The Coming Social (Gaming) Revolution

Via Vegas Seven, an interesting look at the heir to slot machines:

Nevada’s casino industry has seen slot machines come—but is it now watching them go? On the chance that slots have worn out their welcome with a new generation of players, gaming manufacturers are looking at the potential of social gaming.

In 1975, 78 percent of Nevada gaming revenues were generated by table games. By 1983, for the first time, pit revenues fell to less than 50 percent. At Nevada’s pre-recession peak, table games accounted for less than 30 percent of total gaming revenue. The triumph of the slot machine seemed both complete and irreversible.

Since the recession, however, slot machines have lost ground to tables. Last year, tables statewide earned 35 percent of total gaming win. That doesn’t sound like a big shift—5 percentage points over just as many years—but the original shift in dominance from tables to slot machines was just as gradual.

Some think that those born after 1965—Generation X and younger—will probably never take to slot machines like the boomers before them. A better understanding of what they enjoy might help slot manufacturers make a generational leap to rival the great table/slot torch pass of the 1970s.

Stephen Andrade, a computer graphics professor at Johnson and Wales University, recently gave a Gaming Research Colloquium talk at UNLV called “Brave New Play: A Brief Look at Digital Natives, Changing Play Ecosystems and Wager-Based Gaming.” Before you dismiss him as just another ivory tower theorist, you should know that he does much of his research in collaboration with GTECH, one of the world’s largest gaming technology providers. GTECH supplies everything from lottery systems to slot machines, and it’s understandably concerned with getting an accurate view of how people will gamble in the near future.

Andrade believes that digital natives—those who grew up online—prefer multiplatform games in digital space; they want to play on their phones, tablets and desktops, in ways quite different from traditional gamblers.

“They don’t want to simply play someone else’s game,” Andrade said, “but to customize it to suit their habits and behaviors.” He added that these digital natives need to feel that their play is purposeful and that they are advancing themselves or their avatars through their continued participation.

These players are also fiercely competitive. “One constant feature that comes up in undergraduate research and prototyping is a leaderboard feature,” Andrade says. “Digital natives want to know where they stand compared with others—and they want others to know their status as well.”

In other words, they don’t want slot machines; they want social games along the lines of Farmville or Candy Crush. If slot makers and casinos could only channel this seemingly innate drive to play into their own coffers, they’d secure their future (until the next generational shift, at least). This is why traditional slot makers are increasingly looking to nontraditional games for both innovation and revenues.

Case in point: Slot giant IGT, maker of some of the oldest slot machines in your local casino, is becoming a major social-gaming player. In 2013, more than 11 percent of its $2.1 billion overall revenue came from social and interactive gaming. It shipped 26 percent more machines in 2013 than in 2012, an impressive gain, but its social-gaming revenues grew by 151 percent.

What’s driving that growth? Economies of scale that casinos can only dream of. On an average day, 1.6 million people played Double Down games, spending 37 cents each, yielding revenues of nearly $600,000 per day for IGT. That seems like a small number—Nevada’s 156,766 casino slot machines averaged a total $18.5 million daily win in 2013—but, remember, slot machines were at first ancillary to the real casino action. And IGT, though it spends considerably on research, development and network maintenance, doesn’t have to manufacture or ship machines to social gamers, who plug in via their own devices.

With casino operators themselves dipping into the social-gaming pool, more convergence between old and new styles of play is inevitable. Whether the next chapter of gaming is a return to the old (table games), slots becoming more social or a wholesale jump to social gaming, the only safe bet is that the status quo is on its way out.



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