Gauselmann satisfied with UK performance.
THREE years down the line from the beginning of its investment into the UK, the Gauselmann Group is ‘well satisfied’ with the performance of its acquisitions and the impact which they have had on the UK market.
Gauselmann Group managing director Jürgen Stühmeyer said that the original intention to invest in the UK was twofold: it was a stable gaming environment and it was outside of the eurozone. The purchase of Blueprint Gaming, the software developer three years ago, and the acquisition of major adult gaming centre operator Praesepe last year, had been the first fruits of the long-term investment philosophy shown by the German company.
“We wanted to invest outside of Germany and looked at the international prospects. The UK appealed to us because it was a strong, liberal jurisdiction which had stood the test of time. It was, we felt, an environment which has positive indications; it was less restrictive compared with Germany, for example; and with all of the uncertainties within the eurozone, the UK was independent of that currency.
“The UK ticked all of the boxes for us. ‘Positive indications?’ Yes. We felt then, and have now been vindicated, that the downward spiral in the gaming industry’s fortunes in the UK were levelling out and we considered that there would be positive trends to come. That, we felt, was not too much of a calculated risk and we have been proved right.”
He pointed to the solid performances of sectors such as AGCs, bingo and licensed betting offices, and the depressed atmosphere within the Category C (AWP) sector in pubs, Gauselmann felt, would improve. So it has, with the likelihood of a £100 jackpot for pub machines on the near-horizon.
Under Gauselmann Group control, Blueprint Gaming had consolidated its position as a leading supplier of gaming content and had expanded its interests to take a major slice of the internet gaming, mobile devices and games for the AWP market. Praesepe – the largest-ever single investment made by the Gauselmann Group – had exceeded expectations in the eight months since it was acquired and had improved returns and expanded.
His hopes for the Category C market are key to the continued expansion. Both Blueprint, producing the content, and Praesepe using it, were very committed to that sector of the market place. Having now secured strategic alliances with two major pub machine operating groups in the UK, Sceptre Leisure and the Independent Operators’ Association, Stühmeyer felt strongly that the group’s interests in Britain are about to surge.
Did that mean that the ‘German system’ would successfully export to the UK? The use of video-based cabinets and reprogrammable software which revolutionised the German AWP business, would have the same effect in the UK, he said. “The combination of Blueprint content and the high quality of the machine construction coming from our adp Gauselmann factory in Germany, is going to be a hard combination to compete with.
“Our Genie cabinets are now making their appearance in the UK and the high quality of German engineering and the ingenuity of the British software development they contain, will make a strong impact in the British pub machine market.”
Stühmeyer pointed to the example of Inspired Gaming – another key British customer – utilising the German factory for its VLT products, as an example of the engineering quality coming from the production lines at Lübbecke. “Inspired has reported back to us that the record of faults on the machines built in Germany was 30 per cent lower than that of any other source.”
It is the ‘softer touch’ of the Gauselmann philosophy towards its customers in the UK which may appeal most. The group made a lot of friends in its home country seven years ago when its ‘video revolution’ took place, because it did not try to seize a slice of the German operators’ business. “We have just 230 arcades in our own Spielothek arcade operation in Germany – out of more than 8,000 locations which actually exist there.”
Gauselmann put flexibility into its offer to German operators. They could rent or lease the machines and licence the content; but also they could if they wished buy the cabinets and that successfully defused any suggestion that the big group was attempting to grab a slice of the operation. It also widened the scope of its software content, by using not just its own Gauselmann-developed games (and Blueprint’s), but taking on third-party games. It meant that the group could offer the very best of content available anywhere.
It plans to bring the same philosophy into the UK, and the Gamepackage principal (that is the name of the operating packages available to operators) has started to enter the UK market. Praesepe itself is eagerly taking up the availability of Gamepackages and testing in Praesepe AGC locations is already taking place. The system is now on offer to the strategic alliances with Sceptre and the IOA – who between them represent the largest grouping of pub operators in Britain.
Stühmeyer is well aware of the major sea-change which must happen in the UK if the German system is to take a hold on the market. While other gaming sectors in Britain, the LBOs and bingo clubs, notably, have readily adapted to video-based machines, the pub sector has been stuck in a time-warp, and 95 per cent of the existing Category C machines in pubs remain analogue reel-based models. But Gauselmann, he said, is in Britain for the long-run and he and his colleagues based in the UK at Blueprint and at Praesepe, are convinced that the change to video-based gaming was inevitable.
“I believe it will go further than that… I think that digital downloading of fresh content will come to the UK Category C market much more quickly than many believe. The technology is already there – it was developed and initiated by Inspired Gaming years ago for the LBO and casino sectors. Why shouldn’t it be applied to the AWP machine? Everyone plays with reels; why should there be a difference between online and offline?”
Will Blueprint and Praesepe form the limit of Gauselmann Group’s portfolio in the UK? “We are very relaxed about where we go from here,” said Stühmeyer. “We have made two very good acquisitions and backed it with some very strong and influential strategic alliances. We are not casting around for more acquisitions, but that is not to say that if a meaningful situation arises we won’t move for it. We remain opportunistic.”
The group appears well content with its mix of key acquisitions and alliances. That readiness to work together with existing operators and suppliers – rather than simply take over their businesses – demonstrates the softer touch referred to previously. “We want to work with operators,” said Stühmeyer, “not simply walk in and take over. We never did that in Germany and while we are the largest gaming machine company there, in terms of both machine supply and operation, we fostered a close relationship with our customers.
“The group is now at the very pinnacle of its respect in Germany, a factor driven by the 60-year patronage of our chairman, Paul Gauselmann. The policy of close liaison with our customers and having our equipment and content operator-driven, we feel will be the best way forward for a growing involvement in the UK.”
He added: “At the German end we have the very best engineering standards for our machines and the backing of high quality cash handling through GeWeTe in combination with the wide range of all products and services of the whole Gauselmann Group. At the British end we have strong content development at Blueprint and front-end operating experience with Praesepe. We also have a close working relationship with a majority of the British operating business and all of that is against the prospect of improving operating circumstances in UK pubs.
“We are well content with our investment. The strong and well experienced local management we left in place means that those companies can grow organically, but if it is needed, then they have the backing of the entire Gauselmann Group with its long experience and resources.”
The next few years in the UK operating scene will be very interesting… Indeed, the next 12 months will probably set ‘Gauselmann UK’ on its course.
Read the full article in the July issue of InterGame.
