During the recent AGS GameOn Summit, Nick Hogan of ReelMetrics compared slot floors to shelf space in a supermarket. Hogan suggested that using such a metaphor would aid in slot analysis and produce a higher yield. It can be a great metaphor and an effective way to think about a slot floor. It is also not a new concept.
The first time I heard that metaphor used to analyze slot machines was from two IGT salesmen in the early 1980s. Denny Garcia and Bill Engle had come to gaming from the wine industry. They were both top salespeople. They were accustomed to keeping careful track of the way their product was displayed and how much shelf space it was afforded. They knew that placement and the percentage of shelf space affected sales and, of course, their commission. I don’t know exactly how Si Redd found them, but he did.
IGT was a fledgling company trying to build its business around video poker. Redd ended up with the video poker concession as part of his breakup with Bally’s Manufacturing. Bally’s was the dominant slot manufacturer at the time. Sy was a top salesperson and a partner, their visions did not match, and Redd left to form his own company. As part of the separation arrangement, Bally’s kept the reel slot machines; Redd got the new and as yet unproven video poker. Bally’s did not believe video poker could be successful. Si did.
In an attempt to make a dent in the nearly 100 percent reel-machine slot floor, IGT hired the best salespeople it could find and Denny and Bill were part of that initial team. Engle ended up with the Comstock in downtown Reno as a potential customer. Like Denny, Bill did not start by making sales calls. Rather, he started by studying casino layouts, product mix, traffic patterns, and customer preferences. Then he came by to chat. He had confidence in video poker, but he did not try to make a sale. Instead, in order to analyze our slot floor and make recommendations, he needed as much performance data as we felt comfortable providing. We did not have a lot. It was an analog world, not exactly an era of sophisticated analysis. We read meters by hand, entered the data into primitive computer programs by hand, then used a dot-matrix printer to print out our reports. We looked for the games with the highest win and with our annual budget bought more of those games.
Asking for slot data was a strange request. We considered our slot performance to be highly privileged information. We did not even share it within the company, much less with an outsider. No one had asked for the information before. Other slot salespeople simply presented a product and asked for an order. A common recommendation was, “This is a hot game,” though no definition of a hot game was ever provided. How could it be? Slot sales people did not have any data to use as a measurement. A hot machine was simply one that was hot with the casinos; they bought more the following year. A new game was judged on its appearance and similarity to another game that was popular in previous years.
It was against our better judgment, but we provided Bill Engle with the data we had. The result was a proposal that took our breath away.
Bill and company recommended a complete change and rearrangement of our slot floor. He had identified the best and worst games and locations. The proposal recommended taking one-third of our slot machines off the floor, unworthy of the space, the device fee, and other taxes. The proposal suggested that one entire section, far from the best location, be converted into a video poker area.
Other recommendations about placing some very popular games in historically poor locations were made on the assumption that those were destination games and customers would find them. Other games with potential should be placed in high-traffic areas where people normally gathered, like waiting areas for restaurants.
Signage was also a critical element, used to differentiate areas and call attention to particular attractions.
It was an exciting proposal, a more advanced understanding of slot performance than we had ever seen or heard before.
Of course, there was internal resistance. Oldtimers thought no salesperson could possibly understand slot machines, and in particularly wine salesmen, which to them was a derogatory term. The biggest hurdle, however, was the price — three or four times our normal slot budget. The process to approve the purchase, borrow the money, and reconfigure the entire slot floor was slow, complicated, and difficult. But in the end, it was done. That one purchase changed the business and our way of understanding gaming devices.
Over time, with Garcia, Engle, and others as skilled, IGT accomplished the same thing in most casinos. Video poker moved from a non-event to 30-40 percent of slot machines in Nevada. It also created a beachhead for IGT reel games that followed. Starting with less than 200 video poker games at the Comstock, IGT went on to dominate the industry. At its height, it supplied more than 70 percent of the entire slot inventory in Nevada.
IGT’s success did not come quickly or without challenge, but it did come. I like to think it started with two wine salesmen who knew what they were doing. They understood the importance of location, product mix, and analysis as it applied to the shelves of supermarkets. They believed it could also apply to slot machines in a casino. And it certainly seems like it could.
