Duncan, how would you define 2022 at this point as we look ahead beyond the summer? What’s improved – what’s stayed the same and what’s proving challenging?
I’d say that 2022 has continued the challenges of the last couple of years. At the start of the year, we all expected the supply chain challenges to improve, but the reality is that they’re with us for some time yet. Quixant’s response has been to focus our attention upon providing support for our customer base. We recognise that availability is king right now as customers seek to ramp up production to meet positive market sentiment. Our engineering efforts, therefore, have been concentrated around ensuring that we offer sustainable supply chain solutions.
My belief is that 2022 presents an exciting opportunity as Gaming environments ‘normalise,’ but there is a lag between expectations as they unfold in the present and the long-term reality. Quixant’s focus on availability ensures that we are prepared for the next few years, not just 2022.
What supply, price and inflationary pressures are we seeing in the market in regard to components? We’re already seeing average machine prices rising as manufacturers pass on costs to operators – have we peaked or are we still climbing – and what’s are the drivers?
Speaking for Quixant, the vast majority of our products have around 1,000 individual components, and it only takes one of those components to suffer an availability issue or cost spike to affect the supply and price of our products. I think that OEMs in the Gaming sector have been very reluctant over the last two years to pass increases to operators, appreciating the effects of lockdowns and disruptions to regular business. However, we’re at a stage in which costs have spiralled and there continues to be a supply/demand imbalance for certain components.
What’s been most important from the perspective of our customers is availability and guarantee of supply. At Quixant, we have focused upon product resilience, which includes re-engineering our core products to accommodate different components based on supply availability. Obviously, this is difficult and must be done sensitively as our clients operate in markets in which product consistency is highly regulated.
We are seeing pricing start to plateau for the bulk of components, however, and, as external factors begin to stabilise, we’re expecting price consistency into Q1-Q2 next year. Our hope is that we will start to see a fall in costs beyond this point, at which time Quixant will pass this reduction straight to our clients.
Can anything be done to alleviate the pressure and how do you manage customer expectations right now? Quixant’ has changed its products to best fit the components market right now – how much of a game changer is this as regards to customer support and is this sustainable too?
We rationalised our product range at the very start of the component supply issue, appreciating that it was a better strategy to plan our future around a tighter product range. Our priority has been to give certainty to our customers that our products will be available. Key to this is the fact that Quixant only operates in the Gaming industry, which means we aren’t spreading our components across other market verticals, so it’s easier for us to focus on our ability to flex our engineering resource where it’s needed most.
We’re on the cusp of event season again – Quixant exhibited at G2E last year. Was that worthwhile – what’s been the progress in the US since the show?
Gaming is a people-based industry and so it was great to return to an exhibition event like G2E. The show in Vegas was the catalyst for a new Quixant product portfolio that we are launching over the next six months, including our cabinet propositions. G2E 2021 was a great opportunity for us to showcase those products for the first time. Feedback was overwhelmingly positive in terms of a return to business as usual and we are seeing a continued and increasing need for the outsourcing of hardware components from our customers and partners. They want to focus on game content and development and our experience is that procuring hardware, which is hard right now, detracts from their focus on games. We anticipate that there will be an increase in the outsourcing requirement over the next couple of years.
What are your expectations for G2E this year – and how important is the US market to Quixant?
We will be showcasing and making a hero of our core product range of gaming PCs and launching a new range of cabinets, of which I can’t reveal too much before the big launch at G2E 2022. However, we will be launching two cabinet ranges, which returns us to the discussion about outsourcing. If you look at the procurement of cabinets, they’re comprised of an awful lot of individual components around which we’ve seen multiple pressure points, not least in terms of bill validators over recent months.
More and more customers are looking for a full-turnkey solution for cabinets capable of plug ’n’ play compatibility with their latest games. Quixant has a reputation for high quality hardware, and we want to bring that to the cabinet proposition we’re launching at G2E. In addition to our hardware showcase, we’ll also be hosting discussions around our software solutions that can help game designers create the best possible content.
Do you see a changing landscape in which there’s less unique slot platforms – as regards their internals – to ensure better supply and efficiency moving forward? Is there greater emphasis on partnerships with Quixant to achieve this? Is this the future?
Yes, I think that’s a certainty. The conversations we’re having with our partners around both a common hardware and software platform approach, are likely to accelerate. Our clients fundamentally want to be making great games as their IP isn’t valued in the creation of bespoke hardware or software platforms. Why spend time doing this when there are market experts in this field?
We are positioning ourselves to facilitate this approach moving forward and I think there are OEMs ready for this right now. For the partners we are talking to regarding our cabinet proposition, their focus is solely fixed on game content, whereby Quixant can take care of everything else. I think this is an exciting development for our industry.
In the last 12 months, our customers have been living and breathing the component supply issues, which has become a full-time job. The question is: why would they want to do this in the future? Why not outsource to an organisation with deep links into that Far East component market, which Quixant has established over 20 years? There is no added value for the customer in doing this, so let’s enable them to continue to make brilliant content for the consumers and ensure the industry is kept vibrant and growing in the future.