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Las Vegas manufacturer Konami wants to grow market share

A Las Vegas slot manufacturer is turning to its corporate roots to launch its next slot machine and additional ones in the future to grow its market share in Nevada and the rest of North America.

Konami Gaming recently installed its Frogger-themed slot machines in The Cosmopolitan of Las Vegas as part of a test run. The slots were installed earlier this month in California and will be added to the Aquarius hotel-casino in Laughlin this month. If all goes well, the games will be released in other casinos over the next 60 days.

Frogger is licensed from Konami Digital Entertainment (a sister company of Japanese parent company Konami Holding Corp.) that launched the game into video arcades in 1981. The game, in which a frog navigates a road and river-crossing course, turned into a home video game and is considered a classic game that spans generations.

The release has generated excitement at Konami, which was been licensed in Nevada since 2000, and is ranked fourth among slot machine manufacturers. The company ships on average about 10 percent to 14 percent a year among slot manufacturers, said Steve Sutherland, Konami Gaming’s chief operating officer and executive vice president.

“To grow, we need to find a way to address the future gamer,” Sutherland said. “The gaming replacement segment we have been designing for doesn’t necessarily play the games their parents and grandparents played. What Konami is doing, is we’re looking at is how do we appeal to that next generation of players, and Konami as well as all of the competitors will get there.”

ROOTS IN AMUSEMENT WORLD

Konami is well positioned because of its roots in the amusement world that includes games from arcades and home video games, Sutherland said. It did so successfully in the past with the game Advantage Revolution with 1,500 games nationwide, he said.

“We’re looking at the library of Konami Digital Entertainment because they have certain titles – amusement concepts and games and intellectual property — we will look to bring to this market in the future and turn those into gambling devices.”

Konami’s slot penetration in markets across North America ranges from 7 percent of a casino floor to a high of 20 percent. The range in Las Vegas falls even lower between 7 percent and 10 percent of the floor, Sutherland said. It does best in Native American and regional American markets.

Konami set up an office in Las Vegas in 1997 at the Hughes Center with a handful of employees before moving into its headquarters on Dean Martin Drive, where it stayed until it needed more space for its 240 employees. It moved to the Hughes Airport Center in 2005.

“We launched in the outlying markets,” Sutherland said. “We launched the West Coast starting in California, and we went across Canada and down through the Midwest. It was an easier entrance into the marketplace.”

HOME FOR 500 EMPLOYEES

What will it take to get a bigger share in Las Vegas? Company executives said the $65 million for land and building acquisition and reconstruction of its headquarters at the Hughes Airport Center starting in 2013 is a big part of that strategy.

The project was completed in 2015 for a headquarters that went from 220,000 square feet to 500,000 square feet, and the building won the 2016 Spotlight Award for sustainable green building from NAIOP Southern Nevada, the Commercial Real Estate Development Association. It houses Konami’s 500 employees, the biggest chunk being in research and development with engineers from around the world, including Silicon Valley.

“I think our future investment is where we’re taking the company and what this facility is about is additional (research and development),” Sutherland said. “It’s going to be some of the products that we’re bringing out in the future. We aspire to No. 1 and would like to step up that podium. I think what we did is a statement of our investment in this industry and into this town. Konami is one of the success stories in the supplier arena.”

Konami executives said the company designs slots that fit more with local gamblers who go to a Station or Boyd property and other local casinos.

“Some of the competitor’s machines are highly entertaining and will take in bonus rounds or sequences,” Sutherland said. “That has not been our component. We have been more about gambling and giving people free games and occasional bonus rounds and coming back into the game and getting back into wagering.”

Its top five games are China Shores, Dragon’s Law, China Mystery, Lotus Land and Rapid Revolver Northern Treasure. It also has Dungeons & Dragons among its featured games. Konami hasn’t done a lot of intellectual property-style games like Monopoly or Wheel of Fortune, said Tom Jingoli, chief administrative officer and senior vice president.

“We do some of those, but not as much as our completion,” Jingoli said. “Our games are more generic that we developed in house. Our focus has always been to develop our own product line. Those games become very expensive when you have to go out and do a licensing agreement.”

SIX-FIGURE PAYOUTS

Some of its high-limit games can pay six figures, but other progressives range into the thousands, he said.

With so much focus on skill-based slots being part of the future, that will eventually happen with Frogger, company executives say. A skill format is not going to appeal to everyone, and casinos need to decide how much advantage play they want on their floor, Sutherland added.

“Millennials love the social component, and there’s an opportunity there,” Sutherland said. “They love leaderboards. They also want to access that through their mobile phones to be able to know where they sit (in the standings). If they set a record at some casino, they’re certainly going to want to know that someone came in and broke their record, and they need to go back.”

Konami started slot manufacturing in Australia before setting up an operation in Nevada that not only serves North America but South America and Europe for its slots and casino management systems. Australia has more than 100 employees and serves the Asian market.

“This is the global gaming capital of the world, and the company thought it was important to have a presence in the state of Nevada. We also thought it was important to establish our brand here, and certainly getting the Nevada license is a big feather in Konami’s cap,” Jingoli said.

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