Casino industry must innovate, Vegas conference speaker warns

The casino industry may find its business model vaporized like travel agencies, DVD stores and land lines unless leaders transform themselves with innovation, a speaker at a one-day innovation conference in Las Vegas said.

Southern California-based Rob Tercek, founder and president of General Creativity Consulting and the author of “Vaporized: Solid Strategies for Success in a Dematerialized World,” told gaming industry professionals that rapid changes in mobile social gaming and the casino industry’s inability to keep up will drive customers away with every innovative breakthrough.

Tercek was the closing keynote speaker at Innovation Day, sponsored by the American Gaming Association and technology consultant PwC, at Encore on Tuesday.

The event included presentations on how to monetize innovation, privacy and security implications related to capturing data from passers-by and the future role of cryptocurrencies in casinos.

Unimaginative slots

Tercek said consumers are being conditioned by the games they see and play on their smartphones and that by comparison, casino slot machines are unimaginative.

“Once those (slot machine) games are sealed by the regulators, they’re sealed for good and you can’t change those games on the fly,” Tercek said. “You simply can’t innovate at the speed of mobile games and the entire mobile industry.”

Tercek said mobile smartphone games are continuously upgrading and that game designers are receiving constant feedback from consumers through how they play. As a result, they can make quick changes that make a game more appealing.

Tercek said it doesn’t help that the casino industry continues to operate with icons that have been around for more than 100 years. He said there is an exhibition of historic slot machines on display at San Francisco International Airport with historic devices that have bars, flaming sevens, cherries and bells on their reels.

“You’re not going to believe it, but those cherries, bars and bells were introduced in the 1880s,” he said. “We still haven’t changed them. They’re silently telegraphing a message when millennials walk through the casino floor. What it’s saying is, ‘This is not for you. This is an artifact from a bygone era.’”

Conditioned to ‘free’

Tercek said player engagement with slot machines is weak and today’s mobile users are used to a concept foreign to most casinos — free play.

“When you look at the console where players are now conditioned to play with a touchscreen or with augmented reality or virtual reality, when players today see these kinds of consoles, to them it looks like something that was designed in the Soviet Union in the mid-1980s,” Tercek said.

“When you compare mobile games to the casinos games, the casino games disappoint players today. They’re way too expensive because consumers are conditioned to ‘free.’”

Because players lose money so fast, interest quickly dwindles.

“Obviously, I understand the economics of the casino games, but I’m saying that when consumers walk in, they’re going to be disappointed,” he said. “It doesn’t meet their expectations.”

Departed products

Tercek said there is hope for the industry if innovators consider how they can modify the slot machine model to become more appealing to players. He noted that people no longer use telephone directories, pay phones, address books or fax machines and they don’t buy CDs, DVDs, disposable cameras or film, tune in to prime time or ever get lost “because we always have a smartphone app for that.”

“The fate of the casino business is in your hands,” Tercek said. “You’re either going to end up like all the examples I just showed you and be irrelevant or you’re going to make some dramatic changes to your business. It’s a choice you get to make.”

He said casino innovators should rethink every aspect of slot machine presentation — formats, play styles, device locations, screens, presentation, player interaction, connectivity and sharing and social connections.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.