Asia’s gaming industry is about to “resize” and Steven Lim, Executive Director Dreamgate Corporation Bhd, believes there are opportunities for companies whose business model supports the shift to lower capital expenditure on gaming machines, accessories and equipment.
Dreamgate Corporation is a diversified gaming business exposed to many aspects of the industry. This diversification gives you a broad perspective on the impacts of the financial crisis. Share some of your observations.
Dreamgate, which is listed on the main board of the Malaysian Stock Exchange, along with its subsidiaries and associated companies, are involved in sales and marketing and manufacturing of gaming machines and equipment, machine concessions and management, equity investment and management of boutique casinos and clubs.
Dreamgate’s partnerships with world renowned corporations in the gaming industry positions it as a leading supplier of casino gaming equipment and accessories in Asia. With the combined strengths of our partners we are confident Dreamgate will sail through the financial turmoil with minimum impact.
Each of our three business units is able to perform effectively on their own in times of crisis. We will also seize the opportunity to nurture relationships with our existing business partners.
What are the side effects of the financial troubles on slot machine sales?
The financial troubles will eventually force many gaming operators to reduce their capital expenditure and change their purchasing patterns. As such, we expect a decrease in new machine orders.
It is possible that this will create a chain reaction that sets off massive retrenchments by machine manufacturers.
There have been some disruptions to the growth of Macau’s gaming market, with large development projects on The Cotai Strip delayed as a result of the financial crisis. While the market contraction poses challenges, it also provides opportunities for nimble companies. What opportunities has RGB, Dreamgate’s wholly-owned subsidiary, identified in Macau?
The slowdown of projects on The Cotai Strip has impacted the gaming industry in general, especially suppliers and manufacturers of gaming machines and accessories. The impact will last a while before we see its full recovery.
However, the challenges and slowdown create opportunities for manufacturers and suppliers. One trend RGB is seeing is that gaming operators are changing their purchasing patterns from buying machines outright to concession programs, where the supplier (in our case, RGB) places machines into a casino or venue and share the profits, after deducting a certain agreed cost.
One of RGB’s core businesses is machines concession and management. This enables us to continue to expand our business in Macau. At the moment, we have 7,000 machines under concession programs at various regions in Asia and we are targeting another 3,000 by next year in addition to our existing numbers.
We have secured one concession business in Macau recently and are positive about securing more in the coming months.
What is Dreamgate’s biggest challenge in the next 12 months?
Adversity brings with it challenges as well as opportunities. Dreamgate Group’s main challenges in the next 12 months are to continuously sustain shareholder value; improve our human resources’ through training at different locations to sharpen management skills; raise funds to propel our new projects; and implement cost-cutting measures to strengthen our financial position.
What is performing well for RGB in terms of sales?
The group represents some internationally-renowned brands’ gaming machines, equipment and accessories. We also offer the brands assembling arrangements in our manufacturing facilities.
In addition we will promote our own proprietary game brand RGBGames. With more than twenty years of gaming experience we are confident that our new proprietary games will be well accepted in the market.
What markets hold the greatest potential for growth for RGB and Dreamgate?
The whole of Asia poses potential growth, especially Indo-China and The Philippines.
With our strong foundation, we believe we will persevere through this difficult period that many manufacturers are facing and the group will seize opportunities as we go along.
