Games Warehouse started life in 2001 as a small, UK-based digital gaming manufacturer and over the past three years has significantly grown into one of the UK's major players. Helen Fletcher met with founder and managing director Andy Powell to get the story so far and find out about future opportunities both onshore and off
Given life seven years ago, Games Warehouse was originally known as software provider 4Leaf, supplying gaming software and upgrade kits for the JPM Proteus cabinet, best known as home to the iconic Who Wants to Be a Millionaire? SWP game.
After a couple of years it was realised that the company needed its own cabinet, which is when the company name changed to Games Warehouse and then in 2003 the Paragon SWP cabinet was born.
When Games Warehouse first started out with its Paragon terminal it was up against stiff competition as the two major UK operators at the time, Leisure Link and Gamestec, both made their own digital gaming terminals, itBox (Leisure Link) and Gamesnet (Gamestec), effectively meaning that all the major pub chains, which were covered by one of these two companies, were out of bounds to Games Warehouse. However, the one area that neither company was servicing was the independent operator.
“All the products are fundamentally the same,” said Powell. “There are differences in game content but that is about it. The reason we did so well with the independent operators is simple; there was a gap in the market and we couldn’t actually do business with anyone else because of the exclusivity that being operated by either Leisure Link or Gamestec brought to many pubs.”
As reported in recent issues of InterGame, Leisure Link (Inspired Gaming Group) has since sold its pub division to Gamestec with a three-year contract in place to continue operating itBox. This has in effect given Games Warehouse new possibilities as independent operators, taking over former Leisure Link sites, replace the itBoxes with Paragon terminals.
SWPs are great in that they provide the customer with a multitude of choice in one cabinet. However, manufacturers can tell operators until they are blue in the face that all they need is one machine, when in fact this isn’t quite true, as any operator will tell you.
A customer in the location only realises a machine has changed when they see that the cabinet has changed. Put new games into an old cabinet and players won’t realise the difference until they get right in front of it. Conversely, if you replace the cabinet and keep the games the same, the player will perceive that a new machine with new games has been installed.
According to Powell, itBox was always technically ahead of its rivals and pioneered the future for other competing manufacturers. However, where Games Warehouse succeeded on its own merits is in the area of cabinet design. Since Paragon was first released there have been seven new cabinets introduced, each one more stylish and contemporary in its design.
The recent Paragon ‘TT’ even received input from two designers involved in Jaguar car design. Games Warehouse is also well aware of the importance of terminal connectivity, as Powell explained: “Everyone realises that connecting machines is the way forward; it will provide Paragon and Infiniti with new management and development capabilities.”
Games Warehouse has achieved its success and reputation by being “the operator’s friend” and evidence of its success and how much it has expanded over the past few years is best represented in the number of people the company has taken on. Games Warehouse now employs around 60 people, the majority of whom have been taken on in the past two years.
This theory has recently been further put into practice with the recruitment of a new financial director, Bernard Taylor, from Inspired Gaming, and Anita Platt, who heads up customer support having spent eight years with Bell-Fruit and Gamesnet. Another significant new face will be director of gaming, Kevin McGovern, who starts on October 1.
“I have known Kevin personally for 10 years,” says Powell, “and his specialist expertise will prove invaluable to us as we progress the Infiniti project.
“Growth has always been organic and there has been no hesitation,” says Powell. “We identify what is needed and then implement it. First there was telesales, then marketing was added and then a commercial director and field sales. We also have a former operator on board who sees things from a different perspective.”
This growth was in some part brought about when the original company was bought by US company Merit Entertainment, which is itself owned by the private banking group, Harbour. However, although Games Warehouse is officially owned by Merit the two companies run as completely separate entities.
“Being bought by Merit has brought with it serious investment potential and room to grow,” says Powell. This move was one of the most significant moments in the company’s history so far. But with regard to product it has to be said that the biggest achievement is the fact Games Warehouse has gone from having zero machines in the market to over five figures in just four years.
However, if you were to think this would be a good time for Games Warehouse to get complacent then you would be wrong. According to Powell, if the company was to sit back and think that it is more important than the operator, that could result in compromises being made and it would soon see its strong operator relationships dwindle.
“We would be opening the door for another company to get in,” says Powell. “We should always be worried about the small companies as we were there once and were underestimated by the larger manufacturers and ignored. No matter how good we are, the smaller manufacturers of this world can go to our customers and offer an alternative.”
It would seem that Games Warehouse has got as big as it can get within the UK, but for Andy Powell this is not the case and the company is way off market saturation.
“Once we get connectivity on the machines it will open even more doors,” he says. “With connectivity will come network tournament play, which has the potential to be huge.”
With its position within the UK market firmly established there is now an opportunity to look to pastures new and Spain will provide the ideal testing ground for Games Warehouse’s Infiniti digital AWP. “This next challenge will be even harder,” said Powell. “We’ve got to do it all again but in an even bigger market.”
This year’s FER Interazar exhibition, held in Madrid at the end of this month, will see the Infiniti digital AWP showcased for the very first time outside the UK on the Comatel stand. Comatel is one of the largest distributors in the country and several of the Games Warehouse team have previous ties with the company.
“The Spanish AWP and Category B markets are even bigger than in the UK,” said Powell. “They also have the biggest manufacturers, companies like R Franco and Unidesa, which are extremely dominant in the market.”
When asked if this is level of competition is a concern for Games Warehouse, Powell said: “We will enter this market with a positive attitude. Comatel has proved many times that it is a fantastic partner. Our expectations are realistic and our sales targets are sensible.”
However, he added that with digital gaming it is no longer just about selling a machine, it is about taking ownership of the space within a location because once someone has bought a machine they are committed to the regular software upgrades and it is all about ‘incremental revenue’ and not simply shifting boxes.
“If you look at the history of other companies that have started to export, you will find that Spain is the first place everyone looks to,” continues Powell. “It is a logical progression. Infiniti will be bespoke to the market and Comatel and include games relevant to the market.”
Infiniti testing in Spain has been under way since July with a three-game menu of Cajafuerte (Cops and Robbers), Ruleta de Fortuna (Wheel of Fortune) and Vuelta Rapida (Fastest Lap).
With regard to Infiniti in the UK, as with all the digital AWPs in the market the initial trials have been challenging. In some locations they perform extremely well and in others they do not and it is difficult to work out the science behind it because it is all pretty new to those involved.
Gambling is, according to Powell, becoming more important to consumers and operators than amusements and it is important to Games Warehouse that Infiniti is a success. So where does Powell see the future of gaming overall? “Outside casinos, betting terminals are the only machines currently making serious amounts of money,” he said.
“Machines in pubs and bars need to be networked to survive. The benefits of connectivity are huge and there comes a point where a single unit is doing the best it ever can - if you then join them altogether - well that’s another story.”
