Wednesday, April 6, 2005 | 10:49 a.m.
The nation's No. 2 slot machine manufacturer will begin selling a new game platform this week in hopes of putting a dent in the dominance of market leader International Game Technology.
Bally Gaming, a division of Las Vegas-based Alliance Gaming Corp., will begin selling a series of games on its Alpha platform Thursday after company officials admitted falling behind in the video slot arena over the last year.
"That's the hot segment at the moment," said Marcus Prater, senior vice president of marketing for the company. "We've been somewhat on the sidelines for a year or more."
Prater explained that the company's previous video game platform, Evolution, didn't have the horsepower to produce satisfying video games -- a fast-growing market segment that appeals to younger gamblers.
Alliance has been more dominant in spinning-reel slot machines -- a factor that contributed to the company placing 330 machines on the Wynn Las Vegas casino floor.
Alliance took its first step toward improving its video product by announcing the acquisition of Sierra Design Group of Reno in November 2003. The acquisition was completed under new terms three months ago, with the company ultimately paying $165 million for the company that specializes in video platforms.
"When we acquired SDG and their video operating system, which became Alpha, we told the market we were going back to the drawing board," Prater said. "When we had a product that met customer needs and had the appropriate approvals, we felt it was the time to trumpet our re-emergence."
That time is now.
Prater said six game titles are a part of the initial Alpha rollout: Blazing 7's, Arctic Ice, Bonus Times, In the Money, 1,000,000 Pennies and Kona Gold.
In addition to providing stronger graphics and a crisper operating speed, the Alpha platform allows players to change play denominations at the touch of a button. Low-denomination games have soared in popularity in locals casinos because of the high "hit frequency" offered.
"The system offers multidenominaton and multipercentage games," Prater said. "It easily changes from a penny to a nickel, from a nickel to a dime or from a dime to a quarter denomination."
As the denomination changes, so do the hit frequencies. Prater said local players demand high hit frequencies and more action in a game.
Penny games that have 20 lines -- 20 different ways to win -- normally have high hit frequencies. Players can still lose money with the high frequencies because they don't win back as much as they bet.
"We missed a lot of the penny craze because of lack of product," Prater said.
So far, the Alpha machines, which were field tested at the Suncoast and Sunset Station casinos, have received high marks from customers and players. Prater said he has had difficulty in the past getting testimonials from customers on products. That wasn't the case with Alpha.
"The games have performed quite well on the floor and the operating system is working perfectly with no technical problems," said Marcus Suan, vice president of slot marketing for Coast Resorts, which operates the Suncoast.
Suan said the company is purchasing 14 Blazing 7's machines and will be expanding the company's inventory at the Barbary Coast, Gold Coast and Orleans properties.
"You've definitely got a winner here," Suan said.
Analysts, while optimistic about the system, are more guarded about the system's outlook.
"It may take some time before the launch gets off the ground, because of the relatively small number of games that the company plans on starting with," said Steven Kent, a gaming analyst with Goldman Sachs Group Inc., in a note to investors. "From there, we'll have to see if Alliance is successful with those games, as it will probably determine whether slot managers consider buying more titles from them when they introduce them later in 2005.
"We view AGI as a turnaround story that has to first prove to us that its new games can garner the interest of slot managers and prevent market share loss of participation games as IGT, WMS and Aristocrat target their valuable floor space," Kent said.
Marc Falcone, an analyst with Deutsche Bank Securities, said the Alpha program is technologically capable, but the real test is whether Alliance can deliver a game library that satisfies the player.
"There's a higher entertainment experience that the video product produces," Falcone said. "It offers multiple bonus rounds, line combinations and themes that appeal to the player.
"The key is making good games for that platform."
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