ONE-ON-ONE
1 on
1
industry itself, it grew organically. Now we’ve got 58 voting member companies and almost 100 associate members, so we’ve adapted the corporate governance structures from something quite ad hoc to something more formal. Over the years we have adopted a similar governance structure to our member companies. We have a board of directors with a designated executive that is responsible for managing the organization on a day-to-day basis, but with reporting responsibilities to the board. SP: As a member organization, you’re there to serve the members. So what’s on their minds? What’s are the things that come to mind on the supplier side of the industry at the moment? DD: The big one right now is global trade policy and that is affecting pretty much all of our members in ways which are unpredictable, hard to manage and disruptive. That’s something that everyone’s having to deal with and navigate. No matter where they’re domiciled, they are all working across borders with components sourced from right around the world. So top of mind is how they’re going to get through the next six months. Many of these are publicly traded companies and they have to give guidance to the markets and to shareholders and that is very difficult right now. Our members are gaming technology companies, they are building a technology product that happens to be a gaming device. Over many years, the industry has built up a complex supply chain so you might get a touch screen from a company in Taiwan, or computer chips from a manufacturer in South Korea. Then someone else creates the subcomponents in another facility somewhere else. You look at the games today and how different they are from 15 to 20 years ago. That’s the product of a huge amount of R&D to create machines that are highly sophisticated and that sophistication extends to the supply chain as well. Every component has been refined and that takes a high degree of manufacturing capability. That can’t be switched out overnight.
One thing that COVID taught us was not to concentrate the supply chain around sole source providers. That means the supply chain is much more diverse and global than it was. The other thing is that we’re working with quite long lead times. We can’t make products on just in time delivery cycles, meaning we may need to buy things a year in advance to have stock of these items. And that brings in another area of uncertainty to do with cash flow. If you’re expending millions of dollars in cash for boards or monitors, or part-assembled cabinets then those have to sit on your shelves, and you don’t know what you might be able sell the completed product for 12 months from now. That’s what I mean when I talk about uncertainty and why an extended timeline makes uncertainty so disruptive and costly. When you’ve got this highly integrated product, all the components have to work together. It’s very difficult to think about finding an alternate source for one component that’s part of a much larger whole. You have to make sure it functions, that the solution can work in isolation but you also got to make sure that you can support that new component within your product. We realize we’re no different than many other industries, but we are also highly regulated. All of our products have to go through a rigorous testing, certification and approval process from the independent test laboratories and the regulatory authorities. A change in any one of those component items means you have to have the appropriate certification, testing and approvals and that’s not something that happens overnight. It takes a long time and it’s very costly. To get new game or a modified game that through testing and certification cycle in all of your regulated markers is thousands of dollars. For one of these global suppliers, there might be hundreds ot even thousands of games in their library. So when you look at the exponential effect of changing a component, it’s not only the cost and inconvenience of sourcing an alternative, the cash flow implications of a lag to your supply chain, but also the cost of testing and certification. Those things combined make it really difficult to navigate.
PAGE 13
IMGL MAGAZINE | JUNE 2025
Made with FlippingBook flipbook maker