The German system may be making a faster impact on the British Category C market than expected.
In 2011 there were only 12,000 new machines registered as entering the market, according to statistics put out by Tony Boulton, chairman of BACTA’s Division 4, which contains the market’s manufacturers and suppliers.
With the two biggest machine makers, Bell Fruit and Astra, now under the control of the Austrian Novomatic group, it was predicted in these columns last year that the German pattern of renting machines and software will inevitably reach the UK. That may now be happening, although not all aspects of the German system are being happily accepted here.
For example, the majority of players, especially in adult gaming centres prefer legacy games, with 85 per cent of the machines still reel based, as opposed to the almost total domination of video-based multi-games popular in Germany.
It is clear, however, say expert observers, that the apparent low production figures for 2011 are not the total picture. A sizeable number of new machines have entered the market as rented, leased or profit-shared machines, which tend to fly under the statistics radar.
However, all is clearly not well with the British Category C market, dominated by the pub sector. The severe contraction in the number of pubs trading has hit the established base of Category C machines, still estimated at 50,000, but likely to show a sharp drop when the 2012 figures become known.
The AGCs contain about 30,000 machines, mostly legacy games as we know, and there are about 45,000 Category C machines in other locations.
The pubs have always been the premium market, however, with the retailers traditionally demanding a continuous process of injection of fresh investment by the operators. That appears to have ceased, partially driven by the rapidly escalating cost of new machines while incomes have not matched the rise in inflation. That has led to a very cautious market and, at best, unenthusiastic. As one industry expert put it: “There was a perception that you had to invest to keep players. That has gone and people don’t have a budget; they buy when they need to, which is often never.”
What makes the 12,000-machine figure even more shocking is the fact that this included machines which have been greened – effectively rebuilds and refurbished equipment.
Another industry observer told us that while there is clear evidence of leasing and profit-sharing in the AGC and bingo halls sector, that characteristic has not yet fully impacted the pub machine sphere. “There is a growing number of machines being supplied to the pub market on shared terms but this has not yet hit production volumes. The large majority of new Category C machines produced are for the pub sector, but these volumes have been hit dramatically by the reducing number of pubs, reduced machine density due to lower pub footfall, and the longevity of games.”
What is clear from the current situation is that the UK may be moving towards a picture already developing in the US and South American markets, where manufacturer-funded operators become dominant and a reduced number of independent buyers for new machines. This may be seen as the only business model going forward in the present economic climate.
As one observer put it: “The manufacturers of printers decided long ago that sales is not where the profit is – it’s in ink sales. The makers of Xbox and PlayStation realized the same thing, that content is all. The makers of mobile phones and iPods also felt that content is king. The same may well be happening to the Category C gaming machine market.”
