A Quarterly supplement to IGWB

 
   The Official Magazine
of the Gaming Standards Association  

FALL 2002 

Risk and Reward
Brands can grab attention, but games must deliver to win players over

By Marian Green

In the mid-1990s, International Game Technology and Anchor Gaming added the Wheel of Fortune theme to Anchor’s successful Wheel of Gold game in what proved to be a master stroke.

The game rocked, becoming one of the most powerfully performing slots ever, and it still going strong today.

A flood of slots bearing themes based on licensed entertainment content followed, but just putting brand content on a game can be expensive, and there are no guarantees of success, say operators and manufacturers.

“We are very selective about what we put on our floor,” said Kathleen Harris, corporate director of slots and R&D for Harrah’s Entertainment. Harrah’s looks for specific characteristics in games to determine their appeal to players, Harris said.

She predicted Harrah’s won’t take many of the new entertainment-branded games that will be shown at Global Gaming Expo (G2E). “It has to makes sense as a gaming device. For us it’s going to depend on the game and the price model.”

Nevertheless, the trend remains strong, as manufacturers snap up licensed brands and churn out new games. Even manufacturers that have not embraced the trend, such as Aristocrat Technologies and Konami Gaming, are entering the arena.

“The popularity of the branded game has definitely helped the growth of consumers playing video slot machines and has contributed to the growth of the whole video slot market,” said Marc Falcone, a senior gaming analyst with Deutsche Bank.

For instance, IGT will debut 70 new game products at G2E. Among them will be a new twist on the Wheel of Fortune video slot, and games based on That Girl, M*A*S*H and other licensed properties.

“We go to painstaking lengths to make every game that comes out of our door a great game, whether it has a brand or doesn’t have a brand,” said Joe Kaminkow, IGT vice president of product design. “There’s a lot more to making branded games than putting on a title. It’s not going to have legs if there’s no depth, and depth takes time and refinement.”

Falcone noted that investing in intellectual property can be risky. If the licenses are reasonably priced, it can be a successful venture, he said. “In some cases, however, suppliers have paid pretty high prices for the games because they felt they would be able to create games that would generate significant win per unit, on the order of Wheel of Fortune,” but the games just didn’t pan out. “You could have the most attractive brand or license, but it’s not going to do well if the consumer doesn’t enjoy playing it,” he said.

As the shelf life for games grows shorter, manufacturers are getting smarter about obtaining licenses. “The slot manufacturers have recognized that they can’t overpay for licenses because it’s only going to be as good as the game.”

He pointed to Alliance Gaming’s strategy of investing more modest amounts of money in smaller branded titles, such as Blondie, Betty Boop and Popeye, and continuing to develop its own brands, such as Millionaire Sevens and Tower of Power.

Falcone said participation plays into the equation: Most of the branded games are offered on a participation, or revenue-sharing, basis, in part to pay for expensive licensing fees.

To assuage operators rankled by participation costs, suppliers are now starting to offer more flexible pricing models. It’s important for suppliers to do so if they want to maintain their market share and grow market share, Falcone said.

Harrah’s has cut back on participation machines on its slot floors, and Argosy Gaming has pulled them entirely. Both companies, Falcone noted, say they haven’t seen an impact from the reduction of the games on a win-per-unit basis.

“I appreciate where the operators are coming from. They have to control their expenses,” said Mickey Roemer, senior vice president with Bally Gaming and Systems.

Still, he said, branded games bring something to the floor that nonbranded games don’t, and manufacturers are responding to customer preferences for recognizable titles. “You can’t have Wheel of Fortune or a Playboy and not expect to pay for the licensing of the product.”

Harrah’s scrutinizes brands and licenses because “not all brands are created equal,” Harris said. “We do a lot of demographic work. We look at brands that are available and try to make sure they meet the criteria of our core customer.

Harrah’s has been at the forefront of partnerships with manufacturers to develop and market branded games, such as Sigma Game’s Game of Life, and IGT’s Price is Right. “We have to pick our core products carefully,” she said. “If we’re going to invest in that hardware platform, we want to make sure that game lasts and has thoughtful product extension behind it.”

This year, Harrah’s made The Game of Life its national promotion, providing plenty of marketing support to roll out the new game. “The Game of Life is actually a good gambling device because it is about risk and reward, and moving forward based on those decisions, so that’s what we look for,” Harris said.

Under the deal with developer Sigma Game, Harrah’s agreed to take a specific number of games in exchange for limited exclusive placement in markets where the company’s casinos are located.

“Harrah’s saw the opportunity with this particular brand. They really bought into the vision of this game, and they helped us launch this product all across the country,” said Jim Jackson, president of Sigma Game.

The Game of Life is an ideal brand for gaming because of its brand-extension opportunities. “The idea of traveling through life is just a great way to create a video slot game,” Jackson said.

And by offering the game on an upfront-purchase basis with a small daily fee, Sigma hopes to attract those operators eager to avoid participation deals. Buying a machine upfront and paying a small recurring fee gives operators the right to periodic game updates. “Our job is to figure out how to make a game last. Once you buy the box and you’re paying your fee, we’re going to keep you in updates,” Jackson said.

Will there come a time when customers walk onto a slot floor filled with branded games and respond with a shrug? “That’s a good question,” Bally’s Roemer said. “I’m not sure I know the answer yet. You’ll know when you start to see a lot of failures.”

The game has to lend itself to a fun experience, Roemer said. “It comes down to how fun is the bonus and how good is the math. And the math dictates the bonus.”

Wheel of Fortune works, he said, not so much because of the branded content as the idea of a wheel on a game. What Wheel of Fortune did for the game was get players to make that emotional connection and give it a try.

Bad math can kill a game no matter what the brand is, Roemer said. “Good math can make a game successful whether or not it has a brand.”

Roemer maintains there may be a shift in the number of branded games developed because “there is not as much out there to choose from.” But, he said, “it’s not going to go away.”

The channel-surfing risk

Some game manufacturers have eschewed branded games altogether. “The danger from an industry perspective is that we turn our players into channel surfers” who quickly tire of branded products, said Jason Stage, game development manager for Atronic Americas. “The closer we bring games to pop culture, I think we see how quickly they’re a flash in the pan,” he said. “The general public is fairly fickle.”

Atronic has opted for a different approach, Stage said. “Our main focus is to develop brands that stand the test of time and, ideally, that are recognized on a global basis,” he said.

For example, Atronic has had great success with its Sphinx games and IC Money games. Both are homegrown brands that have developed their own loyal player followings. “They have an understanding of what the game is about, and that’s the power of building your own known games,” Stage said.

The biggest issue for Stage is the amount of money gaming manufacturers spent on licensing.

“Some of the deals in the past by other manufacturers have set a price point that is unrealistic. When we have to pay as an industry millions of dollars for licenses, it’s lost money,” he said.

But Aristocrat and Konami — two other companies that haven’t been active in the licensing arena — plan to introduce new branded products.

Aristocrat recently announced its licensing deal with blue- collar comedian Jeff Foxworthy for a new line of slot machines coming out next year. The licensing agreement marks the first since the company licensed Kenny Rogers’ Gambler in 1996. The company has also licensed Card Sharks and Zorro, according to Kent Young, marketing vice president.

And Konami plans to unveil a new slot game based on the Sylvester Stallone blockbuster movie Rocky at G2E.

“We’re looking to demonstrate our execution abilities in that arena,” said Konami Gaming President Steve Sutherland.

Young said Aristocrat, based in Australia, hasn’t been in markets where it believed licensed products were essential. “Being in Nevada now, we need a little bit more recognition and a little bit more awareness of our product on the Strip,” he said.

Aristocrat, he said, still maintains that in a repetitive market, branding isn’t necessary for a game to win long-term success.

Still, many operators say there is nothing like branded games to liven a slot floor and keep it fresh.

“It seems the more variety of these games we put on the floor, the more interesting the casino can be for a variety of players because everyone relates to these different themes or these different brands a different way,” said Frank Neborsky, Mohegan Sun vice president of slots.

But because these games tend to cost more, Neborsky cautioned, “You have to do your homework to make sure they’re doing what they’re supposed to do, and you have to be ready to do what you have to do if they don’t perform.”

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