Matt Davey podcast transcript

Interview with Matt Davey from NextGen Gaming

Speaker key:
RT: Ronan Tighe
MD: Matt Davey

RT: Hi, and welcome to the third of our podcast series, Innovations in eGaming. I’m Ronan Tighe from Foviance, and today I’m joined by my guest, Matt Davey, CEO of NextGen Gaming. Matt, thanks for taking the time to talk with me today.

MD: Ronan, thanks very much for the invitation.

RT: First of all, can you just tell us a little bit about your background and NextGen Gaming?

MD: Sure, I guess I started out in the gaming industry, when I worked for the Racing Gaming Authority in the Northern Territory in Australia, and we were responsible for the management of all gaming activity there, and it was quite an insight into land based gaming, but Northern Territory was also quite progressive in online gaming, and was the first state and territory in Australia to put in place regulations to manage and promote online gaming. We had one casino go live called Lasseters and that was a nice introduction into the game industry, and then I worked for a number of companies in the industry, working for both the government side, operators’ platform, and obviously with NextGen Gaming on the content side.

And NextGen Gaming itself started in 1999, and it was founded by two gentlemen who are ex-IGT, and the view there was, the vision of games that weren’t tied to any particular platform, so we really wanted to focus on being a content business that was agnostic to whatever platform the content should run on, and we’ve held pretty firm to that, the business model has evolved over time, and the company has learnt and grown, but we’re into our tenth year now, and bigger and better than ever.

RT: And the fact that you’re independent – how does that affect how you innovate products?

MD: Well, we kind of pioneered the whole independent content provision space. Gaming has historically been tied to proprietary systems, that’s definitely the case in the land based industry and it was certainly the case in the online gaming industry in 1999, so a number of the, I’m not certain if innovation’s quite the key word for it, but a number of the changes we had to introduce into the industry were how do you work with third parties? – how do you change the way your business operates and the technology that you have to get third party content to work on your platforms? So we worked with a number of our customers who were very very successful businesses in their own right, but there needs to be maturing of their systems and processes and their platforms to handle the impact of third party products onto it. So we’ve helped worked with the industry, I think the industry has matured quite a bit to where it is today, where we now have nicely articulated third party game development kits, and stated positions from big operators such as 888 and PartyGaming that, they’re interested in third party content and see that as a way to get access to best distributed product.

RT: What content are you currently producing, and what would you say has been your most successful to date?

MD: With NextGen we’ve been very very focused, we just focus on the slot product, a number of people have asked us as to why we don’t look at other products such as table games, or even going into skill games – we just haven’t felt that we’d get the same kind of return, we don’t think there’s the depth of differentiation and product development that you can do in any of the other markets that you can bring to bear with the slot business, and we point to the land based industry to demonstrate that some of the largest manufacturers in the world – IGT, Williams, Aristocrat, Bally – they’re all heavily focused on the slot product.

So that’s the product we focused on, and in terms of innovation, it’s a tricky element to talk about – obviously all companies in the product part of the industry want to advance their product, and the best way to advance it is through innovation, but the balance that comes in the sense that gamblers, our core market, are adverse to change, they don’t like change, they’re change resistant, so the trick is to actually introduce innovation in a way that doesn’t frighten them or create a level of distrust, so you need to be able to bring your market with you. So we like to balance improving the product and putting in place points of difference, but also maintaining a number of the core elements that our target market find key for them, and I think you’ll find that a lot of those basic ingredients haven’t changed over the last 20 or 30 years.

RT: How do you currently involve your target audience, your users, in the process?

MD: Again that also is a great question – we have two target customers, we have our customers, our partners that we work with, the platforms and the operators that provide our product to the market, and we have the end user, the player, who is the ultimate consumer of the product, so when we build the product we need to be thinking about both our customers and also their customers. So what we do is we work with our partners, in particular some are very hands on and some are less hands on; we develop a game design brief, and we look at what are the parts of their market that they’re trying to attract or appeal to, and then we look at the player base behind that to see what kind of demographic, and in our case we in particular talk about psychographic drivers – are they after high value players that are prepared to gamble quite a bit, would like a highly volatile product, may have more of a male theme, perhaps eastern European? – or are they after something more low volatile, which is a regular punter who just wants to have an entertainment experience for £20 or £30 over a couple of hours. So we work with our customers to define what is the market, and then we go through some interaction cycles with them, where there is a user acceptance test on their behalf, but ultimately the best form of feedback you get in it with our product is when it’s live in the market, and the market tells you.

RT: And is there any one factor that has to go into every slot that you would say makes it successful?

MD: We talk about our eleven secret herbs and spices, and we know what ten of them are, we just don’t know what that eleventh one is. So yes, we know a whole bunch of things about what not to do, and we know a whole bunch of things about what we should so, but there’s and X-factor, there’s an eleventh element that goes into the games that we see as a function of the creative development process with our product team that delivers a more successful product from time to time, but just nailing down the exact ingredients, it’s difficult, but we definitely do have a core set of principles that we work with.

RT: You take a cross channel approach in that your partner with online and land based operators – how does that affect the games that you develop?

MD: We think that’s a core strength of our business, and in particular that we’re straddled right across both markets. We try and take a view that is agnostic to the platform on which we deliver the product, so in our view a player is really there to play the most entertaining game that suits them, and it doesn’t really matter to us how they get to that game – is it through the internet, through their mobile phone, through interactive TV, or through some land based outlet. But that said, the market and the land based industries are a lot more mature than it is in the online industry. We think that the products market in the land based industry is probably two, three, four or five years in front of where the online market is at the moment, so we were able to take a fairly mature product that we’d built and delivered in a land based market and deliver it into the online market, and that gave us an ability to take advantage of the overcharge between the quality of the products that were already available. So we found that to be very useful, by building product that we deliver to our partners such as Bally, for instance, in the United States, we’re delivering product into some of the most competitive industries around the gaming market, and that means that our product has to be of a certain level, a certain quality, and that’s delivered great results for online product as well.

RT: In what way is it more mature?

MD: So the market itself, so the player base is actually more familiar with the product. In the online space, for instance, we’re finding that operators are moving into markets that previously haven’t had immediate access to gaming products. So, for instance, in the UK it’s only a very small number of people that actually enter into casinos, so they’re not very familiar with the casino environment, they’re probably more familiar with the pub environment with fruit machines and AWPs and the like. With the kind of more mature land based industries, such as in Australia and in the United States, you have a market that’s been built up over the last 20 or 30 years that understands the depth and visions of the product that’s been delivered to it. In the online space, they haven’t had that experience or training, so it takes a lot longer for them to understand the quality of the product they’re working with and the value behind it. So we’re finding that’s an educational process, and it certainly is in our benefit that we have experienced an exposure to both sides of the market.

RT: Does it ever work the other way, where the online space has come up with something very creative that has been brought into the …

MD: Yeah, that’s a great question, and the answer is yes. Part of the reason is that the more mature markets in the land based industry are heavily regulated, and that has a stifling impact on innovation, just by its very nature it has to go through a number of views with government regulators, which ultimately is a healthy thing for the player base, but in the online space what we’ve found is the impact of two things: one is the regulations are a little different, so it allows for a broader range of innovative products to be released; and two, the development time cycles between actually building the product and releasing it and getting market feedback is a lot shorter. So we can actually get feedback on a product within three to six months, as opposed to 12 to 24 months in a land based industry.

RT: You’re based in Australia – is that a disadvantage when you were starting out in the business?

MD: It was a bit of both, it was a huge advantage in the sense that we had developers from a mature gaming environment, and a number of the operators and developers in the online space didn’t come from a gaming background, so we had a depth and vision within our team that was pretty much unequalled in the gaming space. It certainly is a disadvantage when we’d all meet at various conferences around the world, and engage in great discussions about how we can do business, and then everyone would go back to the various parts of the world and it’s difficult to keep up those communications and the relationship. But we’ve worked very hard at that, we have customer account management as a key function of our business, and we use all the various tools that we can to take advantage of, such as video conferencing and telephone, and we do quite a bit of travel.

RT: Is there any major differences in the markets that you operate in?

MD: Yes, a lot of the various consumer markets we gain in product have typically been skewed to the type of products that have been available to them on the back of whatever the government regulations has been, so for instance in Japan, the product is skewed towards Pachinko, and that’s largely due to the nature of the regulations that are available there. In the UK, the product’s been skewed towards fruit machines, and in Australia we have what we call “pokies”, the slot machines that have a very dominant footprint in the market, and that’s largely been dictated by the various rules and regulations from the governments around the world. So we have quite a different experience in taking Australian-style slot product, and putting it into the UK market, for instance – there’s an element of education that needs to go on before the UK, the average UK player, gets comfortable with the type of product that we’re putting in, it looks very different from a fruit machine, for instance.

RT: Has there been any markets that completely haven’t got slots that you’ve gone into?

MD: No, I guess our feeling, and we’re biased, and you’d expect us to say it, but we think our slots is one of the ultimate gaming products in the sense that it gives you a random result every single time that can be delivered in multiple different formats, so the market has evolved from being a three reel product to five reel with 25 lines or 50 lines or 100 lines, with massively interactive second screen features, so we’re able to cater for a broad range of consumer preferences just within this key product itself. So no, we’ve found that that’s been the core focus and certainly the way we see the market moving forward.

RT: What innovations do you see in your area that is going to change the experience?

MD: There are probably two that are worth talking about – a lot of people are looking at the similarities between the development of the PlayStation/Xbox market and the gaming industry itself, and trying to see whether there’s a merger of the entertainment experiences there. So that comes to bear on the slot business, generally through the second screen feature, so we’re releasing a number of products with our partners that involve key action figures, for instance, that might go through certain battle sequences that gives the player more interaction and more of that 3D immersive feeling that you get from the PlayStation/Xbox model.

And the second innovation that we’re seeing is a focus towards community, and by that we mean the same kind of phenomenon that’s established within the poker market, we’re seeing that on sites such as MySpace and Facebook and other internet products where people really want to communicate, and so we’re seeing a number of our operators, platform providers and product companies such as ourselves, working towards building product that allows for a greater level of communication and interactivity as people play.

Probably one of the other key market segments is the bingo market, which really works off the back of the community side, but I’m certain we’ll see innovations on community with slots, be it tournaments or jackpot-driven, or the ability about the shared purses to have a common goal of winning the most number of features or certain symbols that can be won across the screen.

RT: Is that something that NextGen can be involved in, or is it going to be down to the sites at the end of the day?

MD: We have a product team that thinks about this every day, they try and prognostic out on where the market will be in 12 months or 24 months, we see community gaming, for instance, as one of the key trends coming forward, so we are building game design descriptions and developing the front end of the product ourselves in house, and then working with our customers to be able to enhance the back end technology to support that. So yes, it has to happen in lockstep, and we have to have a common set of goals, a revision as to that’s the way the market’s going, but we’re finding that our partners on the platform side to be very encouraging to work with, and I think everyone really want to push the difference of product coming forward, and the underlying innovations underneath that.

RT: Do you think the gaming sites are currently competing on the basis of the games that they’re delivering?

MD: Yeah, I think the market again, and I’m talking pretty much about the online market, is maturing now, it’s middle way from what was historically cookie-cutter based websites that really didn’t have a lot of product differentiation, and they would compete to attract and retain players on the basis of bonuses and marketing promotions, but that was pretty much a standard thing throughout the industry from 1996 onwards to the early 2000s. It’s only really now that there’s a significant number of world capitalised businesses that can all compete in the bonusing and marketing side, it’s only now that the operators are starting to turn to product and see product as a form of competition, to be able to differentiate their site and give a greater entertainment experience to their players, and help the players enjoy the interaction with their site for a longer period of time, so it’s really only been over the last two or three years that we’ve seen product now start to take a bit of a centre stage focus in the competitive positioning between various operators.

RT: Brilliant, Matt, thanks for giving up your time to fit in the interview, it’s really appreciated, and I’m sure your advice and insight will be well received by our listeners, and thank you all for listening, please come back to www.foviance.com shortly to download the next podcast in our Innovations series.

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