing infrastructure and minimize capital expenditures.
• Some casinos have quickly outgrown their technology while others are facing increased competition for their players’ attention.
• Online gaming may soon allow players to gamble in the comfort of their own homes or from almost any location via mobile devices.
One method of addressing the current situation is to adopt an approach that leads to more open innovation in casino gaming. While regulated markets can make open innovation difficult to achieve, the current conditions in the casino market seem to be suggesting that we need to look for alternatives and move toward a future that doesn’t repeat our past.
With the right amount of vision and conviction, casino operators can create a future consisting of new and exciting interoperable products, which will provide differentiation, agility and the ability to leverage new technologies to move the business forward. Certainly, casino operators could look to the development of platforms as a first step toward promoting open innovation.
What is a Platform?
Essentially, a platform serves to facilitate connectivity between applications and the execution of repetitive tasks. A platform will enforce rules of engagement between those applications through standards or well-known interfaces, and provides the infrastructure needed for service-oriented business applications to communicate.
The platform should support the efforts of the casino and its business partners to define innovative products and features. In an ideal situation, the platform vendor would hold little interest in developing applications, and would intrinsically view the development of the infrastructure as its organization’s core value discipline.
To build and maintain such a platform, a vendor must build a scalable system that is robust and based on standards. A platform needs to be nodal in nature and promote connections between the products that interface with it [Fig 1]. A platform vendor must advocate for the industry and attempt to remain neutral, immune from any particular vendor’s market strategy. Such a platform will seamlessly allow for the casino to converse with its customer across a slate of digital devices, and a multitude of screens, using an assortment of tools.
The cost to build these systems can be high, and a platform vendor must make a significant investment in resources to bring a well-defined, efficient and predictable system to the market. The high cost of development will result in a need to build and deliver these systems at a large scale to make them feasible. As a result, there tend to be fewer options when it comes to platform vendors.
The role of the platform is often accomplished by an enterprise service bus (ESB). Examples of platform vendors are Alcatel-Lucent (telephony), Agilysys (hospitality), TIBCO (business/financial) and MuleSoft (various). We have yet to see the emergence of dedicated platform/infrastructure vendors within the gaming industry, perhaps due to concerns of meeting regulatory constraints or possibly because vendors in traditional gaming have multiple value disciplines resulting in technology stacks that support many bundled product lines.
As a result, incumbent casino systems vendors have found it difficult to focus purely on providing the interoperable platform that the casinos need in order to allow for the convergence of existing systems while also supporting the emergence of new solutions.
How Platforms Support Open Innovation
The fundamental goal of open innovation is to produce system architecture designs that can support the creation of connections between systems. It is at these connection points that we see opportunities for innovation. The connection points become the seams that a casino can tap into, so as to observe data and devise new business strategies along with the tools to manage their execution.
When systems start to converge, there are opportunities for innovation. According to open innovation strategist Larry Keeley of the Doblin Group, the areas of opportunity with the most concentrated effort become hot spots [Fig 2]. These hot spots can become a source of disruption, and these disruptions can spur new business strategies that allow a casino to avoid the trap of incremental innovation.
One of the reasons that some industries are more successful than others when it comes to breeding innovation is that platforms exist, and these platforms are designed to be nodal; they facilitate the creation of connections which allow systems to converge. A relevant example may be that of the emergence of application stores within the smart phone industry for content management and distribution to a diverse set of certified products. Or consider how the cable industry has now leveraged its infrastructure to add home security, another billable service. The internet continues to be a rich source for examples of innovations brought about by connected systems.
What to Expect from Open Innovation
With a well-devised platform in place, the casino can expect to see a rise in the number of service-oriented applications. There will be competition on price and product features. Access to open standards-based interfaces and well-defined interoperable systems will generate the interest of innovative industry experts in the casino’s vertical markets (traditional gaming, i-gaming, hospitality, food and beverage, etc.).
These innovators will create new ways for a casino to connect with its customers and manage their operations. As an example, an application may be developed that will harvest perishable inventory, such as show tickets, and create timely offers to active online players to incentivize a casino visit. Such an application may need to make use of well-defined and open software APIs presented via the platform by a venue ticketing system, an offer publishing system, and an online gaming portal.
The applications vendors will be greater in number than the infrastructure vendors, providing casino operators with an abundance of choice in how to differentiate their business from that of their competitors. These vendors will need to enlist the help of high-demand creative talent to develop these applications and to take risks on innovating, hoping to land deals with early adopters. To stay ahead of their competition, it will become imperative for casinos to provide continuous feedback and support to their application vendors.
Casinos may be able to realize some of the highly anticipated operational benefits promised by networked/server-based gaming. Ideally, the casino will be able to leverage a platform for centralized content management that will open a door to the interoperable distribution of games and applications to the player, made available on a multitude of certified devices. Select content could be made available on universal game kiosks, in-room television, and mobile devices such as smart phones or tablets. This may even be the same content that is made available to the at-home player via an i-gaming channel on the internet.
A fully integrated content management system, complete with well-defined standards that will allow for certification, may not be available today; however, casinos have the option to start exploring the evolution of their floors through the use of picture-in-picture (PiP) player/user interfaces (PUI) and tablet-based gaming systems today.
As casinos wrestle with the issue of replacing aging gaming machines, they have an opportunity to experiment and to create a vision for content management. It would be unrealistic to expect these PUI devices to support the long tail of aging machines on the floor today, but they could be used to cost-effectively add value to some models released as late as the mid-1990s. This will not be a quick process; casinos willing to start now will be in a better position to bring their vision to fruition and to take advantage of the new digital marketing opportunities created by this gaming technology.
In addition, new technologies, such as in-room and on-premise mobile gaming, have the potential to change the content landscape within the casino. The player terminals for these games are typically mass-produced commodity devices such as set-top-boxes and consumer tablets. As a result, they provide a clean slate for the development of standards. The same systems that serve content to these new in-house gaming channels has the potential to serve content to the PUIs and/or universal gaming kiosks installed in gaming devices on the casino floor. It is incumbent upon the casino operator to ensure that these systems be able to interoperate in order to create the best player experience possible while also assuring operating efficiencies.
• i-Gaming and Social Networks
A quick glance at what has transpired within the business of social gaming provides an interesting perspective on how people want to access game content, and their preferred method of engaging with others within their online social circles.
The lines have blurred between where one machine experience leaves off and another begins, and users are coming to expect engaging online experiences across multiple devices, instantly. This same seamless gaming experience is possible (and will be expected) from casinos as well, whether connected inside the walls of the casino or moving the experience beyond and even outside.
Leveraging the new phenomenon of social gaming and tracking of leaderboards, scores and achievements can also provide an innovative way to differentiate and keep this new breed of players more connected. Many social gaming companies have already developed expertise, built the tools and acquired an audience. Social gaming companies are also planning on moving into real-money gaming, and they bring with them a significant advantage, both in audience reach and time to market. Platforms will provide support for the adoption of social gaming tools and potential partnering strategies.
In an era of unprecedented gaming expansion and the advancement of i-gaming, the onus will be on casinos to implement better tools to connect with their customer. From a marketing perspective, capturing data on customers and their behavior is only valuable if it can be used to inform a strategy. Platforms will help drive the development of innovative tools that assist with the production of novel marketing campaigns and optimized player experiences such as the reconfiguration of a casino floor for maximum impact.
Applications will be developed to aggregate customer spending and casino-related activities both on premise and at home. Casinos will have a 360-degree view of their customer. These applications will help casinos develop and deliver their digital marketing strategy, allowing them to communicate with their customer at the right time with the right message on the right screen.
Work To Be Done
A Q3 CY2012 Roth-Fantini survey indicated that close to 50 percent of casinos polled intend to invest in systems technologies, and there is an increased level of interest in picture-in-picture player user interface technology. While these are positive signs, there is still uncertainty expressed by many casinos.
Consider that existing vendor solutions work well within their proprietary technology stacks, and perhaps with that of a partner, but these systems may not afford casinos the flexibility and agility needed to develop digital strategies in our evolving market. Today’s systems are rapidly advancing, and casinos need a path toward the convergence of on-premise gaming, retail, hospitality, mobile and internet experiences in order to design and execute a coherent digital strategy.
Rarely do the existing pieces of the puzzle interoperate flexibly enough to provide the casino with a sufficiently agile solution. Casino operators can no longer afford to wait for the next bundled offering from their current systems providers, only to be forced to develop business strategies that are constrained to using the same tools as their competitors.
In support of efforts to spearhead and drive open innovation within the casino industry, it is evident that new technologies and standards are needed. The industry may be required to take a step back and decompose some of the existing systems and solutions that represent the current standard, introducing more seams for connectivity and establishing optimized boundaries for regulated services within the framework of an SOA. While the Gaming Standards Association has produced a good building block in the G2S standard, casinos are in need of additional gaming technology standards that facilitate the development of Open APIs for application services.
A platform, likely an ESB, will provide the foundation for open innovation in casino systems. It will support the development of SOA and provide a bridge between traditional gaming systems and online gaming systems. The freedom and flexibility gained by adoption of a platform and open APIs will provide casino operators with rewards, enabling the development of more relevant services and monetization strategies that will justify their investment in platform technology.