Can the gaming industry reinvent itself?

A Las Vegas journalist covering G2E (the world’s largest gaming trade show) recently contacted me with questions about innovation, disruption, and gaming. As a former gaming executive, I take innovation in gaming as a dear and near subject. After hearing my thoughts, he asked me why I think the gaming industry is behind on innovation, and what can be done to fix this situation. I started by highlighting what a great question it is as the slow pace of change in gaming has always bewildered me, considering the industry’s immense latent potential for innovation. As I did with him, I will share with you my two cents on the particular issue of disruption in gaming.

 

The most important reason why gaming is not really going through disruption (or at least we are not aware of it yet), is the industry’s perceived lack of an immediate threat and the consequent strategic inertia in the industry. Online-gaming briefly represented such a threat in the US, but through legislation and regulation it was diminished. I say that disruption is the mother of all innovation since it forces you to adopt or you will be extinct. Disruption can come from a completely different direction and different industry. For example, if driving to Vegas from LA takes 8 hours and flights are full and/or expensive, and the experience in the properties does not match expectations (which is already the case today from a technology perspective), or security is a concern, then the guests simply might chose to spend their disposable income elsewhere.

If you follow the earning calls of the big gaming public companies you will notice that none of the CEOs is talking about innovation and technology. They perceive it as a cost center at best. They are not technical and focus on margins, immediate threats, and expansions that require government approvals. Hence, innovation does not get really top leadership attention as it should. To illustrate, InnoVel had organized 3 annual events called “TravelTech Israel” since 2016. However, in spite of the fact that our strongest personal connections are in the gaming industry, every year I prepared a panel titled “innovating in a regulated environment”, and not even once was able to bring a speaker from the industry (not from Vegas, Macau, Singapore, Philippines or from an Indian casino). Nada!!! The only exception was Sheldon Adelson, Chariman and CEO of Las Vegas Sands, who was our keynote speaker in our first event as I worked for him for 15 years and he was in town.
On the flip side, we had many top international non-gaming travel companies like Expedia, Booking, Hilton, Accor, Skyscanner, Ctrip and many more.

 

Another reason is the size of the industry and regulation – gaming is just not big enough for startups to target it first. Even large technology companies chose to get in after they cover many other industries. In addition, the regulatory requirements add more complexity and costs, making the industry even less attractive.

The final issue is that gaming is currently mostly a people and relationships industry. As mentioned earlier, most senior executives are not technically savvy. The talent with in the gaming technology is very limited, and it is hard to attract real strong talent to work in gaming (they prefer other industries).

So what can be done to fix it?

 

The answer starts first with senior management commitment. In other words, true top level understanding of the importance of innovation before it is too late.

Secondly, the industry must look at a broader context and beyond its direct competitors, but look into all companies competing for share of wallet and entertainment. In the specific case of technologies, we don’t compete with each other, but rather with other industries. Technology is an enabler, a tool to help us do our work better. It is not our core business. In the end of the day, we all use similar technologies and similar systems. What differentiates one gaming company than another is how well the technologies are used and the fact that some companies are faster adopters than others. Therefore (on top of the size issue mentioned above), we need to work together to look for emerging technologies. The American Gaming Association, for example, can play a leadership role in this process. We need to become more attractive than other industry for emerging technologies, which may imply enabling technological advancements that will be implemented across the industry. A tragic example is last year’s mass shooting at Mandalay Bay. None of the casinos was prepared to prevent something like this (none could foresee such a thing), but now they understand the need for cutting edge security solutions. However, it is not always feasible or optimum for a single casino company to look for solutions in homeland security. Having suppliers adopt solutions to the industry needs is much more difficult for a single company than for the industry as a whole. Similarly, there are solutions in other areas that solve different elements of the gaming management challenges and they all need to be tried and tested, but one company can’t handle so many proof of concepts. It will be much more effective to work as a group.

 

Last but not least, Fish where the fish are.  The gaming industry must be proactive and seek new technologies rather than wait for them to come to gaming, open offices in Vegas, and attend all of our trade shows. Most of the innovative new tech companies don’t have the resources for this and they will simply chose the path of least resistance and work with other industries that are looking for them.

In Israel for example, one of the world most vibrant hotbed of emerging technologies, we have lately seen a tsunami of different traditional industries (i.e. non-technology), that come to look for solutions. Banks (Citi, Barclays), Retailers (Nike, Walmart), drinks (coke, Pepsi), cars (GM, Mercedes, Audi), are just a few of the brands but we also see strong players in energy, construction, food, and agriculture, among other areas. There are different ways to establish presence in Israel and in other technology hotbeds, but the benefits are very clear and the cost (if done wisely) is much lower than one might think.

 

The bottom line is that there is a lot of innovation that can be done relatively easy, not only bring innovation but reduce some of the technology expenses, however such move requires commitment that does not exist at the moment in the industry. There is a plethora of technologies from other industries with application to the gaming industry that can be adopted relatively easy to the gaming industry needs. So let’s all agree that the whole is greater than the sum of parts, start working together, and really commit to bring our great industry to the 21st century and beyond before it is too late.

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