Yes, we know. Server-based gaming is coming. That point has been hammered into our collective consciousness not only by the manufacturers developing networked technology, but by mainstream media reporters who often miss the point of what’s happening.
What is happening in the slot business goes way beyond server-based gaming-which itself is, in the end, a delivery system for the core slot product.
What is changing is how that core slot product comes about. Server-based gaming is both a catalyst and a result of a major paradigm shift that has begun in the way slot games are created. Yes, the traditional method is still prevalent for most games. Research and development by major traditional slot manufacturers-International Game Technology alone will invest more than $1 billion in R&D over the next five years-still results in hundreds of new slot games every year, in casinos across the world.
Soon, that may not be enough. As new casinos open in multiple jurisdictions, and as those traditional manufacturers devise flexible, changeable platforms to adapt to shrinking game life cycles, the demand for slot content is on the rise. Indeed, where slot life cycles were once universally measured in years, a slot life measured in months is not uncommon these days.
As server-based slot networks grow, content will become even more important. On what Bally likes to call the “networked floor of the future,” designing a great new slot cabinet or platform will not be as important as having a complete, dynamic library of game content to place in those boxes.
Consequently, one of the fastest-growing new segments of the slot business is the independent, third-party game content provider. During the past few years, these independent content companies have proliferated, thanks in part to the defection of some high-profile veterans from the traditional manufacturers.
The growth of third-party design companies would be necessary even without the pending rise of server-based gaming, says John Acres, one of the pioneers of modern slot technology and currently a partner in a third-party content developer. He says the sheer number of new seats coming on line in casinos will require content that is plentiful, more diverse-and more customized.
“We’ve been through this time of incredible expansion,” says Acres. “There is pent-up demand. The population is growing by 1 percent a year, and we’re getting 25 percent more (slot machine) capacity every year. We’re going to have to improve the quality of our offering to attract new gamblers.”
Acres says the way to do that will be to customize slot games in a way that traditional manufacturers cannot. “The content of a game is not what’s on the screen or reels,” he says. “It is what’s on the floor-what is specific to the particular location. (Traditional slot) manufacturers don’t have time to pay attention to it. We’re facing a whole new era. Before, all we had to do was open the doors. That’s not true anymore. Now, there are tens of thousands of legal gaming machines.”
Veterans’ Ventures
The new face of game design is being led by a collection of slot industry veterans. Acres-whose remarkable career has included the invention of player tracking, creation of the modern progressive slot display, the invention of slot “bonusing,” the co-founding of Mikohn (now Progressive Gaming), and the founding of the Gaming Standards Association-is typical of the experience being brought to this emerging discipline.
Acres had intellectual property and ideas for a new type of mystery wheel when he went looking for a third-party game developer to help him develop it into a slot game. He contacted Richard Fiore, the veteran game developer who had left the former Sierra Design Group when that groundbreaking game design company was acquired by Bally. Fiore had left SDG to form Richard Fiore Associates, a prototype for the type of third-party company that is now proliferating.
“After talking to John, we realized our chemistry was working very well,” recalls Fiore. “Keep in mind, my last partner was (former SDG president and Bally executive) Bob Luciano, also an engineer, also very intelligent. We decided to merge, rather than work for each other.”
Acres-Fiore Inc. already has its first product in casinos. Called “Halo,” it is a three-credit dollar game on Bally’s CineVision platform. There is a mystery bonus wheel with a unique aspect-a “win proximity indicator” that shows players when the mystery jackpot is getting close. Once the indicator is past halfway, players know the mystery progressive can hit at any time-it is designed to promote jackpot frenzy and high average bets.
The fact the game is on a Bally CineVision platform represents an Acres-Fiore practice they say is a key to success for the third-party game designer. Instead of offering Bally software or intellectual property and having the game development proceed inside the manufacturer’s system, Acres and Fiore bought the Bally hardware first, and designed the game independently.
“We go to Bally and say, ‘We’d like to buy 30 of your CineVision games,'” says Acres. “We buy those games and get a license to use the platform technology. Then, we don’t have to go back to Bally and ask them what they think. We come up with our own game ideas. The Bally box is great; we know it’s approved in all of those 289 jurisdictions; it has a ticket printer.
“If we take that Bally box and use it, then we can focus on the ideas. Then, we go off and get our own regulatory approvals, and we pay for all that ourselves. We get licensed for testing. Then we-Rich and I, the developers-are on site to respond to the test and make any adjustments. Finally, we go back to the manufacturer and say, ‘Look how great this game is doing. Would you like to put it into production?'”
It is a formula that has worked before. “Look at the two big historical successes of third-party designers, Triple Play Poker and Wheel of Gold,” Acres says. “In both cases, the original company built the game and put it into test with players. Only when it was proven successful was it presented to a manufacturer.”
Fiore, who did third-party work for Bally before joining with Acres, says this method gives the designer control of his own game. “The big problem for a lot of third-party developers,” he says, “is that once you get a game in to a manufacturer, it takes two months to develop it, then eight to 10 months to get it through their queues and through GLI, so it’s just under two years before you see any revenue. It’s a big risk.” Acres adds that there is no guarantee a game will even go into production after this process-if it does not perform well on test, it disappears.
Third-Party Bandwagon
Fiore was one of the first game developers to leave one of the traditional manufacturers and branch out with an independent design firm, departing after helping to make SDG one of the most highly regarded suppliers in Class II and lottery markets across the country.
During the past few years, though, other longtime game designers have left the confines of traditional, corporate-style manufacturing to get into the third-party game.
The one who made perhaps the smoothest transition to independent design was Jason Stage, who was one of the top game designers for the Atronic Group for 13 years, rising to the position of game development manager at the company’s U.S. branch, Atronic Americas.
Two years ago, with GTECH Corporation planning to acquire controlling interest in Atronic (the company later agreed to purchase Atronic outright), Michael Gauselmann, CEO of Atronic parent Gauselmann Group, approached Stage with a proposition to create a new independent, third-party development group. Stage, along with Dave Tucker, Atronic’s vice president of engineering, and Gauselmann (who traditionally offered much input on game design) formed Games 4 You.
Stage, who is managing director and part owner of the new company, had a leg up on others who have ventured out on their own. For one thing, Atronic would give the group its first work, signing an agreement stipulating that Games 4 You would work exclusively for Atronic for its first 18 months.
It was easy for Stage to use the Atronic platform and internal processes for his first independent designs; he had been there for the creation of what is now called the e-motion platform, designing many of the first games for that groundbreaking series.
Tucker’s presence, moreover, allowed the new company to offer more than solely game design. “We’re more than just a game studio,” says Stage. “We’re a full-service engineering company as well. We offer three types of service-game design and development; electronic and industrial engineering; and consulting services, on licensing processes and general knowledge of the industry.”
For the company’s first two years, the overall project was to get Atronic’s stepper product up and running. As Acres and Fiore did with Bally, Games 4 You opted to go with a complete, licensed platform for the first games. The first Atronic-branded stepper games are actually on Konami’s “Advantage” reel-spinning platform.
“We feel the Konami technology is a well-engineered product,” Stage says. Konami’s stepper platform consists of a three-reel format with a fourth video bonus reel, and a newer five-reel “Advantage Plus” version. “We were very excited to have that as the basis with which to work,” says Stage.
The most high-profile game yet from Games 4 You combines this base stepper platform with a new “Super Top,” created by Stage using a 32-inch, vertical plasma video monitor. It has just been released as the newest game in Atronic’s “Deal Or No Deal” series, a three-reel dollar version of the game show-themed slot.
“All development was done in-house at Games 4 You,” Stage says. “The game was fully designed, developed and prepared for the laboratories, then handed to Atronic for production.”
Now that the 18-month exclusivity has expired, Stage says the new firm will begin to look for additional strategic partners this year, while continuing to work with Atronic and its new parent company, GTECH. “We’re looking at the traditional manufacturers as strategic partners, with us providing content that will fit into their strategic roadmap but won’t affect the strategic resources of the traditional manufacturer,” he says. “In a traditional manufacturer, it becomes hard to try something with a high risk factor, because they have so many products to produce on their own to maintain their presence on the floor.
“The big manufacturers will be looking more and more for outside content. Each of the major manufacturers uses outside content already, and some of the larger success stories in the industry were created by outside developers. I see that type of business continuing and growing because of the sheer need for new content.”
Room for More
The need for content continues to prompt longtime game developers and marketers to fill the need outside the confines and restraints of a traditional corporation.
Two names familiar to anyone in the slot business were among the most recent to take the leap-Kent Young, the longtime marketing vice president at Aristocrat Technologies, and Mick Roemer, veteran game developer and sales VP for Bally, both have started their own third-party development firms in the past year.
Young was at Aristocrat’s marketing helm through the manufacturer’s breakthrough earlier this decade with new game styles such as Hyperlink and Bonus Bank, which are recognized as reviving the slot-maker’s fortunes after a difficult period in the late 1990s. He says technological changes in the industry-as well as attitude changes-convinced him the time was right for third-party content providers.
“Obviously, with server-based technology coming on line, there is now an openness of manufacturers, domestically and internationally, to take on third-party content,” Young says. “The state of the market is right, with respect to the demand for content-shortening life cycles and expansions in global markets are requiring more content.
“Also, the supplier’s position in terms of ability to deliver third-party content is different than it was previously, when everything was proprietary. The atmosphere is a lot more open, and from an opportunity perspective, the demand is significant.”
Young, whose expertise is in the marketing and sales side of the business, partnered with top Aristocrat game developer Scott Olive-the inventor of Hyperlink-to form his new company, which is called True Blue Gaming. “Scott is one of the best game designers in the world, in my opinion. He’s got 20 patents to his credit with Aristocrat, the biggest landmark being Hyperlink. However, he also was involved in a lot of key products that were successful in the U.S. market previously.”
Young says True Blue Gaming has already secured agreements with suppliers in different segments of the market, and will be showing games at this year’s Global Gaming Expo. The new company has a research and development facility set up in Australia, and plans to open a design studio in the U.S. within the next six months.
“It’s our strategy to develop long-term relationships with key suppliers within different segments of the market,” Young says. “We’re working on premium stand-alone products involving intellectual property, and we’re also developing high-end recurring revenue product, including multi-level progressives with some IP concepts. We’re also looking at some group gaming concepts.”
With R&D groups in Australia and the U.S., Young says True Blue Gaming will be in a position to form long-term partnerships with all the traditional manufacturers. “We see the third-party route as having a lot of advantages,” he says. “We can be a ’boutique’ content provider-very nimble, not getting caught up in the corporate bureaucracy. We have a lot of ability to be innovative, because we’re smaller and can react to the marketplace a lot more quickly.”
Roemer is still in the beginning stages of his business, called Roemer Gaming. He says he left Bally to take the opportunity to “control his own destiny,” but also because the environment for third-party developers is right.
Roemer has already struck a third-party development deal with Bally, but as Fiore before him, he is considering a model in working with his former employer and other large manufacturers that would avoid the 12-24 months a game takes to get to market after being presented to the slot-maker.
“Looking at the dynamics of that, it became more attractive to me to look at a different path,” says Roemer, “in which I would design games using my own intellectual property, or IP which I can help others get to market, and use that to get games I can place independently at casinos on one or a variety of platforms. To me that’s a small niche, but more attractive to approach on an independent basis.”
Roemer says he has no completed games in the queue yet, because he is opting to develop independently. “For the first few months, I’ve worked to identify valuable independent resources-software, hardware, art, game math,” he says. “What’s the best fit? What graphics do I like the best? What IP would I like to work with? It’s really an orchestra of independent contractors working together to develop a product.”
Roemer did reveal the first intellectual property with which he is working to create a slot-Dialing for Dollars, the legendary television and radio game show. “It will be a community-style bonusing concept,” he says. “The title exists on a reel-spinner; it’s been in the market a couple of years. When I was with Bally, I didn’t try to expand it. Now, I’d like to expand the brand.”
While Roemer still is unwilling to commit to how the server-based market is going to evolve, he says there is still lots of room for third-party developers. “Probably thanks to small guys like me, there are still a lot of very interesting niches which the big guys don’t really have the focus to go after,” he says. “I’m not trying to set the world on fire, or to have a huge studio of game designers. I’m interested in developing some very entertaining games on a revenue-sharing basis. This year is when I’m going to get really excited.”
One other new entry to the third-party development space is a company that has for years been a successful provider of skill-based games and wireless games for lottery applications.
Connecticut’s Tournament One Corporation, one of the leaders in development of games for state lotteries, last year created a new subsidiary called Magic Gaming, to bring those skills to the gaming market.
“We launched Magic Gaming a year ago with a focus on slot-based video games, mystery jackpots and progressive development,” says Tom Kidneigh, vice president and general manager of the company’s West Coast division. “We want to work with quite a few traditional manufacturers to help develop custom libraries to distribute in their various markets.”
He says the advantage Magic offers the market is that it is already a full-service supplier, ready to provide as much content as any slot-maker needs.
He says the company already is in discussions with four traditional slot manufacturers.
“We have a very rapid turnaround as a full-service developer,” Kidneigh says. “We do everything from soup to nuts. We will use their math or provide our own, develop our content to their platform, do custom voice-overs, custom music. We will give the manufactures something unique to set them apart from their competition.”
Kidneigh adds that the company intends to specialize on customization of games for specific markets. “We’re allowed to focus on core areas where the traditional box-makers don’t have time to focus, to take slot development to the next level,” he says.
Old Hand
Localization of game content has been on Benny Sum’s list of specialties for decades.
Not all of the third-party developers are start-ups. Benny Sum is an old hand at the third-party game, having established himself as one of the foremost game designers in the business as far back as the 1980s. He is now a partner in Global Gaming Group, or G3, a company formed three years ago by Ed Fishman, founder of Player’s Club International. (Fishman has since retired.)
Sum, who now co-owns the company with COO Mike Dreitzer, has worked with all of the major manufacturers over the years, but has not worked for any of them since the early 1990s, when he designed the look and format of the legendary Game Maker multi-game unit while with Bally. He also designed the artwork for many of Bally’s classic reel-spinners.
After leaving Bally, he worked as a third-party designer on some of the most well-known slots in the business-Aristocrat’s “Wild Cougar,” “Press Your Luck” for Shuffle Master (now owned by IGT), Konami games including “Rocky” and “Hot Dawgs.” Sum also had a major contract with Multimedia Games, under which he designed three-fourths of the slots that supplier sold in Class II markets.
Most recently, Sum has begun work with Roemer on his new venture.
Sum has specialized in what he calls “culturally sensitive” games-he begins by studying the demographics and culture of the market into which a game will be supplied. “When we focus on the content side, we focus on the languages and content that can be designed for specific operators,” he says, “from the standpoint of game play and nitty-gritty customization that certain areas would need, as well as compliance with local regulations.
Sum’s experience puts him in a good position as traditional manufacturers seek out new content.
“The global arena is booming,” Sum says. “That means more content is in demand, whether from manufacturers or people like ourselves.”
He adds that independent companies such as G3 have the advantage of time-sensitivity compared to the traditional manufacturers. “When we take content and develop it, we remove all the dependencies of a company that handles 100 different things, as opposed to a company that handles one or two things,” he says. “It takes time off the process.”
While server-based gaming will certainly boost business for all the independents, Sum notes that the time is right for third-party developers apart from that. “There’s always room for people like us, because the industry is booming faster than the growth of the suppliers,” he says. “We can’t supply as fast as the business is growing.”
For Acres, more variety in content is a natural progression of the business, because it fosters new ways of looking at the slot machine as a gambling device and entertainment delivery system.
“What are the odds that back in 1895 when Charlie Fey decided to put three reels side to side, he was thinking of the best possible proposition?” Acres says. “Or, is it more likely that there are a wealth of new opportunities (for the slot machine) we have yet to discover?
“I’m betting on the latter.”
