There are lots of reasons to be optimistic about skill-based games on the casino floor:
- eSports, which are pure skill-based games without any element of chance, are booming.
- The games have been blessed by regulators in Nevada, the traditional birthplace of all things gaming.
- All the major machine suppliers have released games with skill elements.
- There’s an exciting group of disrupters dedicated to the space (Gamblit Gaming, GameCo, Next Gaming, and Synergy Blue, among others).
- Haven’t you read at least a dozen articles saying that casinos will go extinct if we don’t attract millennials, and that millennials will “only play skill-based games?”
Therefore, it almost seems like heresy for me to say in print, “They’re just not working.” My position got some support this week as Nevada Gaming Control Board Chairwoman Sandra Douglass Morgan echoed my words. She said, “Skill-based slot machines have not gained significant popularity on the casino floor.” Indeed, there isn’t a single “skill” game in any national report that has achieved a performance index much above average. At least not yet.
Yet articles – like the one I wrote recently reporting on an industry survey – say slot operation folks are optimistic. That survey, conducted by Synergy Blue, revealed that 70 percent of casinos “have, plan to, or are considering adopting skill-based games, games with skill components, or games with arcade-style play.” I believe that research is completely accurate, but the question and the interpretation are less so. I would have given the same answer if polled. But there’s a large gap between “interest in,” “buying” and “working.”
You may recall that similar surveys were just as enthusiastic about server-based Class 3 games a decade ago. Interest was high; so was the excitement. Today, all that hype is gone, and so are the games. They may still work someday, but they were a leap too far for the then-current floor technology, and they provided a terrific solution for something that wasn’t that much of a problem. Skill-based elements may have some of the same issues. There’s no denying that there’s a whole generation of eSports enthusiasts that will reach that magic AARP milestone of 50+ years old soon. That’s when increases in discretionary time and income – combined with slower reaction times and a reduced need to e-socialize – seem to match up better with slot player demographics.
The Washington Post recently reported that last year’s DOTA 2 International eSports tournament had a prize pool of $25.5 million. They went on to say that’s a bigger purse than you get for winning the Daytona 500 ($15.5M) or the U.S. Open golf tournament ($12M).
For those of you out of the loop, DOTA 2 is a multiplayer online battle arena (MOBA) video game, where players have a top-down view of the battlefield and control a single squad into battle against one . For those of you who were, like me, raised on Atari, it’s like Missile Command or Tank, but played at warp-speed (professional players can exceed 300 individual commands per minute!) with dozens of little warriors trying to kill you.
Here’s another one from the Post: the 2017 League of Legends World Championship, held in Beijing, drew a peak of over 106 million viewers, roughly on par with the audience for the 2018 Super Bowl (which was itself bigger than the 2019 Super Bowl viewership). Likewise, the previously-mentioned DOTA 2 International drew a larger TV audience than Wimbledon or the Tour de France. And it matched the viewership of the Kentucky Derby at 15 million eyeballs.
In other words, eSports are a big deal, with pro players competing at astonishing levels that you (or at least 106 million of you) have to see to believe. That is the very reason that eSports and skill-based gaming are impossible to compare. Can you imagine the millionaire winner of the lightning-fast DOTA 2 getting excited by moving the simulated joystick of IGT’s Wrecking Ball, one of today’s strongest performing slots that features a skill element? It would be like a Formula One driver competing in a tricycle race.
At the opposite end of the spectrum, there’s another critical issue: the players have to already have some skill in order to enjoy playing the games. IGT often chose my former teammates at Pechanga Resort & Casino to test and evaluate new games. One of them, the vampire-themed Blood Life, officially launched in late fall of 2009, but we had it a bit earlier. The cabinet featured a physical, arcade-style joystick; the skill element was triggered when players hit a bonus and were given the opportunity to fly a bat, using the joystick through a simple maze in order to increase the awards. We first recruited our Social Media team – all of whom were certified millennials – to give it a shot. Not one of them failed to negotiate the maze for maximum points on their first attempt.
However, when the trials moved to real slot playing (and paying) customers, they seldom got beyond the first dip or turn in the tunnel without crashing into a wall. Unlike traditional arcade games, where failure produces a desire to dig out another quarter and continue playing, the infrequency of the bonus rounds made it difficult to improve your skill – or to create the desire to play more.
About a year later, IGT debuted Centipede, complete with an Atari registered trademark. Since I held the high score for 12 days straight on the Centipede machine at my local mall in the 1980’s, I couldn’t wait to test it. When I hit the bonus, I found the Centipede element was great. It played exactly like the arcade game. There was none of the lag between controller and on-screen action that plagued earlier games like WMS’s Star Trek themes. But the Centipede element was far too short; no sooner had you started to enjoy the classic arcade feel of the game than you were quickly dumped back to the weak base game. Like many weak bonus games, this skill element had a negative effect: true Centipede fans felt short-changed, and good slot players didn’t enjoy a pay table they couldn’t maximize.
That’s roughly where I think today’s skill-based games stand. They are not skill-based enough to satisfy even an entry-level Fortnite player, and games with better skill elements are not catching on with today’s slot-playing public.
The data, to this point, are not good. Nick Hogan of ReelMetrics, which maintains and analyzes a database of over 170,000 slots in 105 casinos, says, “We’ve yet to see any hits, although, during the trailing 12 months, IGT’s ‘Texas Tea Pinball,’ ‘Cleopatra Pinball’ and ‘Wrecking Ball’ have all delivered above-average GPTW performance (GPTW is a combination of games played and theoretical win). Over the past quarter or so, however, we’ve seen downward performance and installed-base trends across the entire skill category. There’s obviously a lot of experimentation.”
Notice that he doesn’t mention any of the new manufacturers in this segment yet. And even those titles in the above-average performance group never hit 1.5 or higher on ReelMetrics’ indices. Generally, operators are looking for newly-purchased games to be in the 2.0 or higher range, at least upon introduction.
There is another issue that does not bode well: longevity, or, rather, the lack of it. Hogan notes, “When we evaluate performance of skill product on a time series basis, we see a lot of novelty effect to these titles. They’re played hard initially, then sink like stones.” That situation’s not unique to skill-based games, but it leads to something that operators dread: namely, buying a hot game that tanks too soon. It’s one of the reasons why Hogan’s group at ReelMetrics has worked to develop new indicators like their “time series” to provide meaningful data on performance over time.
Analyst Todd Eilers notes many of the same conclusions. “We talk to slot directors all the time and get the same sort of feedback.” His analyst groups, Eilers & Krejcik Gaming and Fantini Research, monitor 150 casinos and over 90,000 slots monthly. He says some operators are still willing to see what’s ahead with cautious optimism.
“If these games are bringing in a new customer that is 100% incremental, then you could make the argument that the game is successful even though it might only earn 60-70% of the house slot average. It would still need to earn more than the cost to purchase or lease the game, but you get the point. Now, if a casino has limited space or is limited in the number of games that it can have on the floor, this argument might not hold. In that case, with limited space or games, you have to maximize revenue as much as possible, so it might not make sense in that scenario. The reality is that these games probably fall somewhere in the middle, where they are bringing in some incremental revenue but also probably taking some away from slots as well.”
If there is any good news, it is that skill-based games are getting better.
Instead of just looking at negative examples like the aforementioned server-based games, recall that video reel games didn’t exactly take the market by storm at first. Aristocrat’s “Penguin Pays,” the first Aussie-math video game to land stateside, was not an immediate hit, nor were IGT’s down-under clones like “Black Rhino.” Today, video reels are number one everywhere, having completely defeated the former 50-year undisputed champs, reel spinners. But the victory didn’t come overnight.
Community games, like those recently demoed by Scientific Games and Gamblit, are perhaps more fun to play than any product on the gaming floor today. They just haven’t demonstrated that they can generate extended seat time nor repeat play. They can work on that.
Synergy Blue has a shooting gallery game, an approximate clone of comparable arcade games, that’s entertaining and enjoyable to play. It seems encouraging; this genre has done well in amusement settings for years. This version requires some true skill to play, accurately rewards players for target hits, and has a chance element for bigger wins. It just doesn’t seem capable of generating slot-type revenue yet. They can work on that.
Finally, there are the carnival games. Bally – now Scientific Games – utilizes a SkeeBall element in a few games and system bonuses. They’ve used true physics to produce a decent clone of the single most successful carnival midway game in history. Like, Centipede, one problem was the infrequency of actually playing the SkeeBall feature. Again: they can work on that.
My personal preference would see someone develop a game that precisely mimics the old “toss the ping pong ball into the goldfish bowl” carnival attraction. That’s supposedly a skill-based game, but I am convinced that Greg Maddux or Stephen Curry couldn’t win a fish any more often than Grandma Moses. That game’s nominally skill-based, sure, but in effect it’s probably more random than any RNG.
The bottom line is that, for all their potential, skill-based games are just not there yet. They are getting better, but some serious work still needs to be done. I salute and encourage those willing to keep trying them on the floor. That’s the only path to success. You never know when, or where, the next “Wheel of Fortune,” “Fortune 88” or “Dragon Link” may emerge. Someone, eventually, wins the goldfish.
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