Five years ago, a handful of pioneers appeared, championing a new genre in the slot-machine universe. Suppliers like Gamblit, GameCo, Synergy Blue and Next Gaming gained some steam in the slot universe beginning with the 2016 regulatory approvals in Nevada and New Jersey of variable payback percentages—a range of return-to-player (RTP) numbers that would accommodate a factor of skill on the player’s part that may increase the chances of winning.
It was dubbed “skill-based” slot play, something of a misnomer when considering that chance still played a big role in game outcomes. A more appropriate term, and one adopted by many of the suppliers, is “skill-influenced” slot play—more along the lines of video poker in that skill can raise the RTP, i.e., reduce the house edge.
Beginning with the 2016 Global Gaming Expo, radical new styles of games appeared—arcade-style shooting games in which hand-eye coordination increased the chances; multi-level video games mimicking the most popular mobile games appearing on iPhones; puzzle-style games; even games that utilized driving skills for better results.
The ensuing half-decade was marked by fits and starts as the few pioneering companies got skill-influenced games approved and placed on slot floors. Some games were pulled back after failing to earn, some of the suppliers foundered. A few of the major slot manufacturers dabbled in the skill-influenced genre, and later pulled out.
Now, in the wake of the Covid-19 crisis, some in the industry have questioned whether the pandemic shutdowns have hammered the final nail in the coffin of skill-influenced slots. Others insist skill-influenced gaming is a work in progress, and point to the recent success of electronic table games, which were in the market for years with marginal success at best, as offering a beacon of hope for skill on the slot floor.
Rick Eckert, managing director of slot performance and analytics for Eilers & Krejcik Gaming (EKG), is one industry expert that offers such hope for skill-influenced gaming. “I believe it is still a work in progress, but clearly has struggled to penetrate the market,” Eckert says. “The functionality and marketing of skill-based games on casino floors leaves much more to be done.”
Eckert is one of those who offers the success of ETGs as potentially analogous with skill-influenced games.
“Even when looking at the first ETGs to hit casino floors, they underwent many changes and are still evolving today as they start to gain traction,” he says. “And these are games are based on table games—game formats that have not changed in many decades except for side bets and minor variants.”
Eckert says that while a few of the skill-influenced manufacturers have appeared in EKG’s Eilers-Fantini earnings reports, they are not making a big splash compared to traditional games. “All of them earn for operators, but are arguably not earning to many operators’ expectations.”
Work in Progress
Suppliers of skill-influenced games are clearly not ready to throw in any towels. Rather, most are working with customers to get feedback that will ultimately push the genre forward.
“What we did was evolve the gaming genre from a period starting in about 2016 through 2020,” says Eric Meyerhofer, CEO of Gamblit Gaming. “In the four-year period, we saw a significant improvement in the win per unit per day on different titles. And it was really a journey of thinking about the demographic, how people play, what makes a good wager.”
He adds that the arcade style that Gamblit and others began with lent itself to shorter play sessions than normal slots. “People found the games interesting to look at, and they drew people, but their sessions were short because often the game was more complex, and people had a hard time interpreting what makes a win.
“So the evolution was to really simplify the games, make them tighter in terms of wager cycles, and shorten those cycles. After that, we saw at least a doubling, if not tripling of the win per unit per day on the games.”
“Over time, this category has evolved from the early skill-based games into various interactive wagering models,” says Adam Rosenberg, president and CEO of GameCo. “These models can be represented in a few categories: pure RNG games, hybrid RNG and skill games, and pure skill-based games. It is important to understand that even ‘skill-influenced’ can mean different things.”
Next Gaming, founded by Four Queens and Binions owner Terry Caudill and Mike Darley, a 35-year casino operations veteran, was among the last suppliers to attack the skill-influenced game model. “In the last five years, there’s been a lot of growth,” says Next Gaming CEO Mike Darley. “There’s been a lot of growth within our different companies—us, Gamblit, GameCo, Synergy Blue, Competition Interactive.
“All of us are on a big learning curve, putting product out on the floor, getting feedback from the guests, all those things you need to do. It has not been accepted as much as we had anticipated, but that doesn’t mean it’s not needed. It is absolutely needed on the casino floor to bring in a younger demographic and offer something that is gambling-unique to a slot player or any gaming player.”
Growing the Genre
As suppliers and operators continue to ride the learning curve on skill-influenced games, the suppliers are evolving the genre according to the feedback they’ve received from customers.
“Our product roadmap includes games having skill in the base game, others having skill only in the bonus round, and still others that involve player agency and interaction without skill,” says GameCo’s Rosenberg.
“The ‘skill’ involved can also range from physical dexterity to strategy and decision-making to pattern-recognition, among other things. We believe the interactive wagering category should be quite broad, to provide the greatest possible diversity of games that are different, not just better.”
Rosenberg says GameCo products to date have drawn a much younger audience than the slot market in general. “We found that peak revenue from our games comes from 30-year-old players, and demonstrated that over 80 percent of carded revenue from our units comes from players aged 21-49—a monetization rate for this group of approximately four times that of slot machines.
“Furthermore, because of the ability to generate incremental revenue, we believe that the cannibalization rate of placing a GameCo machine on the floor is just a fraction of that of a replacement slot machine. We are excited about the continued evolution of our products and look forward to the release of our newest games in the near future.”
For GameCo, the biggest successes have come from casual games like Mystery of the Secret Temple and Destination Tiki. “We have a number of new matching and casual games coming out this fall, including a Star Trek Voyager: Delta Quest match game we are very excited about.”
Gamblit was preparing to launch its fourth generation of games when the Covid-19 pandemic hit, according to Meyerhofer, who says the new batch took all the lessons from customer feedback into account, including a shorter wagering cycle.
“We had only about 30 days data, but those games showed tremendous promise,” Meyerhofer says. “We had (launched) two particular titles that had approached about 90 percent of floor index, which for a game that has a much slower wager cycle than a slot machine was a pretty telling statistic as far as performance.
“Unfortunately, the pandemic hit, and we weren’t able to release our fourth generation set of games to floors, but we felt that those games really had rendered the lessons of the previous years into a form that was going to hit the floor index level, where operators were more comfortable at expanding to multiple games per location.”
Those first two games were Navy Blitz and Lucky Words Connect. Meyerhofer says there were six others in submission behind that when last year’s shutdowns occurred.
Next Gaming was achieving similar success prior to the shutdown, and Darley says interest in the company’s games has outlasted the pandemic crisis. “We’re really encouraged,” he says. “We were kind of last to the dance, but we’ve got placements now in Oklahoma, New Mexico, Northern California and Nevada, and the acceptance is good.
“We’re really being very strategic in our placements to understand the demographic makeup of the casinos, and because we don’t want to put more product out there than we can service very well.”
Data and feedback from the field has led to modifications to some of the games, including tutorial screens on the third monitor, “but we are encouraged by the expansion of our footprint,” Darley says.
Next Gaming has widened the appeal of its product beyond the youngest patrons by featuring titles from Atari like Asteroids and Arkenoid. “Those are very familiar to an older demographic, no doubt about it,” Darley says. “And they love those games. The challenge to that specific demographic is while they like the games, it’s a smaller population of those that are willing to play those games now. It’s been interesting to learn that. If you go down into a younger demographic, we found out that what we anticipated is they’re more likely to play those games. They’re not intimidated by them.”
But the hottest Next Gaming title right now, says Darley, is Bust-A- Move, a casino version of the popular bubble-popper internet game. “Bust-A -Move is being played more because it’s a match-three game,” he says “Tens of thousands of people play match-three; it’s a very casual game. You can play at your own pace. That seems to be the most popular right now. And it’s got a wide berth.”
Into the Future?
The evolution of skill-influenced games will no doubt continue as additional feedback is received. “The game play of many skill-based games still leaves much to be desired,” comments EKG’s Eckert. “As someone who grew up playing video games, the repetitive game play of current skill-based games is too simplistic to keep my attention for long.”
Eckert says even the games targeted squarely at the Gen Z and millennial generations through their familiarity with mobile games are still subject to a learning curve. “Most mobile-based games are popular because of the quick and easily accessible game play that can entertain users for short and quick amounts of times,” he says, “whereas most casino patrons tend to play for hours.”
Meanwhile, suppliers of skill-influenced games continue to tweak their product offerings, while keeping an eye on changing player demographics.
“We at GameCo believe that player demographics are destined to change radically, disrupting legacy business models as existing customers continue to age out,” says GameCo’s Rosenberg. “Approximately 80 percent of land-based gambling revenue is slot revenue, yet younger people don’t play slot machines to the same extent as their older counterparts.
“As operators, suppliers and content providers all struggle with how to update their offerings to appeal to this next-gen audience, we believe that our games will be critical in engaging this audience. Ultimately, those who get it right will generate massive incremental revenue from younger customers having a whole new lifetime value. We have been fortunate to have so much industry support during our evolution to date, and we believe that support lends credence to the importance of our strategy.”
EKG’s Eckert notes that much of the future of skill-influenced gaming may be online. “I believe there is still room in brick-and-mortar locations for this segment to grow, but there seems to be more growth opportunity in the online casino space for this segment to thrive,” he says.
As it happens, officials of Gamblit Gaming couldn’t agree more. Gamblit recently ceased land-based production and mothballed its hardware in favor of a concerted effort to port all its games for internet gaming. “We had been talking about pivoting to at least add an online component back in late 2018 and early 2019, and started to look into doing that,” says Meyerhofer. “The reason was, you could just see online really is a strong growth market, and companies that have an online business usually trade at higher multiples.”
After last year’s closures, Meyerhofer says it was clear the land-based side would be disrupted for some time. “So we decided then to do a 100 percent pivot to online. We took the games in the land-based area and we converted them to HTML.
“We have 10 titles completed. We have others in development now, and we’re looking at distribution options for partnering up with a company to bring that online content out. And then as far as reactivating our land-based side, I’m sure that’s a possibility in the future, but our focus for the foreseeable future, at this point is, is online.”
For Next Gaming, the future lies in broader-appeal games that can be enjoyed by all age groups.
“We had a couple sitting side by side playing Arkenoid,” Darley says, “and they were having so much fun because they were bantering—‘oh, do this,’ ‘oh, you can do that.’ ‘I’ll beat you.’ That’s a unique component for a slot experience, because spinning the reels on a video reel game won’t allow you to do that.
“When the younger generation started populating the casinos, it was interesting to watch the resurgence of table games. It was just fascinating. They liked the social aspect of live table games, and especially craps, where they could go around the table and talk to each other. I think you can gain a similar experience playing our games.”
As far as growing the genre, Darley says, all it will take is a leap of faith from operators to devote unused floor space to the skill-influenced genre, with the sole purpose of generating incremental revenue.
“I think we’re simply part of that evolution of a slot floor, and of putting different product in the casinos,” he says. “I’m confident that it’s just going to take some time for a large population to understand that these games aren’t as intimidating as they think they are, and to have enough momentum within the industry to have them on the floor, to have people play them and have winning and entertaining experiences.”