G3 Interview NOVOMATIC GROUP OF COMPANIES
Applying the right market formulas
G3 seized the opportunity to interview Novomatic’s CEO, Harald Neumann and CTO, Thomas Graf, at the G2E show in Las Vegas, exploring the Group’s plans for the US market, its ownership of Casinos Austria and views on interactive expansion into both new and existing markets.
Amid the amalgamations taking place in the gaming supplier businesses, the clamour for skill-based games, eSports and claims of a lack of innovation from some sections of the industry by operators at G2E 2015, there was a calm, rock-like stability about Novomatic. Posting record half-year figures just before the Las Vegas exhibition, Novomatic was a ‘safe island’ at the G2E show, a consistent and stable bet amongst an industry in the grips of transition.
Speaking to Novomatic CEO, Harald Neumann and Chief Technology Officer, Thomas Graf, it’s clear that beneath the calm exterior, Novomatic is wrestling with those major issues affecting the gaming industry, but it is doing so in a considered and highly structured fashion.
“The German street market is one example of the issues facing the business right now,” confirms Mr. Neumann of the shifting legislative environment in Germany that could possibly see the removal of over 100,000 machines in 2017. “Novomatic assembles machines in Germany at present and while we anticipate a reduction in the volume of machines assembled, we are increasing our operations business in the market. The acquisition of players is our focus, alongside a transition from predominately machine rental to an ownership model.”
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“The biggest challenges we face in Europe are legislative in nature,” agrees Mr. Graf. “Changes in the legislation of gaming in The Netherlands, Austria and Germany in regards to online, lotteries, casinos and VLTs present challenges for Novomatic but also create opportunites. The duality of our business means that we are both producer and developer, which enables Novomatic to spread our interests across all gaming sectors. We have a very strong operations focus in Europe, recently expanding with the purchase of PlayNation in the UK and the acquisition of 40 gaming arcades in the Madrid market.”
Casino slots, lotteries, online, sports-betting, multi- players, street machines and VLTs are all integral components in the Novomatic portfolio of products. The breadth and depth of the offering enables the company to prioritise with pinpoint precision its focus at a market-by-market level. “In the US, we are concentrating our efforts upon the video gaming terminals,” states Mr. Neumann. “When you enter a major market as a newcomer you have to define where you’re going to achieve the greatest impact. You must also take account of local market legislation, where, for example, in most of the states in America a developer of machines can’t also be licensed as an operator. The reason this dual model is so successful elsewhere is that
“Our feedback from the market
is that customers are looking for alternatives. Many are looking at the changes from a security perspective, as some of the newly formed groups are carrying significant debt.”
it provides important feedback as to the interests and habits of the players, which we incorporate in the development of new products. In the US, we have to take a different approach.”
SENSE OF PERSPECTIVE
Before joining the Novomatic Group of Companies in 2011, Mr. Neumann’s career history was focused upon the telecoms sector. Asked for his view on the recent spate of mergers and acquisitions in the gaming industry, Mr. Neumann states that he believes the changes present real opportunities for Novomatic. “I’ve personally witnessed
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