Terroni defends the Dongle

22/08/2012

Despite a mixed reception to the news, Astra Group’s Paul Terroni has claimed Bell-Fruit’s decision to change its business model and introduce dongle technology to its UK Category C games is aimed at “securing the future of the sector.”

From October, the company’s newly launched Category C models will feature the technology. This will see the game software enabled via a resin-encapsulated piece of hardware – the dongle – within which a finite expiry date is set. The dongle plugs into a receptacle device inside the machine, which is connected to the main MPU. The dongle expiry will occur on the first anniversary of the launch date of the model in question, at which point a reloaded dongle can be purchased.

“The business model the industry has been working to is simply incapable of sustaining a healthy market in which manufacturers are able to commit to the levels of on-going investment, which are necessary in order to deliver top performing AWPs,” Terroni told InterGame. “In many cases, AWPs occupy the most profitable 4sq.ft of a pub interior. This doesn’t happen by accident, it’s the outcome of investing in brand licences, investing in the best quality software engineers, investing in machine security and so on.

“To justify this investment the business model has to be sound.”

There has been a significant reduction in sales of Category C games in recent years, from a high of 60,000 in 2002 to 13,500 in 2011. Costs, said Terroni, have increased and have placed greater pressure on manufacturers.

Introducing dongle technology will help to re-shape the business model for everyone, he said.

“There’s never a good time to introduce what some quarters were always going to perceive as simply a price rise. Myself and the Bell-Fruit team continue to spend a lot of our time explaining the strategy to customers and providing them with the arguments and support they need to take to their customers.

“I fully appreciate and understand some of the more emotional responses but ultimately this is about securing the future of the sector, which has already lost notable manufacturing brands because the business model was so outdated and imbalanced.

 

“Our aim is to preserve employment prospects at Bell-Fruit but also in the supply chain, which includes component and peripheral device suppliers, transport companies, operators and any others spread throughout the country.”

This can only be achieved, he added, if the market is structured in a “sustainable way.”

By Simon Liddle – Editor InterGame

Comments (5)

Add Your Comment

Given the lack of consultation with the operators and the pub retailers – if this was to preserve the propects for Bell-Fruit – goal achieved.
As for the prospect for the operators, who cannot afford to pay this additional licence fee, which in relality has not added any additional functionality to the machine,we have no choice but to approach the retailers to recover these additional licence costs introduced by Bell-Fruit.
The commercial model for the operator is wafer thin, so the only people to benefit from this significant price increase is Bell-Fruit.
This could have been approached in a different way for the long term benefit of all the stake holders, may be there is another agenda?.

peter weir
22/08/2012, 17:26

It is very important that Peter understands fully our aspirations for the industry and the rationale for the changes we have made. It has never been our intention for the operator to pay for the dongle technology. Gamestec is part of the Astra Group and we know only to well how hard they work for what is an incredibly small margin. From the outset we have said consistently that it is the pub retailer who needs to fund the increase which will allow manufacturers to make the level of investment which is necessary to produce successful gaming products. The business model for the supply of high value gaming products to pubs is broken. It needs to be replaced with a new way of doing business and a way which will allow the operator to make a living. We will help all operators explain the rationale to their pub customers – essentially we are on the same side.
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Paul Terroni
Astra Gaming Group
23/08/2012, 08:40

I believe Paul and Bell Fruit have missed an important point, the cost of the dongle will mean many tenanted pubs in due time will have to remove machines as they will become uneconomic. At least one of my clients is looking to release its tenants from the tie as a result-hence less machines sited or older machines used, therefore less machines made/purchased, hidden agenda? I think so. Better consultation could have achieved a solution agreeable to all.

Paul Andrews
Consultant
29/08/2012, 14:38

The whole dongle idea is not well thought out from an operators point of view. For Mr Terroni to say that ”this new way of doing business” will ”allow the operator to make a living” is not, sound. The dongle is very unlikely to be totally funded by the retailers and why use a dongle? It’s overly complicated and becomes expensive in relation to the running, operating and monitoring of said dongles. There does seem on the surface that there is another agenda, that, no doubt, shall become apparent in the not to distant future.

Chris Harrison
Alan Davis Automatics
29/08/2012, 17:09

As Paul will already know from his previous correspondence with Bell-Fruit, the fundamental issue for the industry is the model under which Cat C machines are operated is outdated and broken, brought about by the collapse in annual new machine sales from a high of around 60,000 in 2002 to the 2011 figure of only 13,500. What may have worked in 2002 certainly doesn’t now. And whilst other companies have decided to exit the pub market – see Barcrest, Maygay, Vivid and Extreme, we have remained committed to it and continue to develop as many games as ever to ensure continuity of high-earning product for our customers. For us to continue to be able to invest in the sector we need to change the business model.

It’s worth noting that we build test machines completely at our risk and receive no income from these, (although operators earn rental and licensees and pub companies both make a profit from them). Clearly no manufacturer deliberately creates an underperforming machine and if a model does not gain retailer approvals we are expected to take it back and with it the very considerable hit on the cost of the failed game.

To assuage the concerns expressed by Chris, our agenda is crystal clear – to continue to invest, to continue to develop and to continue to remain totally committed to the pub sector. To achieve that we have to change the business model and, in the process, create a healthier market for everyone.

Paul Terroni
ASTRA Gaming Group
31/08/2012, 17:57

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