Not long ago, it was easy to count the slot manufacturers that dominated the industry: count to one. IGT had 70 percent of the market, and everyone else scrambled for the remaining 30 percent. In recent years, the dominance has been more scattered—but still, just count to five: IGT, Bally, WMS, Aristocrat and Konami.
The balance of power in the slot sector, though, could be shaken up very soon, as upstart new companies, Class II leaders, amusement-game powerhouses and established European content providers all zero in on the casino slot market.
The newest players on the slot scene are in various stages of expansion, many gathering licenses across the U.S., or pursuing new jurisdictions in Europe, Latin America or elsewhere. All are refining products and platforms perfected for game genres such as Class II, VLTs or European wagering terminals.
And all are stirring up the pot in the slot sector.
Here are six companies that stand to make a difference in the market-share mix over the next few years.
Ainsworth Game Technology
While not a new slot manufacturer—it was founded in 1994—Ainsworth Game Technology is certainly “up and coming,” particularly in North America.
The company founded by Gaming Hall of Famer and Aristocrat founder Len Ainsworth has made its name in several worldwide jurisdictions—notably its native Australia, where Ainsworth went up against his former company on its own turf and ended up carving out 10 percent of that massive market. “We continue to be the No. 1-performing product in Australia,” says Ainsworth Group General Manager Scott Clarebrough, “and we have grown from 3 percent market share to 10 percent over the past two years. We have grown sales ship share to between 25 percent and 30 percent across all Australian markets, and all signs indicate this percentage is increasing.”
The company also is well-established in New Zealand, South Africa, Europe, South America and Macau. But the big news these days is North America, where the company has been on a licensing blitz since early last year, accumulating 22 licenses by November.
“Ainsworth is making great headway in the North American market,” Clarebrough says. “We now have games in 20-plus markets that are performing extremely well.” Next month, the company will open its new North American headquarters in Las Vegas. “We already have added key U.S. personnel in the areas of sales, marketing, product development, compliance and manufacturing to launch our new Vegas facility,” says Clarebrough. “It is a very exciting time for the company.”
Leading the way in earnings for North America has been the game “Players Paradise.” “It is a standout performer, at two times house average across 20-plus major sites in North America,” Clarebrough says. “We are the No. 1 performer at numerous casinos.”
Customers have been raving about the manufacturer’s new A560 cabinet, and what the new hardware has added to Ainsworth slot games. Launched at G2E, the cabinet features a dual wide-screen LCD platform, a powerful Quadtronic processor, an advanced sound system and an ergonomic player interface.
Randy Sivigny, gaming operations manager at Treasure Island in Las Vegas, calls the cabinet “fantastic,” saying it makes the games more robust. “The best thing about Ainsworth products is the consistency in performance across all themes,” Sivigny says. “They’re rock-solid.”
At the NIGA trade show, Ainsworth launched “World of Jackpots,” a linked-progressive system with a complete library of brands, launching first with popular titles including “Players Paradise,” “Lights Camera Action,” “Rio Grande Rapids,” “Jackpot Zone” and “Rapid Strike.”
Expansion across North America will remain the focus for Ainsworth in the coming year, according to Clarebrough. The licensing blitz will continue to other jurisdictions, and games designed for the American market will dominate the product launches.
“Ainsworth remains focused on furthering our presence as the No. 1 Australian product performer across all global markets,” says Clarebrough, “by providing our customers with a huge range of industry-leading products.”
American Gaming Systems
In 2005, San Francisco-based investor Graham Weaver’s search for a good gaming acquisition for his Alpine Investors firm led him to American Gaming Systems, a healthy Class II supplier with a good presence in Oklahoma. But his real coup was in managing to lure former Alliance Gaming CEO Robert Miodunski out of retirement to take the reins as interim CEO of the newly acquired AGS.
Miodunski had brought Alliance’s Bally Gaming unit—now Bally Technologies—back from the brink of extinction, changing its focus to core slot and system products and engineering the acquisition of Sierra Design Group, which in turn led to the groundbreaking Alpha slot platform.
Weaver smartly let Miodunski assemble his own executive management team, and the new CEO wasted no time in drawing quality people to AGS. He brought in Paul Lofgren, his former executive VP at Bally, as executive vice president of new business development, to oversee his new company’s expansion into new markets. To oversee game development, he brought in Dr. Olaf Vancura, the former design ace of Mikohn Gaming responsible for such hits as “Yahtzee” and “Battleship.”
Miodunski also brought the same eye for technology acquisition to AGS that he used so effectively at Bally. Just as with Bally’s SDG acquisition, he orchestrated the acquisition of Canadian game supplier Gametronics, a company with a strong platform for both server-based and stand-alone slots. The company has modified it into the Encore platform, and Vancura is using that platform to drive content from his own team and several third-party designers to build on the AGS game library in Oklahoma and other jurisdictions in the U.S., Mexico and the Dominican Republic.
For most of last year, AGS was preparing to apply its expertise in networked Class II games and Class III revenue-sharing games—with 7,000 units in Oklahoma and 3,000 more up and running in other jurisdictions—to a potentially lucrative new market of up to 75,000 VLT games in Illinois. Of course, that effort is on hold as a court challenge to the VLT law winds its way through the courts. This month, the Illinois Supreme Court is slated to hear an appeal of a lower court decision that held the VLT law unconstitutional because it was part of a larger highway funding bill, and the state constitution forbids “bundled” bills.
Miodunski, though, holds out hope that decision will be overturned, since the VLT bill authorizes the games solely as a way to fund the larger construction program. Meanwhile, he says, AGS will continue readying product for the new market, which, even if the court decision is upheld, can still be revived by a dedicated bill in the legislature.
“We have a line of products developed specifically for Illinois,” Miodunski says. “If they are officially approved in May, we will be ready to proceed immediately with games specific for that market.”
Regardless of what decision comes down in Illinois, Miodunski is busy expanding AGS to compete in the general casino market. The company’s temporary headquarters in Las Vegas, he says, will be replaced by a permanent facility, most likely by late summer. Vancura will use the new Las Vegas headquarters as the hub of game design, along with the company’s key game development center in Toronto, and a variety of third-party content providers.
AGS scored a coup recently with one of those third-party providers, announcing in February that the company has acquired “Pay It Again Poker,” a unique 10-coin video poker game from noted Las Vegas game designer Rocco Tarantino. Meanwhile, the company continues its expansion in Class III markets, while improving its position in core markets like Oklahoma and California. AGS recently secured licenses in New Mexico, Arizona, Minnesota and Oregon, and has already filed for its license in Nevada. By the end of the year, licensing efforts will move to Indiana, Ontario, Mississippi, New Jersey and elsewhere.
“We will have a pretty good footprint by the end of 2011,” says Miodunski, “and our focus will remain on delivering content to all of those jurisdictions.” He notes that Vancura has already achieved much success with titles such as “Boogie Ball,” a game with a pachinko/pinball-style top box that has had immediate success in Oklahoma and California. Other strong new titles include “Martini Girls” and “Spy Girls.”
For the coming year, the priority will be on building content. Miodunski says in the near future, AGS, which once produced two to four titles a year, will be churning out 20 to 30 titles a year.
Miodunski says his goal is to carve a specialty niche for AGS in the broader casino market. “We’re off to a good start,” he says. “After eight months on board, we’re starting to get it together; we’re not where we want to be yet, but we have made great strides.”
One of the most rapid success stories among up-and-coming slot suppliers has to be Aruze Gaming, the offshoot of Japanese pachislo king Aruze Corporation, formed by owner Kazuo Okada, a forward-looking executive who entered the U.S. market first as an operator—he has a significant stake in Wynn Resorts.
Okada has succeeded in spreading the Aruze brand across world jurisdictions in remarkable time, thanks to the team of seasoned gaming industry veterans he put in place in the Aruze Gaming Las Vegas headquarters. At the start, several former executives of Aristocrat Technologies, headed by former GM Kent Young, got the ball rolling by establishing licensing across the Americas, South Africa, Asian markets and Australia, among others, while initiating a game design philosophy that combines Aruze’s acumen in mechanical-style amusement games with some of the best program math and graphics in the industry, as well as linked and community-style games.
Aruze’s slots have quickly taken off with players, and with operators, who report high average bets thanks to a unique feature: most Aruze slots give the player three or four extra percentage points in payback for using a “High Power” max-bet button.
“This philosophy differentiates the product, while sending a message to customers,” says Aruze Marketing VP Steve Walther (himself another alum of Aristocrat, where he was system product manager). “A higher payout percentage creates long-term loyalty. Customers have a better overall experience, and we get long-term customers.”
After Young’s departure late last year, Okada stuck with the practice of putting seasoned pros in charge of Aruze’s coming-out party, naming longtime IGT executive Rich Pennington to head up Aruze Gaming in the U.S. Pennington, who was IGT’s senior vice president of product management, is now CEO for the Americas at Aruze. “He brings new, dynamic leadership to our business in the States,” says Walther.
Meanwhile, titles launched last year by Aruze are performing well across the company’s licensed jurisdictions. “Lucky Samurai” has gotten great play in Nevada,” Walther says. “Elsewhere in North America, we’ve gotten great uptake from ‘Vampire & Beauty,’ and ‘Bow Wow Bucks.’”
Outside the U.S., Aruze titles have done very well in Southeast Asia, Australia, and South Africa, the company’s strongest market.
The next big event for Aruze will be the official launch of “Paradise Fishing,” the community game that mad a big splash at G2E last year with its “Reel Feel” technology—a fishing tournament in which players can actually feel the tug on their line (via a joystick) as they get a “catch.” The game recently landed second place at G2E for Best Slot Product in the annual Global Gaming Business Gaming & Technology awards.
After Paradise Fishing launches, says Walther, Aruze’s focus for the coming year will be on “creating a deeper library for our existing properties, and on penetrating new properties with bigger libraries.”
“For a small guy,” says Walther, “we’re pretty diversified.”
One of the deans of the Class II slot market, Cadillac Jack has logged success in every one of its traditional markets. It’s no wonder, then, that the Atlanta, Georgia-based supplier would meet the same success as it branches out into the Class III markets.
“We are the market leader in Class II in most of the jurisdictions where we compete,” comments Gene Chayevsky, who took over as chairman and CEO of Cadillac Jack in 2008. “Our customers know our performance and track record, and have been asking us for our Class III games.” Those core Class II markets—Alabama, Washington, Wisconsin, Texas and New York—have served as the launch pads for Cadillac Jack’s move into traditional Class III casinos with a product that already had proven itself successful.
“Our company is positioned as a provider of innovative, leading-edge products in both games and hardware, and almost all of our products are available in both Class II and Class III,” says Chayevsky. “We have a sufficiently large library of games to support a distinct set of banks of both Class II and Class III games in a single casino, using unique titles for each.”
Part of the company’s preparation for the move into Class III was to develop a cabinet that would move seamlessly between the two segments, and among any of the company’s long list of titles. At last fall’s Global Gaming Expo, Cadillac Jack launched the Genesis cabinet, which, as Chayevsky notes, brought the company on par with the larger, global competitors who had introduced flexible, future-ready cabinets of their own.
This year, Cadillac Jack is working on the next generation of that cabinet, which Chayevsky says will be launched sometime next year. “We’re not content to just catch up; we want to bring something to market really cutting-edge, and become more of a leader among the major companies,” he says. “So, this project will see us launch a new-generation cabinet in 2012 that we think will be very compelling, and will further strengthen our position in Class III. As the cabinet will be available when we have a larger number of gaming licenses, it will be a platform for a much wider push into Class III.”
That push is already well under way, with Cadillac licensed in six Class III jurisdictions as of the second quarter—California, New Mexico, Oklahoma, Kansas, Iowa and Michigan. Chayevsky says the number of Class III licenses will expand “dramatically” over the next few years, starting with tribal jurisdictions and quickly moving on to more traditional commercial markets.
Chayevsky says the company’s current customers will be their best marketers for the push into new jurisdictions. “We have become the performance leader in almost every jurisdiction we’ve entered, both in the U.S. and in Mexico,” he says. “I believe that track record will allow us to make a credible case with operators in new jurisdictions as to why they should give Cadillac Jack a try.”
New jurisdictions need only look to Mexico, where Cadillac Jack holds a dominant position among suppliers. “It is a market where we’re not only the leader in performance in the video reel segment; we’re very close to having the No. 1 market share,” Chayevsky says. “We have by far the largest team on the ground of any U.S.-based manufacturer servicing the Mexican customers. We work with them directly, we know them very well, and we enjoy the same collaborative relationship with them as we do with customers in the U.S.”
That “collaborative” relationship is one of the keys to success for Cadillac Jack, which has a reputation for top-notch service. “One of the reasons we’ve become market leaders in most markets we’ve entered is because we take a very methodical, consultative approach to our customers,” says Chayevsky. “We regularly analyze performance of our products on their floors, and make recommendations to maximize the revenue generated by Cadillac Jack products through the optimization of our game mix. To improve joint planning and marketing initiatives, we also work very closely with customers to provide them visibility into our product roadmap.”
For Cadillac Jack, the roadmap is clear, as well—it leads across the continent.
A.C. Coin & Slot
One wouldn’t consider A.C. Coin & Slot, with 33 years in the business, an “up and coming” company in general. They’ve been a well-respected innovator in the slot space since the late 1990s, when the company founded in 1978 by Mac Seelig to supply the local Atlantic City market began to produce bonus games to combine with slots by International Game Technology, for which AC Coin at the time was exclusive distributor.
However, a change late in 2009 in AC Coin’s business model has thrust the supplier into new territory in the slot market, dropping the IGT distributorship and forging ahead with IGT essentially serving as its OEM supplier of base slot games.
One important result of that change is the ability of AC Coin to sell its games outright. The arrangement with IGT limited its proprietary bonus games to participation deals. The company became known across the U.S. and Caribbean industry while being restricted to the 5 percent to 8 percent of the floors under lease deals. The business move essentially opened up the rest of the floor to the company’s innovative games.
And the games themselves took it from there. Since the change in business model, the company has been one of the leaders in the new community-style slot setups. Using its popular slot brands like Slotto, with the bonus apparatus styled after a lottery ball draw, and Bankroll “Big Roller” bonuses, which rotate sheets of banknote-style bonus awards, the company has been mining the community bonus.
What has set AC Coin community games apart from others is that each player gets his or her own bonus, although the events are played out on a common display. “Our community is a community of individuals,” says Jerry Seelig, AC Coin executive vice president and general manager—who also heads game development. “A shared experience is what we’re creating, but I’ve wagered my money, so my win is mine.”
AC Coin’s community games have gotten a shot in the arm this year as players have embraced a new feature the slot-maker calls “Quick Hit.” Quick Hit bonuses are simple mini-bonus games, involving flashing light-box awards, quick picks or other diversions that can result in bonus credits. What makes them “quick” is they happen every half-dozen spins, on average.
Combined with more traditional bonuses that occur with normal frequency, the Quick Hits keep the action constant, and, as AC Coin Research and Development VP Larry Henshaw notes, makes players feel they’re getting their money’s worth. “In other words, if you sit down with a $20 bill, you should expect to be there longer than a minute or two,” he says. “Combine that with the entertainment experience, and it gives players value and play time.”
“What stands out,” adds Seelig, “is the way we mix the Quick Hit bonuses with the standard bonuses. The Quick Hit events are unique, with a chance to win up to 1,000 coins, but they don’t draw the process out. This makes them fun.”
AC Coin has had mega-hits with this formula, producing community-play slots in eight-game, six-game and three-game setups before this year’s big launches, which have added two-game setups—two machines with a giant dual-width bonus screen for the common bonus events.
First was “Phat Cats,” with animated bling-laden cool-cat characters hosting the bonus. Next up was “Rock & Roll Legend,” which has “rock legend” characters playing guitar solos to send notes upward to intersect with bonus amounts.
Over the last two months came more hits—“Slingo Bonus Surprise,” the latest version of the popular internet slot/bingo game; “First Class Adventure Jackpot,” a three-game unit with a big-screen bonus depicting a trip across the U.S. on a plane; and “Masquerade Bonus,” featuring a giant purple LCD display and advanced 3D video of dancing women at a masquerade ball.
In addition to offering a fair shake to the player, Seelig says the games are consistently earning well above house average.
In the process, they are solidifying AC Coin’s new identity in the slot market.
If there is one constant in the stories of slot manufacturers successfully branching out from Class II or video lottery into the mainstream casino market, it is a core of gaming industry experience at the helm.
The owners of Multimedia Games knew that two and a half years ago when they embarked on a mission to move beyond its core Class II and video lottery markets in Oklahoma and New York to become a player on the larger Class III commercial scene. Former CEO Anthony Sanfilippo, a veteran operations executive from Harrah’s Entertainment, got the ball rolling by bringing in Mick Roemer, a longtime slot development and sales executive with Bally, IGT and others, as well as several other former operations executives from Harrah’s.
In fact, when Sanfilippo went back to the operations side a year ago to become CEO of Pinnacle Entertainment, there was another former Harrah’s executive on board to step in—Patrick Ramsey, who moved from COO to CEO as Multimedia’s expansion continued seamlessly.
Of course, it has helped in the effort that Multimedia happens to be located in Austin, Texas, where it has easy access to some of the top engineering talent in the country coming out of the University of Texas. That fact has enabled the company to consistently produce some of the most innovative slot games in the industry.
Roemer, who is senior vice president of sales, says the company has continued its “very well-thought-out” expansion plan this year, and will remain focused on expansion next year. The company is focusing on the U.S., recently having become licensed in Mississippi and Louisiana, and filed for licensing in Nevada. “Of course, we’ve been in Minnesota, Oklahoma and California for a while,” Roemer says. “Our next targets are Iowa, Indiana, Michigan, Wisconsin and Florida, to name a few. We plan to have about 150 licenses by the end of the year.”
Fueling the expansion, of course, is the quality of Multimedia’s games. “The games are doing great,” Roemer says. “The five-reel ‘Action Poker,’ five-reel ‘Power Stacks,’ ‘Maximum Lockdown,’ ‘Action Poker’—all doing really well. We’re starting to roll out video as well as stepper product.”
Another strong product has been “TournEvent,” the tournament system that converts banks instantly between revenue and tournament mode, provides video of contestants to a big board during events, and other elements making tournaments into attention-grabbing events. “We’re very excited about that,” say Roemer. “We have close to 50 installs, including those that are complete and in the pipeline. The enhancements to the system continue—version 2.0 is out now, and version 3.0 was launched in the first part of April.” He adds that a smaller-scale video lottery version of TournEvent will be available this summer.
Roemer adds that the Class III expansion is incremental to a Class II business that is still quite healthy. “We think we have one of the best Class II products out there, overall, and our earnings tend to prove that,” he says. “As our product has gotten better, more and more Native American casinos have wanted to include Class II as part of their mix.”
For the coming year, Multimedia will continue to work on the expansion plan. Next up after the U.S. and Mexico—where Multimedia also has a large presence—is South America, Italy, Greece, the Pacific Rim and beyond. But first, North America. “We will continue to expand throughout North America, continue to perfect our product, add enhancements to our platform to make it easier for third parties to develop on it,” says Roemer. “We’re staying focused.”