Summary

In this inaugural episode of ReelCast, ReelMetrics CEO, Nick Hogan, and VP of Professional Services, Don Retzlaff, discuss Inventory Overdiversification.

Transcript

Nick Hogan:

At ReelMetrics, we collect and analyze a ton of slot data, and we’re hit up frequently for insights, tips, and tricks. So we decided to do a webcast in which we present, discuss, and otherwise nerd out on our work. Coming to you from our offices in Lovely Leiden in the Netherlands. Welcome to ReelCast. Good morning, Don. How are things in Missoura, as my very Midwestern father would say?

Don Retzlaff:

It’s nice. It’s the first day of fall. We went from 99 degrees yesterday to 75 degrees today. The calendar knows when it’s fall.

Nick Hogan:

Yeah, we have the same thing in Leiden now. We are looking at lead skies and rain. That’s how we know fall is here. So, okay, here we go. Our inaugural ReelCast episode. I guess the best place to start is to summarize why we’re doing this. Obviously, we amass a ton of data with comprehensive meter sets on hundreds of thousands of machines, around 8 million individual game configs and billions of rated player sessions. As a lot of people know, we spend almost as much time researching data as we do collecting, standardizing, and distributing data. In the process, we made a lot of critical discoveries regarding inventory management, and we tend to get hammered with phone calls from folks looking for the inside track on these insights.

Now sometimes these calls are very specific, so somebody could be having problems with specific properties or individual game titles that are dragging, but plenty of them are quite general, and really I have this sense that people understand that pan-industrial data services such as ours, they confer gigantic operational advantages, but they’re a bit unsure as to the applicable best practices because it does represent a bit of a paradigm shift. So, questions are how should they prioritize inventory changes, what guidelines should they follow in allocating supplier floor share, what about premium floor share, when they install six packs, how many titles should be on them, and then just generally, how can we engineer the most positive experiences for our best players. Now obviously we reserve the really deep dives into such questions for our subscribers, but the evidence shows us there are some general principles here that everyone should keep in mind and observe as they’re managing their inventory. So we thought a webcast would be a great vehicle to get some of these things out into the market.

For our first topic, we thought we’d begin with one of the clearest observations we’ve made over the past several years, and that is that slot floors are massively overdiversified. The question is, which slot floors? Well, in our experience, every last one of them. To date, we’ve yet to onboard a single mix that we would describe as anything other than massively overdiversified. Now, the good news here is that there’s plenty you can do about it. In this episode, however, we’re going to focus simply on what it is and why you need to care about it.

Before we get underway, just two quick points. First, when it comes to producing webcasts, we truly have no clue what we’re doing here. So please bear with us regarding any chop in the production and we promise to improve as we do more of these. And secondly, we’d love to tackle any questions that anyone listening may have. If you have a question about what we’re presenting or something you’d like us to present, please drop us an email at reelcast@reelmetrics.com. Again, that’s R-E-E-L-C-A-S-T, @reelmetrics.com. Our policy is to keep all questions anonymous, so please speak directly and don’t worry about us revealing your identity. That’s not something we do.

Okay, without further ado, let’s get a little nerdy here. Today what we’re going to do, we’re going to do this. Part one is really focused on these four questions. What is overdiversification? Why should I care about it? Industry-wide, how pervasive or problematic is it? And then lastly, how did we get here? Then next month, we’re hoping in late October, we’ll have a follow-up episode that we’ll post and that’s really focused on two questions. How do I know if my floor is overdiversified, and if it is, what can I do about it?

We’re going to start with just a simple definition. What is overdiversification and why should you care about it? Let’s talk about its definition and presentation. Overdiversification quite simply is just also known as overchoice or choice overload, and this is a recognizable, cognitive impairment that occurs when people are faced with too many options. So, the decisions as to what they should buy, for example, become overwhelming due to the many outcomes and risks that may result from making the wrong choice. This in turn leads to consumer anxiety, consumer frustration, and ultimately indecision.

Well, why should you care about it? Well, very frankly, because players are productive when they sit and spin, and when there’s too much variety on the floor, we get this overchoice or choice overload situation and our players end up like deer in the headlights. It results in these effects that we’ll talk about here in a bit, ricochet and biting dogs. But just as general principles, remember that an overabundance of fragmented, low demand, underperforming product tends to create scarcities in high demand, highly performing product. Where this is truly problematic is that these scarcities in high demand product disproportionately impact your highest value players. I think, Don, I’m sure you would agree that one of the first things that really jumped out at us when we started really diving into player data is looking at things such as industry assumptions historically about who’s playing premium product, who’s playing the big participation titles, et cetera. That was fascinating, was it not, to look into.

Don Retzlaff:

It was. It was really shocking to find out which player segments