CASE STUDY:

The debate surrounding standard gaming platforms and greater openness has raged for some considerable time.  Operators tend to think and hope – that it is inevitable. 

Content developers must also look forward with optimism, as must poker play who will enjoy greater choice.  Whether or not the largest and most traditional of hardware suppliers are as welcoming and positive is difficult to determine.  As operators seek to exit the ‘furniture removal’ business, the infrastructures and aspirations of those whose core business is physical machine manufacturing will have to be modified.  But perhaps more important to the operators, who interface daily and directly with players, is the level of ‘control’ they have over the products on their floor.  The simplistic view is that it is they who should have full control over the product once it is on site, and not the manufacture.  In the past, this was difficult to achieve, as the different aspects of the business were exactly that, different.  They were also very separate links within a supp

ly chain.  technology has changed all this and the need to the markets are now different. 
      However, it is not true to say that this wave of change is something that should necessarily be feared.  Territorial protectionism is an understandable instinct, but when it is not viable to win a losing battle there is little point in even fighting it.  Just as shipbuilders has to accept the invention of the airplane, so payphone providers had to adapt to the arrival of the mobile telephone.  Common gaming platforms, managed at the point of delivery to the player, simply make sense.  None of has to be a genius to appreciate the wider appeal of this particular ‘bigger picture.’
      In December, at their 4th Electronic Gaming Suppliers Conferences, the UK’s Gala Group unveiled the culmination of 18 months of research and development, the Gala Gaming Platform (GGP). 

Described to by Peter Hannibal, Gala’s Electronic Gaming Director, as “ a vision that will make it easier, more cost-effective and more productive for our organizations to work together in the future,” the core ideal behind GGP is for the operator not to be limited in its offerings to the gaming public and to be able to connect many different devices to one central source for management and reporting.  Across its estate of casinos, bingo halls and licensed betting offices, Gala has more than 100,000 electronic gaming positions.  GGP will inevitably make Gala less hardware reliant and lower the barriers to entry by content developers.  This means a quicker route to a larger market for suppliers.  But it is also a different route and, ultimately, suppliers will simply have to accept and embrace this reality because it is what all operators want to achieve.  It may take a few years, but it will happen, and those traditional suppliers who choose to adopt the regal and autocratic attitude of King Canute will discover that the waves of  change cannot be held back.
      The promised benefits of GGP are improved player choice and differentiation through more games delivered faster, greater product visibility and control, lower cost games and terminals and a flexible future-proofing due to open standards.  It sounds a huge and in some ways frightening prospect but the simple truth is that it actually offers greater opportunity to Gala suppliers.  A different and tailored opportunity maybe, but an exciting prospect nonetheless. 

The best performing content will be delivered to more terminals and at far greater speed.  The fact that the delivery method will be different is simple a shipbuilding to aircraft analogy.  Obviously the key question is, does this concept actually work..?
      Phil Nunn is the General Manager of Gala’s Russell Square Casino in London.  In 2005, his casino was Gala’s second most successful casino.  It operates 16 tables and 40 electronic gaming positions.  The average age of its players is 42+ and its average spend per head is a generous £ 400 per visit.  Mr. Nunn’s proven operational skills are founded on a very simple and realistic view of the business.  “Without players, none of us would be here.”  Having been selected as a field testing site for GGP, his key personal priority was to examine player acceptance.  “The eight new GGP electronic roulette terminals were installed in August 2005,” he explains.  “This represents 20 per of our electronics terminal offer and yet delivers 44 per cent of our total electronic drop, with a ‘hold’ of 23 percent.  So you can take it from me, GGP works.  It has been a very positive addition to the casino, with almost universal acceptance.”

John Purcell is Managing Partner of Purcell & Associates, the Public Access Technology Consultants appointed by the Gala Group in May 2004 to analyze and execute the GGP project.  His explanation of the foundation upon which GGP is built is, to use his words, a lesson in ‘technological stark realities of the 21st century, it can be a difficult period.  If any industry is primed to reap the rewards of prudent technology adoption, it is the gaming industry.  Unfortunately, the industry has lagged behind other public–facing industries in sewing the seeds of such technology benefits.  Already the retail, telecom and government have advanced to benefit their respective customers.  Information, dissemination, service provision and transactional functionality are every day technologies that have not been ‘packaged’ for the gaming industry, and herein lies the inherent problem the industry has faced.  Solution provision and transactional functionality are every day technologies that have not been ‘packaged’ for the gaming industry, and herein lies the inherent problem the industry has faced.  Solution providers have always innovated in gaming and this cannot be taken from them.  However, for too long there has been a premium attached to the provision of total solutions which end up being either too expensive or too restricting for the operators.

      Proprietary software and/or an unwillingness to open development platforms to third parties have stifled widespread deployment and an industry that has entered ‘trial cycle’.This cycle is as exasperating for suppliers as it is for operators by putting gaming equipment ‘on trial’ and waiting to see what seems to benefit the business more.
      Obviously, a sensible operator will hedge their bets and not rely on a single supplier for a solution.  But, the same operator does not want to deal with many different back office systems for reconciliation, auditing, general management and maintenance.  One would think the obvious solution would be to choose the ‘best of breed’ within the industry and run with that.  Unfortunately, the gaming industry finds itself in the unenviable position of legacy providers, resembling the telecom giants of a few years ago.  Unwilling to yield to the huge advances in the personal relationships built up over many years.  These relationships are, and will continue to be, pivotal as the business has not essentially changed in many years, but there are new rules of engagement.

Because no one technology can be chosen, Gala Group has elected to reinstate control of its own destiny and specify the standards to adhere to.  Welcome to the Gala Gaming Platform (GGP).  “The key drivers behind the creation of the Gala Gaming platform were electronic bingo and roulette,” explained Mr. Hannibal.  Gala was faced with the need to take bingo digital and offer customers electronic games, whereas in its agening terminal roulette estate, few manufacturers were willing to upgrade their existing platform.  “We were faced with five different roulette products, none of which would communicate with each other, making implementation of cashless systems, for example, far too complicated,” said Mr. Hannibal.  Gala was determined, therefore, to seek a standard in which technology was no longer an issue in the provision of games to its customers.  But before it could realize its vision, Gala had to find and develop a system that would be ‘fit-for-purpose.’  “There are lots of platforms on the market,’ stated Mr. Hannibal, “but our concern was that these were being supplied by specific gaming companies with content interests. We believed that this would compromise the future development of the platform.” Gala opted to follow an open platform route, which would enable any content developer to provide games for the GGP.  To achieve this, Gala underwent a major betting process, examining in detail both gaming and non-gaming suppliers.  Eventually, gala whittled down the list to three companies, and ironically selected a gaming industry supplier, Inspired Broadcast Networks, part of the Leisure Link Group in the UK.  At the same time, Gala also employed John Purcell to oversee the project and keep GGP on the straight and narrow.  “Today, if we want to walk away from IBN, we can,” explained Mr. Hannibal of Gala’s connection to Inspired Broadcast Networks. 

“The platform has been purposely designed to give us ultimate control and flexibility.”  There are, as Mr. Hannibal suggested, a number of manufacturers offering similar products, but again Gala believed that those supplying their own content would favour their own games.  It was necessary, therefore, to tread its own path in the creation of the platform.  “I believe that we are the first European operator/retailer to have their own gaming platform,” said Mr. Hannibal.  “Getting gaming content to the customer and supporting the needs of the content provider were our primary goals.  To achieve this we created our own API-application Program Interface – a set of routines, protocols and tools for building software applications.  It’s basically a rulebook that gives transparency to the gaming product.  It removes the hardware from the equation, so that product  purchases will solely be about content.”  Selling the project internally proved to be relatively simple, according to Mr. Hannibal.  Most of the Gala team believed that this was the obvious approach and found the financial model attractive.  Tradionalists outside the company, however, have found the changes difficult to swallow. 

“We’ve had to invest a great deal more time in the traditionalists to convince them that it’s a win-win situation,” said Mr. Hannibal.  And to date, over 90 per cent of the industry is on-board, with the likes of Aristocrat, Games Media, Barcrest, Astra and Bell-Fruit, all agreeing to supply games content.  Standard platforms, according to Inspired Broadcast Networks’ CEO, Luke Alvarez, open the industry to free market content supply.  “We have seen in SWP, and in FOBTs markets, commissioning by retailers themselves,” said Mr. Alvarez.  “Standards are a wonderful thing for competition.  In the console gaming world, 15 years ago Sega and Nintendo had the market to themselves, now its Sony  and X-box with open standards, large communities of developers and greater purchasing power.”  There are however, concerns from manufacturers, not least that they’re handing over their value IP on a disc of the operator.  “It’s non-sensical objection,” proclaimed Mr. Alvarez.  “Manufacturers are not taking any greater risk in the digital world, than they are then they  hand over their machines.  Content providers in the past were paranoid about handling their games to us (Inspired and Leisure Link) for the It Box, but if we were able to reverse engineer the games then we wouldn’t have closed Maygay Games, we would have had the best games in the industry.  No, what game developers supply is not source code, it’s a compiled executable game, which is just as secure as a reel-based mechanical game.”  Manufacturers will continue  to worry, however, not just about the their valuable IP spread across networks;

but what’s to happen to the factories producing the cabinets for the games?  “If content providers remain wedded to making a margin on boxes, ultimately they’re going to suffer,” stated Mr. Alvarez.  “Following the ‘Old World’ development model, manufacturer might sell 1,000 units of a fantastic game, in the ‘New World’ he might sell 50,000 units to Gala, which would be implemented overnight, with royalties for years.  It’s a matter of letting go of a finite model for a recurring revenue one.  New entrants, and incumbents can profit if they manage the out-sourcing of manufacturing.  The transition is bumpy, but in the server-based world, in which we’re creating a true free market for games to compete, the designers will win-out in the end.”
      The ability of traditional online poker games designers to survive the transition to server-based gaming is just one of the factors in the business model.  Both Gala and IBN expect to the move to widen the pool of games developers even further.  Gala’s Peter Hannibal stated: “To write to our API means that traditional cabinet manufacturers will need to adapt.  Our API means that traditional cabinet manufacturers will need to adapt.  Out API  is very similar to the API of Inspired Broadcast Networks’ It Box, but with a few Gala tweaks.  The written API belongs to us, but it’s available for anyone to use, and a developer can test and develop their own games using the API independently.

  As an operator, it means that we will be able to test more efficiently, without the need to install cabinets that will be ultimately thrown-away.  We can switch the game on instantly, update with tweaks and changes and re-deploy without moving a single machine.”  Ultimately though, cash-box will dictate how long games will last on site, but then when games fall off in terms of performance, it will also be much quicker than dragging physical machines off the estate.  And as for profit share, the games designers will have an interest in the long-term development of the game, updating and changing throughout its life-span to keep it longer on-site.  Mr. Hannibal  also makes the point that with the convergence of technology and legislation, once the UK Gaming Act is enacted in September 2007, Section 21 games can be installed in LBOs replacing AWPs.  “Is the to continue to inject AWPs into betting sites knowing that change is around the corner, or should we instead install a terminal that can be switched between FOBT and Section 21 to suit the operator?”  posed Mr. Hannibal.  These views, so far, have dealt with the impact on both operator and content provider, but what about the crucial customer experience?  A dedicated Barcrest or Atronic games player, who loves the Impulse and

e-motion cabinets, and seeks the games titles they recognize as their own?  “I think the visual environment will differ according to product category,” explained Mr. Alvarez.  “There will be a noticeable difference for casino slots, but at first glance the effect on electronic roulette will be zero.  That said, the player will notice subtle enhancements to the game over time, which will actually take effect much faster.  Stakes and prizes will change at different times of the day, with personalization of each terminal suited to player preference.”  Gala, for example, noticed that players were shielding their credit metres from each other on the GGP electronic roulette.  A ‘hide credit’ button was created and downloaded.  It may sound like a simple thing to implement, but traditionally you’d have been looking at long development times.  Bingo players, on the other hand, will see their table-tops replaced by a touchscreen bingo product, which again will be a constantly evolving experience.  Pubs will see their reel-based machine replaced by video.  There will be different stakes and prizes offered to suit the environment, with new games updated every four to six weeks, instead of every six months.  “if you take the UK FOBT model as an example, we’ve seen income more than double, and that’s the same in the UK skill games sector too,” said Mr. Alvarez.  “And if you consider the two different categories of player, both core and casual, both will be catered for with server-based games.  Core players are very sensitive to the game development brand, and know they like Barcrest or IGT games for example, but there’s no reason why they won’t remain loyal in the digital world as they have in the offline world as they have in the offline world.  Big brand licenses can also play a role, offering greater mass-market appeal to players that respond to licenses more strongly than traditional games development brands.”  Mr. Alvarez depicts a games Utopia, where operators select the best performing games, downloading to the estate tweaks and updates, while poor performing games can also be modified to improve performance without having to remove the game entirely. Hopefully, this will offer a more robust business model, and one that offers both flexibility and long-term partnership with operators.

  “We envisage the structure in terms of anchor games in both bingo and roulette, which we prefer to own, our ‘bread and butter’ games if you like,” explained Gala’s Peter Hannibal of game ownership.  “And there’ll be another set of shared income games (although at present operators are not allowed to share income on AWPs, until the new Gaming Act 2007 changes those rules).  In the short-term that means we’ll operate Section 21, SWP and novelties, on an income share basis.”  But while Gala is looking to share income with games designers, the branding of both platform and games will be much more of an in-house affair.  “The Gala brand represents certain values and a particular kind of customer experience,” said Mr. Hannibal.  “We’d like to carry that through to the Gala Gaming Platform, to the benefit of the Gala/Coral business.  Individual brands are important, but if customers, especially in a bingo club, want the same experience in an LBO, or casino, we have opened up the platform across all forms of gaming: bingo, LBOs, casinos and Internet.”  In this way Gala intends to use GGP as a means to leverage the Gala brand.  A Gala bingo customers who visits the Gala Internet site should find a similar experience to the bricks and mortar business.  “Imagine the Gala customer returns to a location after several weeks  away,” described Mr. Hannibal.  “He places a card into the terminal and the screen reverts back to the place they left it, and the next moment a gin and tonic arrives as part of the dedicated personalized service.  Why not provide this for all our customers?  GGP is an example in which technology doesn’t depersonalize the experience, but achieves the opposite, adding to the personal approach.  The terminal would display the games that customer likes, and shows similar games they could try, allowing them to select the presentation on the screen that suits them best.  We would bespoke everything for the individual player experience – the Gala player experience.”  During April Gala was to expand its ongoing test.  Two bingo clubs and four casinos will become part of the GGP network this month.  The ultimate test will be customer reaction, where performance will dictate everything.  As long as traditional AWPs out-perform terminals, the migration  will be slow.  As soon as the GGP outstrips them, however, then the speed of hardware replacement will become much faster.  “Phase 1 of GGP installation will see 11 bingo clubs and five casinos taking part in the roll-out,” said Mr. Hannibal.  “For casinos it’s a cost neutral approach, since we have to replace the ageing roulette terminals, whereas in bingo it’s all about the growth opportunity of the electronic game.”  The final words best belong to Luke Alvarez.  Having come into the gaming industry from a ‘new media’ background, Mr. Alvarez is more than comfortable with the concept of shaking the tree (like Cool Hand Luke himself ).  “Disruptive technology drives creative destruction,” he says in true cliché style.  “Recent examples include mobile telephony and satellite television, and these technological breakthroughs are transformational.  In the gaming industry, we are entering a similar period of dramatic change and creativity.”