Questions & Answers

Growth in Games: Slot Directors’ Round Table

Moderator: “Can you tell us a bit more about your customers and their behaviour?”

Matt Hurst, City of Dreams: “After only a few days operations [at City of Dreams] it’s pretty hard to tell. But I think from working at Wynn and Sands and so on, we’ve certainly seen slots develop hugely, and we’ve definitely seen big players in slots.

“I don’t know if anyone remembers slot machines in Macau before Sands [the first foreign-owned casino in 2004] opened, but they didn’t even have chairs in front of them. They were in the hall on the way out, just to get some last loose change from people on the way out of the door.

“Now everything’s diversified a great deal. You’re getting high denomination play in slots, and we’re also getting very low denomination too.”

Peter Johns, MGM GRAND Macau: “We break it down into two groups—premium denominations and mass denominations—a dollar and upwards and a dollar and down. There’s definitely a bigger growth in the premium section in the last 12 months. We’ve also seen a big growth in the mass [sector]. The type of customer varies widely from day to day.”

Mr Hurst: “The highest bets we can have in Macau, I think, is the HK$10 Aristocrat machines. Based on 500 credits that’s HK$5,000—about US$700.”

What segment do you focus on?

Tammy Ng, SJM: “Our market is mainly the locals. What we see is that locals actually like to play slots—it’s just that we haven’t been able to give them enough product in the right positions and the right areas [of Macau].

“We’re very limited about where we can place them [gaming machines] in the suburbs. The highest grossing areas are actually in the suburbs. The general take up of slots in the past four years has been very very good. We use denominations starting from 20 cents, and 50 cents are very popular.

“Our machines accept local coins. We are the only company to do that in Macau, which has been a great benefit to our customers as they can walk in off the street and use their spare change. I would say the customer profile is 50-50 between grind and mid-market. We have construction workers, quite a lot of housewives and [casino] industry people—mostly middle class [customers].”

Mr Johns: “We try and cater for everyone. Higher value customers obviously get a little bit more in terms of benefits. We look after those players because of their spend. But the mass market is also important to us. The top 10-15% largely looks after itself—not literally but in the sense of customer relationships.

How much business is coming from VIPs?

Mr Johns: “I would say looking at a recent month such as May, it is just over 50%.”

Mr Ng: “VIPs are the main component in the local market. The middle class particularly is a growing market for us.”

Where do your customers come from?

Mr Hurst: “It’s too early to say at City of Dreams. At Wynn [Macau], we probably attracted more than our fair share of Hong Kong customers. They seem to like the environment at Wynn. We also had some big players from [South] Korea—occasionally Japan, Malaysia and Singapore. There are also big players from Mainland China—probably more from there than anywhere else.”

Mr Johns: “We are probably quite the opposite to Wynn in some things. Our biggest market is probably Hong Kong. We are seeing 55% to 60% from Hong Kong and only 15% to 20% Mainland Chinese. The rest is the ‘outer ring’—[people from] Singapore, Malaysians.”

Mr Ng: “Ours come from all over Southeast Asia, including Burma and Thailand—but they’re all people working here in Macau. They’re ‘local’ but they’re international at the same time.”

Mr Johns: “Our 20% of Mainland customers probably contribute 40% to 50% of the revenue.”

Mr Hurst: “Most of our Mainland customers come from Guangdong province.”

What is the primary reason for customers coming to your property?

Mr Ng: “Definitely the location. Our three highest grossing sites are located pretty much within residential areas. That and the convenience of being able to use MOP [Macau patacas, the local currency].”

Mr Johns: “We attract a Hong Kong crowd that come for many reasons—including the food. If you’re talking about slots overall, people come because they get good value for money. If you want to generate mass market on your slots, you need to give them [the players] a good run for their money. You must give them decent jackpots that are attainable—not something that they only experience months or years later.”

Mr Hurst: “With City of Dreams it’s the diversity of experiences. We have the Hard Rock Casino upstairs, the podium downstairs—The Bubble—which is an amazing audio visual experience. Hyatt, Crown and Hard Rock Hotel offerings. The food and beverage offering is also fantastic.”

The Venetian Macao is next door to City of Dreams. How do you attract people to CoD? How do you make sure people come to you and not them?

Mr Hurst: “The Venetian is massive but you can be 100 meters away from the nearest bathroom if you’re in the centre of the gaming floor. It’s all [The Venetian] divided up into quadrants—all the walkways are straight and at right angles.

“We’re much more of a flow-round effect [in CoD]. I think it’s good as a punter that the restaurant divides the rectangle of the gaming floor in half so you’re never too far away from anything. We have a look and feel that is more contemporary.”

Do players have any special tastes or habits? Baccarat for example is very popular in Macau. Chinese people often try and see a pattern in a game. So in your thinking do you see any slot players playing differently from other markets?

Mr Johns: “As far as [slot] machines go, players like to play certain game titles. I’ll share with you the fact that five game titles are probably making 50% of the handle. The maths of these games is very similar, and the volatility of the games is very similar. Players are quite savvy. They like to think they can work out the volatility of the game.”

Mr Ng: “In the local venues we’ve realised that without the multi-stations people won’t come. Multi-stations are put there as an attraction. The reason is that the customers are already familiar with the table format. We don’t get much cross play, but we do get people coming to play tables before they go to the slots. We see this a lot at the Canidrome [dog racing track]. We have people lining up five deep to play multi-stations. They may even say ‘I don’t play slots’ but we find they will try them.

“[Regarding play style] there are a lot of superstitions around luck.”

Mr Johns: “I’ve been in gaming 25 or 26 years—a lot of that in slots—and I’m still learning about what the player likes. It changes month by month. We constantly monitor the data, we constantly make changes to try and keep abreast. Rather than just giving the player what he or she wants we are trying to jump one step in front. We like to pre-empt what they [the players] want.

“I would say 80% of what we have on the floor at the moment we would reprise—there have definitely been some changes, though, in the last year.”

If you had billions to spend on slot facilities in the Macau market what would you spend it on?

Mr Ng: “I would build many many social clubs. I would get the product to the public and work with them. A lot of the Macau suburbs right now are quite run down. Perhaps a slot business could actually revamp those areas, create jobs and create a better Macau.”

I’ve heard some operators tell equipment suppliers that the graphics on games for the Chinese market shouldn’t be too complex. Otherwise players will think the machine is too ‘smart’ and they won’t dare to play. What’s your take on this?

Mr Johns: I think quality graphics are extremely important. People are used to seeing high quality graphics on their mobile phone and on their audiovisual equipment at home. Colours are very important on screens—certainly in the interactive parts of certain graphics from certain vendors, as it increases the players’ willingness to interact [with the game].”

Mr Ng: “We saw the exact same issue when we went from a mainly stepper market to a video market in 2003-04. There were many doubts in our players’ minds about whether video machines were cheating money, whether the result was predetermined. But as the market matures people are coming to understand that the market is regulated, and that they are protected by GLI and BMM and all those regulations. And once we educate a player to that extent, it once again becomes important to attract a player to a machine. Sound is very important, as are graphics.”

Who are your future customers in the Macau market?

Mr Johns: “We’re so close to the Chinese Mainland that that market is still going to be the biggest customer base over the next five years. Certain players from Macau may go to Singapore when that market opens. But I think there’s enough mass-market growth in China over the next five to ten years to make that the focus [for the Macau industry]. The people in Macau’s catchment zone are still going to supply the growth.”

Mr Hurst: “I agree. I also think there’s a lot of opportunity in Taiwan and Japan [players from there] especially. We’re seeing [in Macau] a lot of play from Singapore and Malaysia. Malaysia already has a casino but players still want variety. I guess the question for the people that run Macau resorts is whether they want to make Macau the destination in Asia or whether they’re just happy to taste the money from China. China is certainly big enough to keep everyone going for a long, long time.”

Mr Ng: “We are limited right now to the local market. I would love to tap into the China market, but I don’t think our sites really cater for that, unless we can start running [in] RMB [Chinese currency].”

What are the most popular types of game?

Mr Ng: “Chinese games certainly make it easier for the player to take up [the game]. Most of our players don’t read or speak English—only Chinese—so having a Chinese-themed game makes it naturally easier for a Chinese person to approach the game and start reading it.

“The theme doesn’t really matter as long as it’s done well. A lot of the early games [in the Macau market] done by certain manufacturers kind of played on the Western stereotypes about the Chinese too much—in terms of the fonts and the colours of the graphics—the colours were actually wrong. I’m a Chinese and if a ‘gweilo’ [Cantonese nickname for Westerner] comes and does that it’s kind of offensive to our culture. Over the past few years they’ve actually got it right and got the graphics spot on. So it’s getting better, but in the early years I have to say some of them [the slot products sold to Macau] were pretty horrible. They were kind of ‘step in the dark’ games that were about trying to tap into the market as soon as possible, but they weren’t really themed for this market. I think any game is fine, as long as it’s executed well.”

Mr Johns: “It’s horses for courses. If you say Asian-themed games, then yes, your Choy Sun Doas and your Five Dragons and 50 Dragons [all from Aristocrat Technologies] are popular—but then games like 100 Lions and 50 Lions which have been ‘Asian themed’ are just as popular. I think it’s all about the game itself. Important factors are the math model and the language on the screen. We have a corporate policy that we stick to traditional [long form character] Chinese on all our buttons, but I’ve put machines side by side—one in English and another in Chinese—the same game on the same bank [of slots] and we see virtually no difference [in revenue] between those two machines. Maybe that’s just our customers. I don’t see screen language being a big important driver in our venue, but obviously venues change [over time].”

Mr Hurst: “One supplier tried a number of Asian themes and they were the biggest dogs on the floor. I’ve seen another vendor do the same game [in terms of play dynamics] but with a mahjong theme on the steppers at Sands [Macao]. The mahjong had double the performance. So there is certainly something to do with the artwork and the graphics.

“I agree with Peter that people pick up many games pretty easily regardless of language. If it’s a touch screen interaction, though, or a second screen feature like a lot of WMS games and so on, I think it’s absolutely necessary that you get the Chinese version. The Great Wall [of China] game [from WMS] is a classic example of that, where you really need to understand what is going on.

“An industry colleague showed me a game in Australia where he turned it into Russian for me to play. We stimulated the second screen feature, and I had no idea what to do at all. I was basically just randomly ‘touch flashing’ things on the screen. One minute I’d find I’d been awarded 800 credits, but had no idea how. There was no value created for the [non-Russian speaking] customer at all. So it all depends on what kind of a game it is and what’s involved in the process. But I would just say as a default [localised language content] is a smart thing to do.”

Penny slots are becoming big in the US. Is this a trend in Macau? I heard The Venetian [Macau] is putting in one-cent machines, but other than that I heard the lowest denomination is two cents.

Mr Johns: “Our two-cent Cash Express [Aristocrat] machine is doing 100,000 [dollars] right now. The 20 cents is getting over a million dollars, so they [players] like that. The jackpot has got to be obtainable within three to four weeks.”

Mr Hurst: “We’ve got two-cent machines [at City of Dreams]. So far they look to be pretty popular, though I haven’t looked at the numbers too closely. It’s very hard to get the average bet up to generate some income. People [operators] blank out some button panels. We’ve done that a little bit where we can. Peter’s tried different things with that as well.

“Brandon Patterson over at [SJM’s] Grand Lisboa has done some fantastic things I think with Bally machines and putting plastic strips across the touch bet part of the screen, so that you’re guaranteed the player has to bet max lines at least on the really super-low denom [denomination] stuff to try and boost that average bet. I think that’s the way to go. It’s certainly popular, but I think we’ve seen since the opening of Sands [Macao] movement both ways—movement to the low denom for the mass, to much higher denoms for the much higher value players.

“IGT have done some things with buttons recently too, where you have to bet the maximum lines.”

Mr Johns: “I’m not a great believer in blanking off buttons. I know we have the ‘true’ two-cent machines in our place. We have a couple of banks, but I don’t see it being a mass wall. Blanking off buttons does force up the average bet, but I don’t see that as a big indicator of turnover. Occupancy is more important to us. We see where we’ve used the buttons and didn’t blank them off, people sit on them [the machines] in a 24-hour period for 85% to 90% of the time and you’re going to get the churn. The big player’s going to go on there and max bet anyway. Let the grind customers sit there all day—you’ll get the turnover in the end, and you’ll hold your percentage of that.

“We have seen a better effect from not blanking off [buttons] than blanking. I’m not saying I would never blank off buttons—it’s never say never in this business—but I think it depends on the product. If you can drive people to sit on machines it teaches people how to play and they get used to the machines. It’s a matter of strategically placing the lower denoms, and to show that if you move onto a slightly higher denom, you might get a better return. It’s about educating the player and using the two-cent [play] as an entry mark. I don’t particularly see it as being a profitable denomination to chase.”

Mr Ng: “We don’t have any one- or two-cent slots. Our lowest denomination is five cents. I do believe that there is a market maybe in the next 12 months—depending on local economic conditions—for one- and two-cent slots, to add a more value-for-money option for players. My players come back every day with a certain amount of money. I would rather keep them coming back than view them as a one-off customer. Five cents has though been very popular at our sites—but not stand alone—always on a link.”

What do machine manufacturers need to do to help develop the Macau market in future?

Mr Hurst: “Besides lowering the price?”

Mr Johns: “Some of the manufacturers have done some great stuff and been innovative. They are trying some new products that have been working [well]. One thing with vendors is that they are very good at setting up showrooms and very good at selling machines, but that doesn’t necessarily transpose to how an operation works on a client’s floor. So vendors dictating how you set your links and how they set their program because they think it’s right and it’s worked in other jurisdictions, doesn’t necessarily transpose to Macau. I think it’s better to let the operator set the parameters and set it to how he thinks it works best for his particular site.”

Mr Ng: “As Peter said, manufacturers should treat Macau as its own jurisdiction and stop pretending that American machines or Australian machines, etc., will [automatically] work in Macau. They’ve started to make progress in this direction with Macau themes and Macau jurisdiction [specific] machines. That’s only been in the last 18 months. Most of the manufacturers are still bringing in other jurisdiction machines and getting them approved for the Macau market. I don’t think [the latter] is the right approach. They should really set up their R&D [research and development] team inside Macau and start taking data from Macau, to get the Macau jurisdiction framework happening. You can’t place foreign machines in Macau and say to a Chinese person ‘You play this machine.’ It doesn’t work.”

What do Asian players want in a gaming machine?

Mr Ng: “Bigger payouts.”

Mr Johns: “Players need to feel they’re getting value for money and see value in the machines—not just that it’s taking HK$500 or HK$5,000 from them. Players here love free game features. No matter how big the gambler or player is, he or she still likes to get a good run for their money—[they like] to feel that they have a few feeder jackpots or just money for credits so that they can play for longer. I think large jackpots and links have come back.

“Links weren’t really working for us when we first opened, but we have certainly learnt a lot about links. We have changed the limits of the links we have on our floor. We have seen a growth in popularity [of links] because of the way we have changed the contribution to each level. It’s different, for example, from Australian standards or those found in other parts of the world. It’s about learning your market and knowing what to cater for.”

Mr Hurst: “I would build on Tammy’s point. You have to treat Macau as its own market. Don’t come here with Australian, European or American machines expecting that they will work. I think there’s a massive opportunity for game designers and machine manufacturers to really build on the growth of gaming machines in Macau. I would start by looking at the gaming machine experience as being fundamentally different for an Asian player or specifically a Chinese player than for a Western player.

“I use an analogy that in some of the [Chinese] movies that you will see, such as ‘Crouching Tiger, Hidden Dragon,’ where the hero and the martial arts people come floating from rooftop to rooftop—that’s believable and entertaining for Chinese people, whereas many Westerners may laugh it off and say ‘That’s a load of rubbish.’ Fundamentally, what people look at as entertaining is different here. I think game designers and manufacturers should take that on board and stop trying to flog us the Model-T Ford—i.e., ‘You can have any colour you like as long as it’s black.’ We have had these [gaming] machines pushed on us and pushed on us.

“I think people need to start getting creative and to look at different parts of Chinese culture. Look at movies, look at the Jackie Chan movies and stuff like that. There are real opportunities here. And I would start at the fundamental level, not just at changing the graphics or the name of the game, or the colours to gold and red, but really the second screen features, the way things appear on the screens. It’s a little wacky for Westerners, but for Chinese people that’s really what’s entertaining.”

Why not have multilingual touch screen machines?

Mr Johns: “I have brought that up with several vendors and I have been working with four of the main vendors this year to do a lot of market research on the floor and a lot of focus groups getting them to understand the players from different regions—what they want, what they say is important. The technology is certainly available. Why there aren’t multi-managers at the flick of a button on each screen is beyond me. I know that certain jurisdictions take a long time to approve games, but it should be something that’s looked at. It requires a simple effort.”

Mr Hurst: “Our machines are a little newer than these guys so we have the advantage of having the latest product. WMS and IGT do have that functionality now in their new machines. In answer to the question ‘What can manufacturers do to break into the Macau market?’ I would say ‘Listen to us’. We’ve been crying out for this stuff.

“People that are prepared to work with us will get an opportunity on the floor, and those that don’t will get pushed off the floor.”

Mr Ng: “I think we were the first ones to work with the manufacturers to bring in Chinese [language] machines. We have always been looking to work closely with manufacturers and suppliers to get them to translate the screens. We found the fastest way to do it was for us to take the screen, translate it and give it back [to the manufacturer] so they could put the graphics on it. We have done that countless times on many games. As long as the manufacturers are willing to listen, we’re happy to give them as much information as we can.”

What are you doing to get more people to try slot machines?

Mr Ng: “It’s quite a touchy subject. We are actually limited by certain regulatory bodies regarding expansion of the slot business. We are very limited in marketing capacity. We’re not allowed to advertise [return to player] percentages or advertise in the newspapers any major gaming promotions. We’re not allowed [as an operator] even to mention the word gambling in a newspaper. We can’t have slot machines facing the street. If a slot machine was placed in such a position in the venue that it could be viewed from the street we could be closed down straight away. It’s not that we don’t want to do more, but until the slots market is once again seen as a vital business, then we are limited—especially on the local side.”

Mr Johns: “What we’ve been doing in the last couple of years is growing the slots sector by bringing in a bit of Western thought and mixing it with the experience on the ground here and catering for what the customer wants. We’ve seen massive growth this year. There have been some staggering numbers in the last couple of months, in a financial climate where the world is suffering pretty badly. I think slots will grow because they’re aimed at the mass market. It’s a cheap product to run, it’s got bigger margins [than VIP table games] for the venue. I think we will definitely see slots grow in numbers and as a percentage of the slot floor over the next five years.”