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Jason

Game maker sails into big deal

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The casino aboard Norwegian Cruise Line's Norwegian Dawn.

BY STEVEN MIHAILOVICH, THE BUSINESS PRESS

While game manufacturers are studying the proliferation of gaming in the valley, the U.S., Native-American land, and international jurisdictions such as Macau, China, for sales potential, Aristocrat Technologies Inc. has landed a deal with a major cruise line operator.

Not missing the boat, Aristocrat has signed a contract with NCL (Norwegian Cruise Lines) Corporation to outfit five casino cruise ships with the game maker's OASIS casino management system to link and monitor a combined 1,000 machines aboard the boats.

While the purchase will give NCL a competitive edge that can be easily promoted for increased market share among gamers in its raging sea battle with other cruise line operators, Aristocrat stands to benefit from the war by being the first to sell the first game system on the waves.

"This really is our first corporate cruise ship endeavor," says Ron Jeffrey, Aristocrat's vice president of gaming systems. "It is quite strategic. This area is very competitive."

With a fleet of 11 active ships and three under construction, NCL purchased the Aristocrat game system for its Norwegian Dawn, Norwegian Jewel, Norwegian Spirit, Norwegian Star and Norwegian Sun cruise ships. The vessels sail to Alaska, Bahamas, Bermuda, Canada and New England in the U.S.

NCL is a privately-owned subsidiary of Hong Kong-based Star Cruises Limited, which had 16,778 employees and revenues of $1.573 billion from 18 total ships in 2002.

Although the price of the transaction was not revealed, Aristocrat completed installing one OASIS system two weeks ago and is scheduled to complete two more by the end of the year and the rest by the first quarter of 2005.

The OASIS system allows casinos to collect performance data on machines and follow player activity individually to identify the high rollers for comps and other offers. In addition, the system can be tied into other revenue producers, such as food and beverage, to generate overall activity reports for operators.

Moreover, the system provides for a more integrated operation by allowing for player loyalty points and rewards for customers going to different destinations on different vessels, which can used to market the cruise operations directly to the gamblers that count.

Aside from the OASIS system, NCL purchased other support game technologies for its games, such as cashless ticket in/ticket out (TITO), to give its customers the feel of a Las Vegas casino with the unique views only found on board a ship.

"They're raising the bar in terms of cashless technology and how to market to customers," says Jeffrey. "While land-based casinos have bee quite sophisticated, [but cruise ships] have not traditionally been strong. They are using an innovative product to target and market to those [lucrative] customers more effectively."

If lucrative for NCL, the deal could offer a sea of profits for Aristocrat should the competition in the casino segment of the cruise ship industry heat up accordingly. Although Jeffrey did not know the exact extent of that market because of the numerous flags and registries under which such ships operate, Aristocrat can ride the wave as it grows by being the first game manufacturer to sell and install such a system, with all the adjustments needed to operate on the sea.

In addition, because it was the first sale, the transaction took some time to arrange but Aristocrat was already sailing in that direction by dedicating a marketing team for the market segment well in advance of the NCL deal.

"The sales cycle in systems is long-term, much longer than the game side," Jeffrey notes. "[The deal] was not something we just stumbled upon. We dedicated resources and focus on [the cruise ship casino segment]. The potential is quite large, even if it is a bit of a moving feast."

While surfacing into the cruise ship market, Aristocrat gained the added advantage of closing the deal with a subsidiary of the world's third largest cruise line, positioning itself on the radar of others, both smaller and larger. For the game maker, that could lead to numerous and enriching ports of call in the near future.

"We're the first aboard," Jeffrey says. "It was strategic for us that a high profile company selected us. They made the commitment and we are seeing spin-offs. We are seeing other interest being generated by this from other multi-vessel corporations that are competing ... It speaks to [Aristocrat's] momentum. We're building both our games and systems in North America and we're happy to build on that."

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