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Ramesh Srinivasan took the helm of Las Vegas-based Bally Technologies in December 2012 when he was named president and chief executive officer. Prior to this promotion, Srinivasan had served as president and chief operating officer since March 2011. Since first joining Bally in 2005 as executive vice president of systems, Srinivasan led the Systems division to record revenues and customer-satisfaction levels, and is continuing to drive impressive performance throughout the company today.
Congratulations on your new position, Mr. Srinivasan. While you already have been intimately involved with Bally’s success to date, how do you envision your role evolving going forward and what is your focus for the company in 2013?
Thank you! Business is a team sport, and we have worked hard to build a terrific team of hard-working winners at Bally. It is not so much about my particular role. I will continue to be a good team player and lead by setting a good example. We at Bally will always remain conscious of the fact it is all about listening to our customers and getting better continuously. As a customer and market-centric engineering driven company, Bally’s focus in 2013 will continue to be about creating and enhancing our industry-leading core products and effective new innovation. Our casino customers need our help to improve their competitive advantage and operational excellence more than ever before. During 2013, we will keep our focus on helping them maximize their results with great products and even greater customer service.
Bally Technologies’ recently released nearly across-the-board record-setting results for the company’s second quarter ending Dec. 31, 2012. What do those results tell you about Bally’s current operations and gaming operators’ appetite for Bally products?
These results tell us that we are listening to our customers and delivering the products they need to be successful. We have come a long way during the past few years with respect to the breadth and depth of quality products and services we offer to our customers and the managerial and engineering talent levels we possess, which are facilitating good financial results. The casino environment is infinitely more competitive now than in the past, which has increased the need for quality games and systems products. New demand for mobile and online technologies is also providing new revenue opportunities for Bally.
While Bally enjoyed impressive results over most of its divisions during the second quarter, international game sales proved disappointing. What is holding back those sales, and what steps is Bally taking to turn that around in the coming months?
While struggling economies around the world and import-export rule changes in certain regions are challenges beyond our immediate control, we could have done better with respect to localizing our games products for various global markets. Our systems products have done extra-ordinarily well in international regions during the recent past thanks to the many international focused product initiatives we invested in since a few year ago. For some time, we have been similarly focused on creating great games for various international markets which take into account specific regional, cultural, and other play preferences. We expect that effort to translate into good international games sales soon.
What was the reaction to Bally products at this year’s ICE Totally Gaming exhibition in London?
In my personal opinion, the reaction to any set of products exhibited in any show can best be judged by customer enthusiasm and specific interest during the couple of months following the show. I know that our sales personnel in Europe have been on the road, visiting customers almost non-stop since the ICE Show, and that is a very good indicator of increasing interest in Bally products – across both games and systems.
Which specific Bally games and other products seemed to draw the most interest from international customers at ICE? Why do international customers gravitate to those games?
NASCAR, Pawn Stars, and Michael Jackson King of Pop drew significant interest from international customers at ICE. International customers gravitate to these games because all these names are iconic global brands, backed by Bally’s superior and creative play mechanics and solid unique technologies like iDeck. Among systems products, the powerful marketing possibilities that iVIEW Display Manager and the Elite Bonusing Suite of products open up for casinos elicited considerable discussions. The focus on online gaming and mobile technologies always tends to be high at ICE every year and 2013 was no different. The open architecture of our iGaming platform which provides casinos the freedom to choose the front end products they prefer and the cutting edge Mobile technologies Bally currently offers were high points at the show. The world-class Bally games content becoming available for various web portals in Europe through our Remote Gaming Server was also popular during the ICE Show.
On the games front, I know Bally has invested significantly in an increased number of game studios. What are the benefits of having those studios and how are they paying off to date? Are they effective in targeting content to specific regions, for example?
Increased investments in R&D have been the driving force behind our resurgence as an organization during the past few years. Currently about 56% of our staff are focused on R&D, and that represents a 10% increase from where we were in 2005. And our overall number of employees and business size has also increased dramatically since then. Much of that increased R&D investment has gone into Games Studios. The increased number of studios situated across various regions in the world has given us increased development capacity, stronger quality assurance practices, wider creativity, and the ability to create a truly diverse set of game themes, each of which appeal to various regions in the world and within the U.S. to varying degrees. We have a well-documented history of creating great hardware cabinets, and now we have the development fire-power to keep the compelling titles and software content flowing consistently on each of those cabinets.
WMS announced in January that lottery provider Scientific Games Corp. was purchasing the Waukegan, Ill.-based company for $1.5 billion. What does news of such a major merger say about the gaming industry sector? How would such a merger affect Bally, both negatively or positively?
I don’t think the merger will have any direct effect on Bally. The success of any acquisition – especially such large-sized ones - really comes down to great execution, and we are assuming that two very well-managed companies like Scientific Games and WMS will do a terrific job of making the merger very successful. As a fellow gaming sector player, we wish them well. Based on how much we have improved ourselves during the past few years in every way imaginable, and the various transition phases some of our crucial competitors are currently going through, we believe our current competitive positioning is the best it has been in a very long time.
.Given that the industry sector may be undervalued, would Bally consider making such acquisitions itself? Why or why not?
I think we have done a good job of managing our capital allocation strategies during the past years. We will continue to make prudent strategic and financial decisions in the future as well. As a products and services oriented company, we actively look for tuck-in technology acquisitions, which accelerate our product enhancement efforts. We have a done a few such acquisitions during the past few years, which have worked out very well for us. We will remain opportunistic with respect to other kinds of acquisitions and will always keep an open mind should a good possibility come along, which makes both strategic and financial sense. Given the extensive growth possibilities ahead of us in each of our core business areas, there is no need for us to get anxious about initiating industry consolidation.
Recently, Bally announced it will bring its content online through an agreement with OpenBet, a leading provider of interactive gaming and betting solutions. What are your hopes for that deal — both for Bally and for the gaming industry as a whole?
Bally has been very successful at creating exciting and compelling products for our land-based customers, and many of them would like to replicate their hugely successful land-based offering in the online environment. Since the inception of Bally Interactive, our vision has always been to create a platform that is truly open and allows operators to use best-in-class products. Utilizing OpenBet's platform, we are now able to extend the reach of our products and deliver on that vision to a truly global online audience.
Finally, where do you see Bally greatest growth opportunities, both internationally and in the states, in the next 12 months? On the flip side, what are the greatest challenges facing Bally?
Answering your second question first, our greatest challenge, which is also possibly our industry’s biggest challenge, is continuously increasing our ability to attract the finest world-class technical and managerial talent to our company and to this industry on a consistent basis. Great people make great organizations and keeping our need for world-class talent constantly fulfilled is our greatest challenge. Macroeconomic realities pose the next biggest challenge. Every business organization would like the overall world economy to be more of an ally than a challenge, and we are not different. We are currently cautiously optimistic given the extent of improvements we are seeing in the economic environment in various regions compared to a few years ago.
We see many growth opportunities in front of us. We have invested heavily in improving our product sets and making them more diverse. We see a solid growth path in front of us in the international games sales arena. We expect to continue to gain domestic market share in both games and systems during the coming years and are well positioned to take good advantage of expected increases in games replacement decisions. New market expansions like Illinois and Ohio, our successful recent entry into the Canada VLT market and various new big customers we have added recently to our systems family open up new opportunities for us that we did not have before. In spite of the phenomenal recent increases in our Games Operations footprint, we still only have a small market share in this segment and have a lot to gain during the coming years. The major globally recognized brands we have added to our Games Operations portfolio during the recent past have made our competitive positioning stronger. The outstanding work we have done during the past few years improving our Core Systems products, and adding compelling new modules to our systems portfolio, will continue to open up many new doors for us, as casinos look at an increasing pace for the kind of tools and technologies which help compete in their crowded marketplaces more effectively than before. And we are only getting started with our Interactive Division. We have spent a couple of years of intensive R&D effort in this area, have become the top mobile technology provider in the industry and are now ready to help our customers in the emerging online world as well. Overall, I would not trade our current state – both in absolute terms and in terms relative to our competition – for any other time in our past!
