HOW ON EARTH DID WE GET HERE? - CMAA - Home · –Regional and coastal gaming trends –Data...

HOW ON EARTH DID WE GET HERE? Trends, insights, ideas and answers

1

• Set the table with some insights, data and observations about current market conditions across 5 different topics – Headwinds, wider market trends

– Rising costs and the rise of Pubs

– Regional and coastal gaming trends

– Data overload and the evolving gaming floor

– Future of country clubs

• Get feedback after each topic from our panel

• Audience participation

2

The goal of today

MARC EISENHAUER KARREN HOWE DAN PERKISS

JOHN GOULD CRAIG BUTLER

• Clubs NSW data – 50/50 between Sydney Metro and ‘Regional’ (defined as non-Sydney Metro)

State dynamics

STATE OF PLAY What the wider market looks like at the moment

The demographic challenge

• The player base is getting older

• New generation perception – that’s where ‘old people’ go….it’s not a product ‘thing’, in some cases it’s a layout ‘thing’

• People are living longer, savings have to be stretched, discretionary spend affected

• Record low interest rates -> effect on self funded retirees

• Age line is moving up

• Pubs encroaching on the 50-69 age bracket

Changing trends

Changing landscape

The big get bigger EG

M S

HA

RE

AV

ERA

GE

2030 Prediction

• What is the key for regional clubs not only surviving, but succeeding?

• How do small clubs get ahead?

• Is stigmatisation and social pressures around gaming coming present in regional areas?

• How do manufacturers look at changing player tastes?

12

Questions

THE NEW DEATH AND TAXES Costs and competition

Headwinds

• Insurance

• Compliance

• Power

• Borrowing cost

• Overall AEMP, but really just one part of it……

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Rising costs

Myth vs Fact

%age

Tier Level

x

x

x x

Myth vs Fact

%age

Tier Level

%age

Tier Level

x

x

x x

x x

x

x

• Keep it under control

• Rusted on costs

• The squeaky wheel

• Entitlement

• When a perk becomes an entitlement

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The new AEMP cost

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 H1

2012 2013 2014 2015 2016 2017 2018

NSW Clubs and Hotels' MW Market Share

Clubs' MW Hotels' MW Linear (Clubs' MW) Linear (Hotels' MW)

H1 ‘18

62.5%

The reality

67%

33%

• Lightning Dragons

• The model travels

• Smoking areas

• Aristocrat dominance

• Cheap Money

• Gentrified offering

• Evolving and improving

• ‘No judgement’ areas

• Loyalty programs

• No fear

• RTP / depreciation

• Financing

• Watch, learn, experience

• Reports

21

Why Pubs are improving

22

Just copying the good stuff

23

….but all booms end

• What costs have become disproportionate issues in the last 5 years?

• How do you rationalise the cost of Rewards programs and AEMP in general?

• How do venues counter the success of Pubs?

• What products are Pubs after?

24

Questions

ALL THE GOOD STUFF Trends, retention and spending patterns

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Breaking down the State

Breaking down the State

Minutes Minutes

Avg Daily TO Location Share Avg Daily TO Location Share

Under $1000 Coastal 63.2% Under $1000 Coastal 63.2%

Country 61.2% Country 60.3%

Metropolitan 46.4% Metropolitan 45.8%

$1000 to $2500 Coastal 25.6% $1000 to $2500 Coastal 25.6%












Over $20k Coastal 0.0% Over $20k Coastal 0.0%



Q4 - 2016Q4 - 2018

The case for retention

Actual Net Theo Net Sample

All Games 8.35 8.49 50,400

2017-2019 (Jan) 8.46 8.17 13,900

2013-2016 8.43 8.65 20,600

2004-2012 8.04 8.71 15,200

SAP 8.29 8.26 18,900

Link 8.53 8.54 8,800

Standalone 8.67 8.82 3,200

Extra Bet 8.16 9.38 3,400

Multi Game 8.26 8.51 16,000

Multi denomination 8.40 8.40 27,000

0.01-2.00 8.25 8.66 23,400

Players Choice 8.44 8.62 6,000

Lightning Dragons 8.53 8.34 11,800

MultiStar Champion 6.30 7.87 500

Aristocrat 8.50 8.56 26,900

SciGames 8.58 8.61 5,100

IGT 7.33 8.23 7,100

Ainsworth 8.25 8.19 8,700

PRODUCT TYPE

DENOMINATION

KEY PRODUCTS

MANUFACTURERS

YEAR OF RELEASE

• Look at the older games

• Multi game blame

• Ante bet (anti-hold)

• The Lightning Dragon schnitzel is not ‘off’

• Gimme an I…gimme a G..

• Is it as simple as players just want to win, or do they want entertainment?

• If they want entertainment, what is that on a machine?

• How is the retention problem solved? Would you advocate a cap of 92% like the Queensland Pubs and Clubs market?

29

Questions

DON’T OVER THINK IT

Data overload and the breaking old habits

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• An average 80 machine Club generates approximately 30Mb of data a day

• We have more, but are still looking at a small amount of it

• Player data is confusing

• We rely too much on automation, not enough time understanding

• Sometimes the simplest ways of looking at something are the best

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Data

Where does it ‘hurt’

• Foot traffic

• Average spend

• Day of week, time of day

• Competitor activity

• Missing groups

• Missing individuals

• The nuance of floor design is disappearing

• The skill of game development has gone

33

RIP….denominations

• Product and service differentiation exists in most industries

• There are clear preferences

• Venues can look to shape an offering

Gender preference

Game Name M'facturer F2M

SEA QUEEN IGT 6.26

JETSETTER NEW YORK IGT 3.32

TRIPLE MAGIC AINS 2.65

VEGAS FIESTA AINS 2.63

ENCHANTED WORLD AINS 2.62

DOUBLE SHOT DUO ENCHANTED AINS 2.59

5 TREASURES - DUO FU WA SG 2.59

HOTTER THAN HOT QS AINS 2.55

PINK GALAH TRIPLE SHOT AINS 2.55

PEARL POWER AINS 2.43

WONDER WORLD AINS 2.43

DS CLASSICS AINS 2.41

VEGAS FORTUNE AINS 2.38

DIAMOND ETERNITY - DUO FU WA SG 2.35

FIRE WIZARD AINS 2.30

Game Name M'facturer M2F

VS SG 1.96

PC HIGH LIMITS ARIS 1.77

WILD STALLION ARIS 1.76

VS CLASSIC ROULETTE SG 1.75

MORE CHILLI ARIS 1.53

LUCKY 88 ARIS 1.49

PC ULTRA JACKPOTS ARIS 1.48

VS MTGM BLACKJACK SG 1.36

KING OF THE NILE ARIS 1.35

VS MULTIGAME SG 1.33

JUMPIN' JALAPENOS DELUXE KON 1.32

PC CLASSIC EDITION ARIS 1.31

PC EMERALD EDITION ARIS 1.26

PHARAOH'S GOLD IGT 1.21

PC DIAMOND EDITION ARIS 1.20

• Treating games as though they appeal to all

• If floor occupancy isn’t 80% a lot of the time, why are all games treated equally?

• Volatility is less appetizing for the older player

Total addressable market

• Is it achievable to smooth out trading hours?

• What are the best guiding data points for venues of all sizes?

• Not only gaming, but food and beverage?

• Are gender specific and lower volatility areas a pipe dream?

36

Questions

THE GAMING EXPERIENCE

Invest in the engine room

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Stay in business Capex

Replacement Assumed Annual

Component Rate (years) Price Contribution

Gaming Machines (new) 8 $28,000 $3,500

Paid game conversions n/a $250

Gaming stools 4 $350 $88

Gaming bases 5 $400 $80

Gaming peripherals 6 $190 CRTs and Kiosks

Display screens 3 $160 Assume 1 screen per 20 machines

Room furniture 4 500 $125 Privacy screens and lounges

$4,393

• Gaming is the most profitable part of the business and should have an ‘untouchable’ investment schedule.

• Once you cut a gaming budget, you start to cede ground very quickly.

• Processing quicker

• Privacy not seclusion

• Removing site lines

• Getting in and out

• Interfacing remotely

Generational

• Gaming User Experience

– Service on demand; food and beverage, Uber

– The power of the points economy; buying convenience

– Games and promotions

– Reminders based on past trends; raffles, Bingo, promotions

Interface

G UX

CLUB ECONOMICS

Not-for-profit doesn’t mean a charity

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• The issue of power costs and self sufficiency

• How should layouts change to reduce costs? 95% of Clubs have enough room.

• What is the future of ‘sacred cows’?

– TABs

– Courtesy Buses

– Bowlers Bars

– Auditoriums

Cost changes

THE FUTURE OF CLUBS

How Clubs will adapt and acclimate

43

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What is the operating space?

• Gaming – 65% of current Club revenue, best margin driver, still place of choice for 50+ age brackets

• Food – still driver of foot traffic, appeal will continue to follow key age brackets

• Beverage – Gen X are drinking less, beer consumption in general is declining, growth pockets in wine and coffee.

• Entertainment – gain share in the small to medium space as Pubs withdraw

The future of Clubs

• What are some of the things you are seeing that Clubs are doing better?

• How will the business of running a regional club change?

• How will the ‘battle for the 40’s market’ be won?

46

Questions

• Benchmarks for key silos in Gaming

– RTP and retention

– Rewards program costs as a %age of Gaming revenue

– AEMP

– Gaming room investment, age of machines

• Objective operational review

• Form a Gaming Group

• Functioning Strategic plan

• Functioning Master Plan

• Demographic projections and regional development plans

Checklist

Terry O’Halloran MBA B.Ec

Associate – Member Insights and Gaming Specialist

(m) 0426 468 738

(e) [email protected]

HOW ON EARTH DID WE GET HERE? - CMAA - Home · –Regional and coastal gaming trends –Data...

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