Tackling Macau’s 2.0 challenges and the rise of ETGs [video]

Suppliers to Macau are introducing changes to their products to comply with the new 2.0 regulations, which need to be completed by 2024. Any machines that can’t comply will need to be switched out, although the current low visitation and social distancing requirements mean it’s difficult to predict how much of an opportunity this will present for new sales going forward, says Ken Jolly, vice president and managing director, Asia, for Light & Wonder.

In this week’s Face-to-Face interview, we discuss the 2.0 changes, the growing popularity of ETGs, and the potential for recovery in Macau and Asia. We also discuss the potential in the Philippines domestic online market. 

Q & A

AGBrief  0:09  

What is the rationale behind the branding?

Ken Jolly  0:52  

We’re excited to be doing businesses as Light & Wonder. It’s a bit of a transformation for our company. We’ve sold off the lottery business, we’re going to focus now on great games and content. We have an opportunity to carve a name that projects where we want to be and that is a leading global cross gaming platform provider. 


Is Asia more limited when it comes to omnichannel offerings?

Ken Jolly

We’re reviewing our options as to how some of this will unfold in the different verticals. From the land-based side it’s business as usual and moving forward. When it comes to digital we’ve been focusing on other markets, but we’re certainly looking to do this across the whole company. 

AGBrief  2:56  

In Macau, you have the first games certified under the 2.0 regulations. How challenging was that?

Ken Jolly  3:21  

Certainly, whenever a regulation changes, there’s work to be done. The first thing was when the document came out, we had to evaluate what that meant. Some were fairly straightforward, such as the software. We then had to look at the platforms themselves to see if the horsepower was there to drive the changes. For instance, one of them was that we now have to have cryptographic RNGs and that takes a lot more horsepower than some of the older models had, so they obviously will be coming out of the market at some stage. Other things like putting the clock on there is a software thing, but it took a bit of time. Whilst we do this in other markets, in this market they wanted it to flash. So not It’s not simple, there’s work to be done.

AGBrief  4:38

If some of those cabinets aren’t going to be able to be converted is that an opportunity for suppliers?

Ken Jolly  4:50  

There are a lot of machines that are turned off. This started at the beginning of COVID for social distancing, but with low numbers of visitors, we’re finding that operators aren’t needing those machines. It will be interesting between now and the end of 2024, which is the deadline for the upgrade, to see how much visitation has come back and the requirement for units on each of the floors. 

AGBrief  5:28  

You are in Macau, what are you seeing on the ground?

Ken Jolly  5:32  

Very low numbers in casinos at the moment. It hasn’t gone anywhere near back to 2019. It depends on the visitation from China, because that’s the only place that players can come from. There are a number of hotspots in China and that is deterring players from coming over here. So, in the last couple of weeks, it’s been very, very quiet here in Macau. I think it will be some time before we see the numbers coming back to where we were previously. 

AGBrief  6:20  

Are you seeing any changes in player preferences?

Ken Jolly  6:26

There’s a bit of a move from live tables to ETGs, in particular to standalone ETGs. 

Previously in the ETG space, the stadiums were very popular, where you have all the terminals connected. That seems to be a little slower these days. Some of the companies have brought out, as we have as well, a standalone terminal. So it’s a bit like a slot machine, but it’s an ETG game and it’s a bit more personal than before.

AGBrief  7:38 

When, or if, do you see Macau returning to 2019 levels? 

Ken Jolly  7:53

I’m not so sure we’ll ever see 2019 numbers, again, as the market structure is different. The junkets have gone and that will restrict the operators as they will have to guarantee the money to players. There will come a time when we are post-Covid, but to what level things pick up remains to be seen. The market is very different than it was before. 

AGBrief 8:26

Outside of Macau, where do you see the most potential for recovery?

Ken Jolly  8:42

The Philippines is coming back quite strongly now and it looks like it’ll be strong for the rest of this year. Singapore has been fairly strong all the way through. Indochina has been a little slow and those countries are just coming out of lockdowns now and allowing travel and flights back in there. I think we’ll start to see them grow, but it has been hurt so badly over the last few years that it will take a little bit of time.

AGBrief   9:29  

Do you think any of the markets will get back to 2019 levels this year?

Ken Jolly  9:45

I don’t think we’ll see a full recovery just yet. Asia was the first area in the world that got hit with COVID and it’s probably going to be the last region coming out. Parts of Asia are beginning to live with Covid and as that happens, we’ll start to see much better times.

AGBrief  10:19

Have you seen any other changes in player preferences?

Ken Jolly  10:27

No, what was popular before in the gaming spaces is popular now, such as large jackpots in the Philippines. It will be the same going forward. 

AGBrief  10:50

Is there anything else you’d like to add?

Ken Jolly  10:58

From a company perspective, when it came to the version two software in Macau, we knew that customers were going to want to only do it once and not continue to put in new games that were of the old standard. Hence we moved quickly to put the winning games out. We do have other products in the market, such as the Dualos and Dualos X and we do have conversion games coming through for those. I’m expecting the first couple of those games in the next month to six weeks. We want to stay ahead of the game. We’ve put down a strong roadmap because what we’re seeing elsewhere is that as countries start to live with Covid,  the markets returned quite strongly and we believe that will be the same in Asia. So we want to make sure that we’re ready with a good game range, not only for the 2.0 in Macau, but for outside of Macau as well. I think customers will be impressed when they see our range, as we unfold into the end of this year and also into 2023.

AGBrief  12:14

The Philippines now has a regulated online market? Is there any space for you to bring in any of the other product lines in there?

Ken Jolly  12:21

One of the PIGOs is already using our cashless system. Quite a few of the machines have gone to the PIGOs because you’ve got to have a machine off the main floor area to operate. So we’ve had some top-up orders for the main floor because of that happening. I think there are still some opportunities in that area for growth.