By David Stratton | In casinos across the country, don’t expect to see many additions to the slot inventory as demand for new games will remain in a lull for the near term, although video poker and video slots in general will continue to garner a larger percentage of the slot inventory.
Those are two of the conclusions drawn from Goldman Sachs’ eighth annual survey of slot managers, which was released last week.
Based on interviews with slot managers in 135 casinos in 25 states, the survey revealed that only 30 percent of managers said they would increase the number of slots on the floor this year, a sharp drop from the 43 percent who said they would expand slots last year.
Moreover, the number of casinos that said they would decrease the number of slots combined with the number who said the number of slots would remain the same was 68 percent – the highest ever reported by the survey.
Nonetheless, casinos are installing more video poker machines, which have been a staple in the Las Vegas casinos that serve locals. According to the survey, video poker’s share of the floor grew to 20 percent from 16 percent last year, and that video slots’ share grew to 46 percent from 40 percent.
Losing ground in the casinos were mechanical reel slots, whose share went from 27 percent to 20 percent.
With fewer casinos installing new slot machines, manufacturers are expected to become more competitive in vying for customers.
"Dueling press releases, alliances and litigation are all signs of a more aggressive competitive environment," said Steve Kent, who co-authored the Goldman Sachs report.
Among the other results of the survey:
• Managers look forward to server-based gaming, but they don’t expect to see it for at least two more years.
• Aristocrat, which pioneered penny slot machines, appears to have peaked in sales as other manufacturers catch up.
• Low-denomination games (penny, nickel and dime) now occupy more than half the casino floor.
• Wheel of Fortune is the highest producing slot, although its grip on the title is slipping.
• Skill-based slots could be on the horizon.
• 87 percent of managers said they would not be adding automatic card shufflers, and 77 percent said they weren’t adding proprietary table games. However, 53 percent said they’d be willing to use electronic table games, such as poker, blackjack or roulette.
Server-based gaming is always a topic for discussion among slot managers, and most surveyed, 76 percent, said they would be interested in installing downloadable slots, but the majority, 62 percent, said they wanted to "wait and see" the technology in operation before installing it.
Even though they, in theory, accept server gaming, the majority of managers surveyed said 50 percent or less of their floor would be targeted for downloadable slots.
The slot managers’ top reason for installing server games would be the ability to quickly re-configure the slot floor, with better customized promotions and game content as the second and third most popular responses.
Australian game maker Aristocrat has enjoyed robust sales in recent years, especially with its penny progressive and video slots. But the survey showed that 29 percent of slot managers would buy fewer Aristocrat machines this year, up from 17 percent last year.
Aristocrat helped pioneer penny denomination slots, which continue to proliferate throughout casinos. According to the survey, almost 60 percent of managers said that more than half of their slot floors contained low-denomination games, the highest percentage ever.
Helping to boost their popularity are penny slots’ sharp graphics and animation features, as well as the ability to flexibly bet from one to 50 pay lines.
IGT’s Wheel of Fortune has for years been the casino’s most profitable slot, based on win per machine, but other companies are closing the gap.
Of the slot managers surveyed, 11 percent said Wheel of Fortune was their top producer, although the consensus was dramatically below the 38 percent who cited Wheel in the 2002 survey.
While Wheel of Fortune was still the top vote-getter, there was a broader distribution of support for other slots, such as WMS’s Monopoly Big Event and Monopoly Super Money Grab.
The notion of skill-based slots was an intriguing one for slot managers, of which, 76 percent said they would be interested in introducing.
Although there is nothing like it on the market, skill-based slots would be expected to perform like a Nintendo video game, with some type of controller or hand-held device.
While the concept may appeal to a younger audience, there’s the danger or "possible downfall" the games would alienate casinos’ current strong customer base.
"Many people play slots for the simple reason that they do not have to think much," Kent said. "A game which requires eye-hand coordination or other types of skills might not appeal to this segment."
Kent added that he wasn’t surprised at slot managers’ acceptance of an as yet unseen skill-based slot.
"Slot managers tend to want the ‘latest and greatest’ slot machines," Kent said. "Skill-based slots could open up the door to a whole new demographic of the younger generation used to video games."