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A Look at Aristocrat Exec

29 March 2005

by Howard Stutz

LAS VEGAS -- There were times over the past few years that Kent Young questioned his decision to come to Las Vegas.

As one of Aristocrat Technologies' first employees sent to the United States to help the leading Australian slot machine manufacturer establish its American division in 2000, Young suffered through the company's many setbacks.

Aristocrat had trouble finding its footing, trailing in slot machine placements behind such American manufacturers as International Game Technology, WMS Industries and Alliance Gaming.

Through corporate management shake-ups, both in the United States and Australia, Young remained a constant face for Aristocrat.

Last year, the work paid off. Aristocrat's North American division grew its revenue 52.6 percent over 2003, based on increased game sales of 35.8 percent and a 92.2 percent increase in participation game placements. Overall, Aristocrat company revenues grew 12.5 percent.

Young was in Palm Springs, Calif., recently for a companywide retreat when the division was honored for having the best year-over-year improvement for an Aristocrat business unit, besting divisions from Asia-Pacific, Europe, New Zealand, South Africa and Japan.

The award, a crystal blue vase, sits like hockey's Stanley Cup championship trophy in Aristocrat's Las Vegas showroom.

"There were times I was definitely scratching my head and wondering what I was doing here," said Young, who moved to Las Vegas permanently in October 2001 after more than a year of commuting between Australia and the United States.

"But I think I always knew we were going to pull it off. I have been very passionate about seeing this happen, and now we have a whole lot of new priorities."

While overseeing marketing for Aristocrat's American subsidiary, Young's duties also include advertising, research and product development.

Young, who grew up in Sydney, Australia, said he's grown comfortable living in Las Vegas, although the desert doesn't really suit his passion for surfing, which began as a youth. He said he keeps in touch with goings-on Down Under.

"I think I average about an hour a day during the workweek on the phone back to Australia," Young said. "That keeps me up on all the sayings."

Question: Had you traveled to the United States much before coming to Las Vegas?

Answer: I came to UNLV two years before I moved out here to take a three-week gaming course. That gave me a small introduction to the market.

Question: How did you teach yourself about the United States?

Answer: I looked at maps to learn the geography. I started reading American publications to get a feel of the market and I spoke to a lot of people in Australia who I thought had some form of grip on the market.

Question: What were some of the challenges Aristocrat encountered while getting started in the United States?

Answer: We were seen to be a company that was very successful in our own market, but until we got licensed in Nevada (in August 2000) we never really had the ability to apply in the American market. We were seen as here, but not really here.

We were so focused in getting our Nevada license, that we were too late to capitalize on areas such as ticket in-ticket out. We didn't have that product approved and available until the close in the buying cycle.

A lot of it was just a function of us learning what we had to do and getting things developed in a timely manner.

Question: Is doing business different in the United States than it is in Australia?

Answer: We were relatively immature as a company in reaching out into international markets, so our perception of doing business here was a lot different. We thought it would be a lot like doing business in Australia.

Things down to our product offering that we thought would work here that had worked in Australia were very different.

Question: What problems did you encounter adapting your product to the Las Vegas market?

Answer: It took us a lot of time to get where we had zero barriers to entry, such as having the right size cabinet, the right peripherals, the right protocol to talk to systems and the right type of product offering.

We had to build up our relationships with the regulators throughout the market. It took time for those variables to come to together to build a success.

Question: Why did Aristocrat purchase Casino Data Systems soon after entering the market?

Answer: They had one of the largest installed base of slot-management systems, which we saw as being important strategically. The acquisition also gave us a lot of smarts, the right people who had relationships in the market who knew how to get products approved properly.

Question: How is the gaming industry in the United States different from the one in Australia?

Answer: The United States is a for-profit market where the Australian market is generally not-for-profit. At the clubs, the profit goes back into the community.

I really think this business is all about product and people. Gaming is definitely relationship-based from product development to product approval, from both ours and a customer's perspectives.

Question: Was 2004 a turn-around year for Aristocrat in the United States?

Answer: We're a lot more comfortable now in a lot of ways. One of the most important things we did was invest in research and development in the United States. We had been investing in Australia only and, unless you're here, it was hard to come up with the right formula.

Five years ago, we weren't on the radar for the American financial communities. Now, the analysts are taking more of a notice of us.

Question: Where is Aristocrat's strength?

Answer: We have positioned ourselves to dominate in the video gaming segment with low denomination video slots. We have innovative bonus products and we're seeing our competitors coming back and doing our style of products now. We feel we are at the front of the pack in terms of innovation.

Our systems side and our games side are coming together with integration for future introduction of new technology. We're a lot more aggressive in newer markets and we're able to take advantage of those opportunities better because we're a much stabler ship.

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