Since Paul Oneile was appointed chief executive officer and managing director of Aristocrat Technologies in December 2003, he’s been constantly putting out fires. Whether it was over-enthusiastic earnings reports or creating a new marketing team, he’s spent a lot of time righting a listing ship. And now that the economy is listing, as well, it seems Oneile’s hands-on leadership is needed more than ever. Despite the difficult times, Oneile believes Aristocrat is poised to make a dramatic rebound once the economy comes back. He spoke with Global Gaming Business Publisher Roger Gros and Editor Frank Legato at G2E Asia in Macau in early June. To hear a podcast of the full interview, which includes Oneile’s view on the state of gaming in Australia and other issues, visit www.ggbmagazine.com and click on the GGB Podcast button.
GGB: Is Asia the most important growth opportunity for Aristocrat?
Oneile: I’d have to say that the United States is our most important growth area in straight dollar figures, but in percentage terms, there is critical growth coming out of Asia within the next three years.
This show (G2E Asia) marks the debut of your new Gen-7 system and the Viridian cabinet. What is the significance of these products to your company?
The Viridian is the first new cabinet design that we’ve released in the last seven years. It’s a little overdue, but we wanted it to be somewhat revolutionary, and we think we’ve achieved that. The reaction from our customers has been overwhelming.
The new Gen-7 platform is 10 times more powerful than any platform we’ve produced in the past. It also allows our software to use common computer language in the Microsoft format as opposed to proprietary languages that obviously require special programming. The response from both our customers and their players has been absolutely outstanding.
Tell us how these products are set up to work with server-based gaming.
We’ve actually got two formats for server-based gaming. One is our thin-client solution, our Ace platform, that has been approved by GLI for the United States; and two, the Gen-7, that is enabled today and can be used right away, as soon as networked gaming is approved.
How quickly do you think it’s going to take off in the U.S. market?
I’ve often said it’s going to be an evolutionary not a revolutionary development. When CityCenter comes on, it will give it some momentum, but not until then. We’ll see how it actually works and get a sense for its commerciality and acceptance among the customers. Most importantly, it will demonstrate how an operator can increase the yield from similar machines and games, return on investment… those sorts of things. But I don’t think it’s going to be immediately embraced. It will take between five and 10 years to become established.
Your recent comments during earnings reports have noted flat sales in the U.S. market. What kinds of things are you doing to reverse that trend?
There’s a couple of factors at play here. The current economic situation worldwide, not just in the United States, is having somewhat of a dampening impact on businesses in general and our business in particular.
In some respects, we have to wait for the economic cycle to begin to turn so that casinos have a little more confidence to re-invest in their gaming floors.
In the short term, it’s going to be driven by the replacement cycle, as games begin to peter out, but ultimately it will be driven by technology and quality of product. We’re trying to develop breakthrough games that provide gaming operators with a real incentive to actually convert their games out.
Aristocrat has always been very popular in Indian Country. With the great expansion in California and Class III machines now going into Florida, are your U.S. sales picking up?
Yes, we have had great success with Native Americans and that continues to be the case. The reason for that is that the Native American casinos tend to be the more local-type casino where the same players go back on a regular basis, and they get used to our style of games.
Tell us how you are approaching the Asian market. Slots are a very small component compared to tables, and then there’s the cultural differences. But you still have a strong presence in Macau and elsewhere.
The reason we had 60 percent of the Macau market from day-one is that we used Asian resources to develop specific games for the Asian market. We got in there and understood how this market was going to operate.
Certainly, the vast bulk of the gaming floor in Macau is table games. But we are beginning to see a significant movement toward the slot side of the market, so we’re well positioned to profit from this as the slot market share grows.
How about the Singapore market? Do you think it’s going to be a bit more slot-centric than Macau?
Yes, we’ve done quite a bit of research in Singapore. There is an existing machine market there, the clubs, and we enjoy a 70 percent market share. We’ve got a pretty good idea what the Singapore market is going to look like and I think you’ll find it will be a much more even balance between slots and tables there.
Aristocrat used to have one R&D department that would develop games of the Australian market and then adapt them for other markets. Has that changed?
Yes it has. And it comes with a fairly heavy expenditure. In the past few years, we’ve doubled our R&D budget to about $110 million. We now have major R&D centers in Australia, Las Vegas, South Africa, Europe, Japan and Macau.