The danger of digital gaming

The advent of 'digital' AWP machines could decrease the profit from pub gaming machines, warns John Appleton, director of electronic leisure at Mitchells & Butlers.

The 'dogma of technology' in the current digital v analogue (reel-based) gaming debate could cost the pub sector around £160m a year in lost gaming revenues and the higher costs of digital gaming products.

The seductiveness and 'hard sell' of technology, and not the commercial reality of the cash in box, is influencing some pubcos' gaming strategies to the detriment of the business. It feels somewhat uncomfortable not to be seen to be embracing new technology, but when it comes to making cold commercial decisions, traditional analogue products continue to significantly outperform their digital cousins by a country mile.

If you couldn't make a call on a smartphone you wouldn't buy one just because they looked great and the story was compelling. This logic should be applied to picking gaming equipment — install products on their performance.

We have tested many digital products over a long period, as well as our extensive testing of reel-based products. We are not so interested in one technology or another, just what players tell us is their preference through their spending. Unequivocally, the reel-based products have thus far significantly outperformed digital products in every trial.

When a digital product is sited in a pub and a player has a choice they have chosen the reel-based product. We hope that players will play

both types of machines, or hybrid machines, and that we can widen the player base. But this has not yet materialised other than on the very occasional site.

Perhaps the absence of a compensated payout approach to digital games in pubs, as opposed to random payouts that better suit high stakes and prizes machines, has led to this lack of success.

And maybe new products coming out with compensated structures will lead to success. We hope so, but there is no evidence to support this.

High stakes and prizes​

There is a concern that digital gaming machines in pubs might go the way of digital skills with prizes (SWP) machine trends — downward. We know bookmakers' fixed odds betting terminals work successfully in a digital format.

But that is because of their huge stakes and prizes that appeal to their dedicated gambling customers, unlike pubs. In other jurisdictions around the world digital gaming works well, providing there are very high stakes and prizes, unlike the levels available to pubs.

The concern is manufacturers and some suppliers may try to 'force' the market into Digital Category C machines via a 'supply push' approach. This would be very detrimental if players do not put as much cash in box and even more detrimental with a higher cost base — more so if existing analogue products are not supported in the future.

Some manufacturers say that Digital Category C machines are more expensive than reel-based ones. If this is true they must produce more cash in box, not less.

Times are tough for manufacturers and gaming machine suppliers and the temptation is to introduce any product that enables a greater share going to manufacturers and suppliers. The resolution of the economic situation can be dealt with in other ways if retailers can accept they need to create an environment in which new machine investment occurs. It is almost unbelievable that new machine production has fallen as much as it has — to an estimated 15,000 this year. It seems many retailers are not encouraging more investment in new reel-based products that could lift production of new analogue machines and grow profit.

We are having another good year by focusing on regular investment in very good new analogue products.

In some leased estates we know, lessees do not generally refill £1 coins as much as they need to in order to maximise cash in box by keeping note acceptors functional.

Certainly this can mean ticket payout assists the performance of a digital machine. But note payout is becoming widespread in analogue machines. We have found success through note payout because the customers like it.