In the Roth-Fantini Quarterly Slot Survey for the first quarter of 2012, operators are demonstrating an increased desire to purchase systems technology; 43 percent indicated that they plan to invest compared to 23 percent who actually did invest (Exhibit A). This raises a question: What technology investments are being considered, and what are they actually purchasing?
The most recent Goldman Sachs Slot Manager survey sheds further light on this question (Exhibit B). Operators are planning and investing in the following system initiatives: business intelligence, player communication systems, and systems that increase their tools in awarding players bonuses.
Based on our work, we believe operators should take a deeper look at picture-in-picture (PiP)-style player user interface (PUI) technologies, because they enable new forms of player communication and bonusing. PiP is defined as a method of presenting applications from a secondary source on the same display used by the video slot, thus allowing players to engage in a wide variety of network server-based game and application content. PiP is the feature attraction that is fueling the development of innovative PUI products. These PUI applications are greatly enhanced when the PiP feature can be combined with access to additional game device peripherals, such as the touch screen and ticket printer. We believe that the hardware and software associated with this technology represent a $2 billion to $4 billion opportunity for suppliers over the next 10 years.
It is clear from the first-quarter Roth-Fantini Quarterly Slot Survey that operators remain relatively unconvinced regarding the application of PiP technology, and certainly operators have every reason to remain skeptical given the slow pace of innovation to date. Operators may want to stay tuned to this important industry trend, as there is a lot of activity in the space. Operators are increasingly looking to other technology suppliers for their solution, as it appears that the major players have yet to find a compelling package of solutions to excite operators (Exhibit C). Other technology suppliers are looking at unconventional technology deployments that might reduce the cost of implementation while increasing the opportunity for innovative application design and delivery.
Before examining implementation, let us revisit the ROI story associated with PiP by focusing on four key areas, Exhibit D: 1) Improved Player Account Management; 2) Greater Promotional Flexibility; 3) Engaging Digital Content; and 4) Distribution Scale. The ROI story for PiP is increasingly becoming more realistic, as technology innovation is reducing the cost of deployment and focus on innovative application deployment is picking up steam. Application deployment is becoming more realistic as there is greater line of sight to infrastructure deployment. It may very well be the beginning of the next great wave of innovation for our industry, on par with ticket-in/ticket out, bill validator and bonusing.
There are two identified architectures for providing PiP capabilities on gaming devices (Exhibit E):
1) The Integrated Software Solution; and
2) The Game-side SMIB Solution.
While the integrated software solution was met with great fanfare, the game-side SMIB solution has spurred many providers as they focus on serving the whole floor by being backward-compatible with older games. Aria and Cosmopolitan on the Las Vegas Strip were earlier adopters of the integrated software solution, while Pechanga in California and Mohegan Sun have implemented game-side SMIB solutions.
An early PiP implementation, the Integrated Software Solution has been realized solely by software executing within the same computing environment as the gaming application. In this architecture for the PUI solution, both core gaming content and server-generated content execute on the gaming device’s CPU, sharing the device’s internal hardware resources. Additional complexity is added to the gaming device’s software systems to support the flow of peripheral device I/O through to the PUI applications. For example, the rendering software must be designed to manage the display of content from the two different sources. This architecture results in a high degree of coupling between the game software and the PUI application software. This archetype for the PUI solution was the enabler for the early IGT sbX development.
The game-side SMIB solution introduces an additional computing device to the game cabinet. In the SMIB solution architecture, an additional CPU and GPU provide an independent operating environment for the server-generated content. The execution of server-based applications is thus decoupled from the operating environment of the gaming device. The applications executing on the PUI device rely on industry-standard hardware and software interfaces for gathering information from the gaming device and networked servers. While the PUI-based applications lie dormant and wait for triggers, game I/O is passed seamlessly through the PUI device. At appropriate times, the PUI device will actively manage the I/O and rendering to the display by blending the content from the game with that of the PUI application.
Exhibit F illustrates the tradeoffs between the two architectures and how they can create substantial complexity for the operator while deciding on the solution that fits a casino’s needs. While viewed as a “low overhead” solution, the integrated software solution requires significant coordination between the gaming device software and the content delivery system, which inherently creates technical and business tradeoffs that are not always obvious. Its tightly coupled software solution increases the performance demands on existing technology, as opposed to the game-side SMIB that introduces additional raw computing power and independent controls to the game cabinet.
The game-side SMIB can be deployed today with state-of-the-art technology, and can evolve on a different path from that of the gaming CPU. However, the game-side SMIB solution must be proved to function on every gaming device platform and to interoperate with the peripherals deployed on each gaming device.
Both implementations require the same networked server systems to provide the content that makes the PiP approach appealing. Therefore, the complexity in choosing these solutions is balanced in favor of the game-side SMIB solution due to the impracticality of replacing casinos’ gaming devices in order to meet the performance demands of the integrated software solution; it should be noted that a casino could choose to run a hybrid floor, provided that both game-side architectures are recognized by server-side components. It is not clear, yet, which solution is preferred when opening a new property given the somewhat slow adoption of PiP technologies and, in particular, the integrated software solution.
Currently, there exist six vendors who are supplying game-side SMIB solutions. Only IGT offers an integrated software solution. Three vendors—Aristocrat, Bally Technologies and IGT—also supply gaming devices, casino management systems and application servers as part of their product offerings. While IGT licenses its Universal Game Adaptor to other system providers, such as Konami, for the most part the hardware is bundled with the core casino management system. Three vendors—Leap Forward Gaming, Reel-TV and Tipping Point Gaming—offer their products independent of a casino management system. These vendors are pushing alternative solutions for networking casino floors, and in some cases have access to or have designed innovative systems and applications to prove the utility of their hardware approach. These alternative solutions open the possibility of leveraging third-party systems, allowing both traditional and non-traditional players to deliver innovative applications.
Suppliers of PUI technology are divided into two distinct groups (Exhibit G):
1) Bundled System Providers; and 2) Unbundled System Providers.
Both offer similar hardware but are differentiated in how they deliver service offerings. The bundled system providers reinforce their core transactional systems sales by bundling PUI hardware sales with PUI applications. The bundled model results in consistent and reliable operation but may lack in innovation and diversity as vendors struggle with trade-offs and conflicts internally. The unbundled system providers break the PUI market into three separate businesses: equipment providers, content management system providers and content providers.
This model provides a number of benefits to casino operators. In the center, the content management system providers will demand equipment vendors to provide innovative and cost-effective solutions while striving to curate a long tail of application options, to be supplied by the content provider side of the business. The flexibility created by this model may be tempered by the operator’s increased exposure to product management.
Operators who are looking to purchase PiP technology are faced with interesting scenarios.
• Operators can potentially enable their gaming floor with hardware from their incumbent casino management system provider.
• Operators can switch to a different casino management system provider and acquire their PiP technology.
• Operators can maintain their relationship with their current casino management system provider while selecting PUI hardware from an independent peripheral vendor.
There are different risks and opportunities in each one of these scenarios. Whichever solution operators choose, PiP, as the method for enabling the distribution of new forms of engaging content to a slot machine, is poised to usher in the next wave of innovation in the gaming industry.