Simon Binns managed to catch up with Aristocrat's Paul Oneile and Nick Khin during the recent ICE exhibition, to talk about expansion plans and new frontiers...

It makes a nice change to get away from the whirring and clanging of slot machines that Earls Court uses as its three-day soundtrack during the ICE exhibition, but as Paul Oneile, chief executive and managing director of Aristocrat, meets InterGaming in a room at the nearby, but far more tranquil, Gloucester Millennium Hotel, he looks less than relaxed. “Regulators,” he explains, with a wry smile. “They’re very thorough.”

It’s a sign of how far Aristocrat has come in the last decade that they are so beholden to such intense levels of scrutiny, and something that Oneile welcomes. It’s a marker of success outside of its domestic market, after all.

“Up until going public in 1996, the company was very Australia-focused,” he says. “Over the last eight years though, we’ve started to push into international markets and approach things differently.

“This has meant that we’ve had lots of tough regulatory and licensing work to do, build the necessary infrastructures, but from that, we’ve seen growth that has been dramatic around the world.”

Aside from being the leading manufacturer of slot machines in Australia, Aristocrat is also the second largest in the US. But it’s breaking into new markets that interests Oneile the most.

With that in mind, joining Oneile to speak to InterGaming is new addition Nick Khin, responsible for overseeing Aristocrat’s European, Middle Eastern and African operations. Aristocrat has six offices in those regions - London, Moscow, Stockholm, Ljubljana, Johannesburg and Cape Town. A Durban office is expected to open soon. Khin will be based in the UK and will bring ‘a real focus’ to the region, according to Oneile. “Strategically, his role is very important.”

“We’ve significantly strengthened the team in the UK,” adds Khin. “Marcus Honney has joined us from TCS John Huxley and Mark Campman, who has over 25 years experience in the gaming and technology industries, now heads up our marketing team. We’re also looking to restructure our service department here and have employed a senior R&D resource in this region. We’ve also restructured our sales force, so there’s been lots of work behind the scenes.”

Oneile says that the scale of the Japanese and US markets are ‘comfortable enough’ for Aristocrat to operate in, but the company is now looking to expand with established infrastructures.

“This year, we have started to focus on Europe” he says. “We see Europe as a real growth engine in the next five years, percentage-wise. We’re looking to capitalise on growth in Europe and we’re channelling significant amounts of R&D spend into developing specific product for Europe.

“Two years ago, we had less than 40 people in Europe, now it’s well over 100. We’ve had record game approvals in the region in 2006 and we’re going after even more in 2007. We’ve just put out our biggest games catalogue ever and that’s an indicator of the direction we’re going in.”

The company’s stand at ICE was double the size of the previous year and Aristocrat exhibited over 70 games, including 20 new titles, as well as the new PokerPro Heads Up two-player table.

One of the most popular pieces of product at the ICE show, Oneile was pleased with the reaction to the compact edition of the PokerPro table. “The two-seat PokerPro Heads Up table brings much more of a social side to the game. It’s less intimidating for players who might not know the standard of those they are playing against.”

Oneile revealed that almost the entire Aristocrat global executive team had made their way to London for the ICE exhibition, demonstrating the commitment to the region.

In the same week, the day before the show opened, the company also opened a new office in Uxbridge, just outside London. New facilities include a new customer showroom and significantly increased warehousing and integration capabilities.

“We’ve also made significant acquisitions,” says Oneile. “ACE Interactive in Stockholm (founded in 2003 to develop and market the next generation of systems for operations of interactive, online server-based gaming terminals) and a 50 per cent stake in Elektroncek (a Slovenian company, which manufactures and distributes electro-mechanical multi-terminal gaming products).

“We’re looking to do more deals, if it’s right for both parties. We also took a 20 per cent stake in Pokertek, and we believe one of our principal markets for PokerPro is EMEA.

“The opportunities in Europe will be fascinating. We are looking forward to the expansion of the UK market which we are closely monitoring.

“The Spanish market is expanding rapidly, the Italian market has opened up, and could potentially become one of the biggest markets in the world. We are looking at the VLT market there through ACE Interactive. There are new opportunities in the Greek market, and Russia changes by the minute, although it will still be a huge market when it reopens, in whatever form. We are also looking at opportunities in Norway, Sweden and the Netherlands.”

As ICE demonstrated, and G2E before it, server-based gaming is emerging as a dominant trend, with virtually all of the large manufacturers investing in the technology. Aristocrat is no different, and Oneile identifies SBG and video lottery terminals as ‘key strategic drivers.’

“It is a good entry to market, as it has proved in Italy,” he says. “We believe that, commercially, the VLT market is absolutely key. Server-based gaming is a global opportunity, and we believe that the VLT market will be global as well and work well as a ‘thin client.’ SBG will be a solution for some operators, but others at smaller locations will go for downloadable solutions.”

Aristocrat announced a tie-up with Bally at G2E in Las Vegas relating to the G2S protocol-based solution, which allows products from all suppliers to be controlled by one operator.

The company has also released a new 100-line game, Wild Panda, which is the first of its kind in the European market, and has two new standalone progressives, Outback Jack and Golden Archer.

Last year saw great success for Aristocrat with the Zorro-themed DSAP and has this year been followed by the release of the Zorro Hyperlink.

“We think we have the resources to grow in Europe in a way that mirrors our growth in the US and Japan,” says Oneile. “We have the second largest market share in the US, and are number one in Australia. We know we have the product.”

Europe, of course, is defined by then different laws of each of its member countries, but Oneile claims that experience of entering the US markets, with differing state laws, stands Aristocrat in good stead for this fragmented and fluctuative market.

“Europe is similar to the US in that is it a large market spilt into lots of composite parts with different requirements,” said Oneile. “The US has shown us how to penetrate markets made up of different components.”

Khin argues that it’s about ‘targeting the right areas at the right time, seeing the opportunities and making sure we have a good catalogue of games to enable us to capitalise on those opportunities.’

“We believe the legislative changes in France and Spain will drive the replacement of games in those markets.”

Even though the company has grand designs on the European markets, Oneile is realistic and pragmatic enough to admit that it will be a case of finding a share of an operator’s business with machines that complement those of other manufacturers, rather than trying to establish monopolies on gaming floors.

“No operator should purchase 100 per cent of their product from a single supplier - it makes no sense,” he says. “What a wide portfolio of games gives you, which is what we have tried to build up, is an advantage in building relationships with operators, and building the trust to enter into strategic alliances.

"This then allows us to act as advisors to operators in a particular market, and it’s important that it’s based on honesty from both sides - what games are working, what isn’t doing so well - even if that means taking on board criticism of your own machines. Relationships like this take years to build.” Clearly though, Oneile believe that investing the time is well worth it.

Khin also told InterGaming that the company is looking to get involved on the systems side in Europe – eventually. Aristocrat already has a successful systems operation - Oasis – in other regions, including the US. The casino management suite aims to help casinos with advertising, marketing, and player-loyalty promotions such as the PersonalBanker credit management tool.

“We’re exploring the systems side of things,” says Khin. “We’re actively looking to do something in that area but have made no commitments. We’re doing well on the systems side in South Africa, Australia, Macau and the US. Maybe it’s something that we’ll focus more on in Europe later in the year. Of course any decision we make in this area must make economic sense to the company.

“We have the blueprint for Europe, it’s just a matter of building on the existing Oasis and Asian systems.”