SUPPLIER SPECIAL REPORT

Adapting to change and coping with crisis

The world is now about six months into the coronavirus crisis, which is having a deeper, longer and further-reaching effect on the global economy than anyone anticipated at the start of 2020.

The land-based gaming industry, together with tourism and events have been brought to their collective knees, with borders restrictions, grounded airlines and mandatory quarantine periods.

It’s still far from certain when any of these measures may be lifted and it’s not a stretch to forecast that they will be some of the slowest areas to return to normal.

Our supplier special section of this magazine would normally have been dedicated to new products to be showcased at Macau’s G2E Asia gaming show, one of the key events on the region’s gaming calendar. It has now been pushed back to December, joining the majority of others in scrambling to reschedule.

In place of our normal format, we have asked suppliers to highlight how their businesses and working practices have changed as a result of the pandemic. What measures have they taken and will they remain in place once the crisis has passed. The clear majority stress that the digital solutions that have been put into place to ensure work can continue from home do have some advantages, but will never replace the face-to-face meetings and staff interactions that spark the creative juices. Humans are social, as we have heard in the pages of this magazine, and we all look forward to being able to intermingle at networking events.

There are also some key takeaways from suppliers in the need for flexibility in business practices. Those able to adapt and learn will hopefully come through the other side stronger.

Remote working more manageable than expected

GENESIS GAMING

How fast do you expect business to bounce back and when?

It’s still very difficult to say at this point given the unprecedented nature of the pandemic and its global scale at an economic level. There is still a lot of uncertainty, but we are hopeful that normalcy will return at some point in the near future, once any sort of vaccine becomes widely available to the general public. We think this will be key if we are to see any sort of bounce back in economic activity.

Has the pandemic changed the way you work and if so, can you see any of these changes becoming permanent?

The pandemic has definitely required us to be creative in maintaining the level of connectivity across our workforce while we practice social distancing across our various office locations. Thanks to the proliferation of many online productivity tools, remote work has proven to be much more manageable than we initially anticipated. Depending on the sectors and the nature of work, I wouldn’t be surprised some companies may adopt longer term remote working policies for some roles.

Are there any upsides to these changed working patterns?

Like anything, there are always pros and cons. Face to face meetings are definitely a better form of interaction for cross-functional teams needed to solve problems and generate ideas. This is especially true for what we do, where creativity and innovation play an important role in our product development process. However, without some of the day-to-day office distractions, I am sure working from home does provide a benefit of giving employees the time to focus on tasks that require more concentration.

What’s the biggest lesson the industry has learned, or needs to learn?

No one is immune when it comes to a pandemic. But we can choose how we respond to it. As a business, we just need to be better prepared for left-tail events and develop internal resilience across major functions and limit external dependencies.

Standalone progressives to benefit in social distancing era

IGT

How fast do you expect business to bounce back and when?

Well, as we know, Macau is already in the early stages of ‘bouncing back’ - testing the waters of the new normal for the short-term as we learn to deal with the aftershocks of COVID-19. Macau is a heavy focus for gaming and tourism in Asia and will set the example for the bounce back in other countries in Asia.

Everyone is hoping that the business will bounce back in the second half of this year, but the reality is that recovery is likely to be a staged process with many casinos continuing with social distancing on machines and tables for many months. Key in the recovery will be the opening of the Chinese borders and the ability for the VIP sector to be able to travel.

When it comes to ‘when’, for Macau, it’s likely that we will see some return to a more ‘normal’ business in the last quarter of this year. As for the other countries in Asia, well not even some of the greatest minds can predict when that will be - as we’ve seen, every country is different in the measures they take and the success of those measures.

Has the pandemic changed the way you work and if so, can you see any of these changes becoming permanent?

The virus pandemic has changed the world, and of course changed the way we work. We, like most others, have moved a lot of our business interactions online. We are now utilising online platforms to run presentations to customers with online game videos, and focusing on IGT’s online showroom. Luckily much of this infrastructure was already in place. This is helping maintain our customer connections across the different countries.

I think we will use online tools more readily in the future and it will play a bigger role permanently – but there will never be a better way of transferring information and growing customer relationships than a face to face meeting.

In the short to medium term the new social distancing rules may well affect the floor configurations and designs to comply with the regulations. Plus, it will negatively affect link products if 50 percent of the link product is switched off, which will affect both the atmosphere on a bank and a reduction in the jackpot increment pool. So, if this happens, it may favour more standalone progressive type products where we, IGT, have a strong presence.

Are there any upsides to these changed working patterns?

There’s always a silver lining to every cloud. We are finding we now have a bit more time for creativity in our game studios as we evaluate new game ideas and our roadmap. Plus, even though we are not working in the same office we are actually more connected as we use social and video tools to connect and share more ideas both internally, and externally with customers and suppliers.

What’s the biggest lesson the industry has learned, or needs to learn?

A simple lesson is ensuring that venues have game variety, especially when up to 50 percent of the game floor might have to be switched off – to ensure that venues have the right mix of products to suit the different player types at different times of the day.

Also, it’s important that there is a strong locals focus in a venue’s product set and in the customer marketing – ensuring that when borders close, the locals market is catered for and are able to sustain a business in times like these.

Time to consider convergence

JADE ENTERTAINMENT

When and how fast will business bounce back?

We can expect that social distancing will remain a way of life until a vaccine is developed and estimates from the medical community are 18 -24 months. Land-based properties will reopen, however, patron registration and tracking while on the property floor will need to be incorporated into the properties’ surveillance and casino management system. We can expect reduced visitation from the mass market, while travel restrictions will also impact the VIP market and my estimate is that it will be 2023 before we are back to 2019 revenue levels. One has to be prepared that as the world emerges out of the COVID-19 pandemic, we can expect major changes to what can best be described as social norms, such as habits, routines, ethics and other social philosophies.

Has the pandemic changed the way you work and will it become permanent?

What we know from the past few months is that we were not prepared and work practices need to be developed to ensure business continuity. Digital acceleration of our daily processes will be a must. Travel will be restricted for some time to come and customer engagement will need to be electronic.

Are there any upsides to the changed working patterns?

Living in a congested city like Manila means a lot of time is wasted in traffic. Developing “work from home” guidelines for our admin staff will be included in our plans moving forward. The upside is less time in traffic, reduction in office space requirements and an increase in productivity. Downside is the loss of face-to-face social interaction with other employees.

What are the biggest lessons?

The lesson learned is that we were not prepared. It is time for land-based casinos and regulators to integrate internet gaming into land-based casinos. It is time for a convergence of land and internet gaming. The land-based properties that integrate and start their digital acceleration will be those that will thrive moving forward.

Innovative safety solutions to help bounce back

SUZOHAPP

How fast do you expect business to bounce back and when?

I think we will see a faster bounce back of some of the smaller facets within the industry, such as sports betting and digital gaming, but it is difficult to speculate on the entire industry. In my mind there are two potential scenarios: One, that once restrictions are lifted, people will look to the gaming industry for that escape from the heavy atmosphere and isolation that currently surrounds us all. This would mean a strong return in casinos, albeit with social distancing and additional sanitizing measures. While this may seem optimistic, we know that casinos are actively preparing for this by coming up with innovative solutions to increase those safety measures with new ideas for sanitizing screens, buttons, and handles, and ways to strategically enforce social distancing. On the opposite side of the spectrum, people may instead remain cautious and limit travel and spending. If this becomes the case, it will take time for everyone to bounce back and we will have to get creative with how to motivate people to spend money in ways that best benefit the industry as a whole.

Has the pandemic changed the way you work and if so, can you see any of these changes becoming permanent?

As a global company, we’ve had a lot of remote work already so that wasn’t a huge adjustment for us and we still have some critical staff working in our distribution centers as we’re open for our customers who are currently in need of products or services. We were very fortunate to already have that infrastructure and hardware in place from an IT perspective and have a very motivated, capable staff that is easy to trust when it comes to working remotely. For those on our team that weren’t working remotely before, I think they’ve adapted quickly and handled the change well. It has, however, allowed us to evaluate how much physical office space we need. It is something we might consider changing in the future to lower our costs and lower our carbon footprint. There is a lot that we’ve had to adapt with travel that we hope to resume soon. While it is possible to conduct these meetings digitally, there is still something to be said for conducting a deal in person and having those person-to-person interactions.

Are there any upsides to these changed working patterns?

There are definitely upsides. I think we’ve seen a stronger sense of community within the industry as everyone is equally in this tough place and recognizes just how much we’re all interconnected. Companies, competitors and suppliers alike, have been relatively flexible and cognizant of each others’ need to survive past this. We’ve also seen how well and how quickly we’ve all adapted to the ‘new normal’ and having that ability to adapt can only serve to benefit us in the future. Lastly, we’re learning how to innovate in ways that push our limits and challenge us as we try to figure out how to modify our products or create new products to facilitate sanitization or be antimicrobial so that everyone can resume that sense of normalcy as quickly as possible.

What’s the biggest lesson the industry has learned, or needs to learn?

I think the biggest and hardest lesson that’s been learned has been that nothing is certain. We never thought we’d see the day that the big casinos would close their doors. There are stories of operators having to get new locks because they’ve never locked their facilities or haven’t done so in years. In an industry that we believed never slept, the stark contrast to the way things look now has really just settled in that concept that what we have and are today isn’t guaranteed tomorrow.

Flexibility key moving forward

TCS JOHN HUXLEY

How fast do you expect business to bounce back and when?

This is impossible to answer as we have no idea how long travel restrictions and social distancing measures will be in place. The gaming industry is quite resilient but the current situation has highlighted many challenges we face in terms of our businesses and also ensuring the wellbeing of our staff and customers. Our teams around the world have continued to work throughout the pandemic so we are well positioned to respond to our customers’ demands as they reopen their businesses. We are ready to support the industry in every way we can.

Has the pandemic changed the way you work and if so, can you see any of these changes becoming permanent?

We have continued to operate throughout the pandemic with many of our teams working well at home. Where this is not possible in manufacturing and service/support, we have put in the place all the appropriate health and safety requirements along with the correct social distancing measures to ensure their safety.

Are there any upsides to these changed working patterns?

Having to adapt and change the way we work provides a great opportunity to assess our current processes and systems. We will probably revert to many of the original practices but this has given us the opportunity to look at some interesting alternatives, that are possibly smarter and more productive.

What’s the biggest lesson the industry has learned, or needs to learn?

As we emerge from this, flexibility will be key. We will need to reassess our businesses and mid-term goals to ensure we can weather the major disruptions the pandemic has thrown at us. Being able to quickly adapt to customer demand and re-shaping the offering to fit the ‘new normal’ could be the difference between success and failure. We are all still learning…

Player activity up 31 percent in March

TVBET

How fast do you expect business to bounce back and when?

According to the International Monetary Fund, the effect will be a 3 percent decrease in the global economy in the current year. We can conclude that in a year or two everything will come to normal. Even though the igaming market has been less affected by restrictions than other sectors, every market participant will sense it. For instance, we’re already seeing a drop in our partner’s average check.

Has the sports suspension changed the way you work and if so, can you see any of these changes becoming permanent?

The TVBET games were originally built at the boundary between sports and lotteries in a live format. In fact, we don’t have to change anything now, because sports cancellations haven’t affected our supply side.

Are there any upsides to these changed working patterns?

We can indicate a daily activity increase of players after sports cancellations. Thus, in March the daily number of bets on TVBET games increased by 31 percent overall. We understand that our live-games have now appeared as a perfect betting alternative for newcomers. And our goal now is to make TVBET products more accessible to a global audience.

What’s the biggest lesson the industry has learned or needs to learn?

The first and most important lesson is gaming market participants will need to be flexible and adaptable to the specificity of each situation. Those companies that were able to adjust their business processes to circumstances are benefiting at these challenging times.