InterGame – innovation and the economy feature – editorial
Investment and innovation generally come hand in hand but while the global economy is suffering the effects of a recession, the coin-op industry is having to tighten its belt while it weathers the storm.
Through this feature InterGame will look at whether manufacturers have kept spending down while still providing new, innovative product or whether they have increased investment to ensure the best product is available to operators and how.
Answers from Peter Davies, Business Development Director at Gamestec.
What has been the company’s experience of the global recession?
The UK pub industry has been hard hit by the recession with an estimated 52 pubs closing every week. The majority of our customers are in the pub industry and this has had a knock on effect on our business.
How has this affected your business strategy?
Due to the combined effect of the recession and the takeover of INGG’s pub division it was vital to review our business strategy. Last year Danoptra Chief Executive Derek Lloyd brought in a new management team of industry heavyweights with the brief to turn the company round. The business has been completely restructured so it is now a leaner and more efficient operation. This has included introduction of a call centre to improve customer service, reduction of the number of depots to streamline the operation and walking away from unprofitable contracts which were draining the business. Excellent customer service and offering the ‘best of breed machines’ has been at the heart of the restructuring. In times of recession customers expect value for money and are more likely to cancel their contract if you do not offer them the best products and services. We are also aware that offering the same products isn’t going to be enough to help maintain and grow revenues in pubs. We have been actively investing in developing products that create new revenue streams for licensees or help to provide different entertainment experiences.
Have you seen any signs of green shoots yet?
Green shoots have defiantly started to show. The restructuring work has started to pay dividends. When we unveiled a number of new products at Preview the response we received from the industry was fantastic. It shows there is still a hunger for innovative new products despite tougher economic times.
Have you seen changes in credit terms and/or numbers of companies leasing machines?
We have renegotiated supply agreements where possible to reflect fair terms to ensure we are able to continue to support investment in products and services. The industry must continue to provide the platform on which innovation can be brought to the market place. We are working with a number of forward thinking suppliers who are seeing the benefits of ‘partnership’ arrangements which removes the need for intensive and expensive capital outlay on products and equipment and encourages a combined approach to generating income which benefits our customers.
What new products have you launched during the recession?
We were the first company to install £70 prize Category C machines in the UK and completed a roll out of over 8,000 machines within the first month of the legislation coming into force. At Preview last month we unveiled an exciting portfolio of new products. This included TabBOXX, a new instant win lottery product launched in partnership with Twylite Media Group, LLC and International Gamco of the US. This will provide a valuable additional income stream for pubs and bars and is expected to raise over £6m for good causes in the first year of operation. The first charity to benefit is the Roy Castle Lung Cancer Foundation. We felt this is fitting as the TabBOXX is likely to replace cigarette machines in many venues if the government’s new UK Health Bill places a ban on cigarette vending machines. Socialite, a new ‘in venue’ digital advertising medium will offer locations an additional revenue stream. The 40” HD posters will generate income by providing space for high quality brands space to advertise whilst also offering licensees the chance to promote their own events and products. i-assist is a new user friendly service management tool, also launched at Preview. It offers efficient detection of faults, protection against fraud and reporting which can be used to maximise income. It is simple for licensees to operate and can be installed quickly. As well as launching new innovations it is important to capitalise on brands and products which are already successful. With this in mind we developed and launched the new and exclusive Deal or No Deal Platinum Category C machine in conjunction with Bell Fruit Games which combines a reel to screen playing experience with the incredible attraction of the Deal or No Deal brand. The team continue to work up ideas, products and adaptations to bring to market yet more, exclusive to Gamestec, money making opportunities for our customers, all to be ready for January.
What were your reasons behind releasing these products?
Maximising income for both our customers and ourselves has to be a priority. We reacted quickly to the change in stakes legislation and the injection of new machines has been a lifeline for many struggling pubs. We are constantly evolving our offering and looking to generate new revenue streams for our customers through innovative new products .TabBOXX and Socialite are great examples of products which provide new sources of income. We are also keen to capitalise on our existing strengths, the Deal or No Deal brand has been a success for a number of years. This is why we have released the platinum version to build on previous success. Throughout the restructure we were aiming to become more efficient and provide a better customer service. i-assist uses the latest technology to meet both of these objectives, greatly improving the customer experience and allowing us to maximise revenue through improved operating practise and machine management.
Has the company continued to invest in new product during the recession or has it held back – please explain your reasons for this?
We decided the only way to survive the recession was to invest in new products. Innovations such as TabBOXX and Socialite open up new revenue streams for both our customers and the company. During the recession customers expect even higher standards so it is important to invest in new products which offer both value for money and an excellent gaming experience. We have secured exclusive deals on many of the new products making Gamestec the UK operator with the widest selection of products.
What has been the biggest challenge for UK operators and how have you tried to overcome this?
The decline in the pub trade has proved a big challenge for Gamestec. This has come alongside a series of changes to the industry like the smoking ban. We have met the challenge by offering innovative products which provide new ways of boosting income for licensees. Many pubs are looking at inventive ways of bringing younger people into pubs like poker nights and hosting wii tournaments, we need to be working with licensees to create brand new offerings that cater for this market. There will always be a market for the traditional gaming machines, but the industry is changing and we believe our product offering is ahead of what the competition is offering