Japanese giant Konami buys LV casino supplier

David Strow

Wednesday, Aug. 8, 2001 | 11:08 a.m.

Emerging slot machine maker Konami Gaming Inc. said Tuesday it has acquired Paradigm Gaming Systems, a Las Vegas maker of casino database systems, for $12 million.

Konami Gaming is the Las Vegas-based slot machine manufacturing subsidiary of Japanese video game giant Konami Corp.

Paradigm employs about 20 people. None of these workers will lose their jobs with the buyout, said Konami Gaming President Steve Sutherland.

"(Employment) will be beefed up as business requires," Sutherland said.

Konami called the move "a key component of (Konami Gaming's) strategic product offering and growth plans for the casino industry."

"(Paradigm) has sold their system to certain customers ... we will try to sell our slot machines to Paradigm customers," said Ko Uchida, chairman and chief executive of Konami Gaming. "We have placed our machines with some major (casinos) in Las Vegas, and we can utilize that business relationship to try and sell the Paradigm product to those companies."

Paradigm's computer system tracks individual players' activity on both slot machines and table games throughout a casino or group of casinos, then gathers it in a central database, where it can be used in player marketing efforts. The system can also tie in with a casino's hotel system, restaurants or retail stores.

The system can then offer suggestions for very targeted marketing campaigns -- for example, country music fans who spent more than $100 on slots in a certain period could be sent tickets to a country music festival.

"We're familiar with (Paradigm's) Tim Britt and Paradigm Gaming, and we were impressed with the methods they're using to affect player following," said Dave Ehlers, chairman of Las Vegas Investment Advisors. "I'm inclined to believe Konami has made themselves a sound investment."

Other system capabilities include wide-area progressives (a progressive jackpot covering a large number of slots in one or more casinos) and cashless gaming, Konami said.

Casino management systems are something other slot companies have offered for some time, so the Konami purchase helps the company level the playing field with more entrenched competitors like International Game Technology and Bally Gaming & Systems. But Uchida said the Paradigm system is far easier for customers to use -- and can "talk" to slots made by various slot makers.

"What Paradigm has is like the Macintosh system (compared to DOS)," Uchida said. "It's user-friendly, state-of-the-art, and the look and feel is very different."

But Apple Computer was never able to wrest dominance of the computer market away from Microsoft Corp., even if the Mac was vastly easier to use than DOS or early versions of Windows.

"It (the Paradigm system) could be a very effective marketing tool, but we're skeptical (about) how long it'll take to convince the market of this," Ehlers said. "Paradigm came to town four or five years ago, and they've been slow to convince managers of these casino companies that they had a better mousetrap."

Konami currently employs about 100 people at its manufacturing plant on Industrial Road in Las Vegas. It currently has six slot titles on the market, and has sold machines to Caesars Palace, the Bellagio and Mandalay Bay. It holds gaming licenses in Nevada, Mississippi, California, New Mexico, Indiana and Iowa.

The company's main focus, Uchida said, is to produce slots that can appeal to players in their 20s and 30s, a market that hasn't historically played slots. Helping it in that effort is the parent company's library of video games stretching back to the 1980s.

"We believe we're in the best position to address that issue (appealing to younger players), and we're seriously looking at different concepts and ideas," Uchida said.