Bluberi with Andrew Burke

Good morning, Dan.

Good morning, Nick. It's good to see you.

Yeah, good to see you. So here we are in late August. We've both been traveling a bit. I've been surfing with my boys in the wilds of Galicia, and you've just returned for some time in Asia. So, everything go well with your travel?

Yeah, I was in Japan, two and a half weeks gone. I think the longest I've ever been from home. So, it was amazing. It's good to be back. I don't know where Galicia is, but you can tell me.

Ah, this is the northwest corner of Spain, so it's very, very raw and rural. You got a lot of rough coastline there and this kind of stuff. And we just lucked out, apparently it's been a flat summer, but when we turned up, everything started pumping, the whole coast turned on. And then the last day, it just went flat as a pancake. So we got our little slug in there, so it was good. And what was your most memorable thing from Japan?

Yep. Japan was amazing. Food was amazing, culture was amazing. Definitely want to go back. You can't see it all in one trip, for sure.

Did you get into any Pachinko parlors?

No. No, I didn't.

Oh man, come on.

It was a no gambling trip.

Okay, okay, okay. Those things are just awesome. I love the chaos of them and the insanity. It's great.

Okay, so news item. I guess it was last week I caught a headline about PENN Entertainment deciding to pull their Boomtown New Orleans boat out of the water, and they're plowing around 200 million into a new fully land-based Hollywood casino in the city, and taking out a circulation yet another riverboat. So, this story led me down a rabbit hole about the state of America's riverboat casinos, which I haven't really looked at this for a while.

So, for any of the international listeners who are unfamiliar with the movement, I'll just provide a quick summary. So basically IGRA, the Indian Gaming Regulatory Act was passed in 1988, which cleared the way for the proliferation of tribal casinos throughout the US. And in very short order, a lot of the state governments realized that the public's views on casinos were way more tolerant than they had assumed, so they began maneuvering to get in the action. So in order to make the casinos more palatable to their residents, many of the states decided to restrict casinos to these Victorian era riverboats, the paddle boats. And the thought that was limiting casinos to functioning vessels gave communities the sense of containing the sinful behavior and the vice there, while also the appearance of beautifully appointed antique vessels was complimenting their riverfronts and skylines, many of which were in state of bad repair.

So, a number of these states dove in big time and at their peak in 2003, there were actually 90 riverboat casinos operating in the United States, which that was a much bigger number than I had though. Now, the downside was that generally speaking, operators absolutely detested these vessels. Many of them opened with mandatory crews requirements, which meant that they were forced to employ professional maritime crews. They were subject to Coast Guard regulations and inspections. And then they were forever struggling with things like weight limits, low ceilings and multi-level casino floors, to name just three big structural challenges.

Now in then 2005, Hurricane Katrina wiped out a number of the riverboat operations in Mississippi, and then operators had the leverage to demand land-based licenses as part of their rebuild commitments, and then the scourge of riverboats began. And really, when you look at the financial performance before and after, you can't help but think this trend is just going to continue. So, those Mississippi conversions post-Katrina were huge, in terms of both revenues and margins. And then most recently, I looked up when Boyd converted their Treasure Chest casino in Louisiana from a riverboat to a land-based facility, they saw an immediate revenue surge of 88%, which became their new baseline.

So Dan, then out of all that, here's a quick trivia question for you. So out of those 90 riverboat casinos that existed in 2003, any idea how many continue to operate today?

Oh, wow. Stab in the dark, I'm going to say 35.

Okay. Well, you're definitely soft, but it's gone down to 64, which is also a bigger number than I thought were out there. But now, it's just limited to six states. So we have Missouri, Louisiana, Mississippi, Illinois, Iowa, Indiana. So across, and then 26 have been shuttered since 2003, which is a big thing.

So Dan, I'm curious for you as an operator, because like I said, I went down a bit of a rabbit hole. So inside the companies that still operate them, and I know you work for a couple of them, are there really long-term plans to just phase them out? I mean, is that a thing that people are focusing on? And also as an operator, are you happy to see them go or do you feel that these are more charming historical homages that need to be preserved?

Yeah, no, I mean, I think it's a good thing and I think it's the right thing. I mean, in my career, I worked on a few of them. Right? I worked on traditional riverboats with the paddle wheel on the back on the Mississippi. I worked in several [inaudible 00:06:00]. But PENN's a good example, right?

So, PENN's been focused in the last few years on fairly low cost, high ROI projects, whether it's building some smaller hotels at properties that don't have them, but more recently, the two in Chicago. So Aurora and Joliet in the Chicago region, they relocated those both from water to land. In my mind, it's a win-win, because these are staying within the same jurisdiction, within the same city or township, and so the tax base is still going to the same place, but they're relocating from oftentimes the river is not the most lucrative or the best real estate in that market. So they're relocating from old downtowns or industrial areas to, in PENN's case, right on, I want to say it's Interstate 80 or 84 or something like that, but much more high traffic. They're able to bring folks who are passing by, tons of foot traffic, more highly visible, bringing dollars into the jurisdiction.

And frankly, they're able to make better casinos. There's a company I did work with recently that just relocated from a very old vessel to land. And that vessel, to your point, it was three or four levels. They could not bring in most of the modern products simply because the topper signs were taller than the ceilings. Right?

Absolutely.

So, really limited. And the trend's going to continue, just because to your point, these vessels are aging and most states you're able to, if not fully at least partially build on land. It's not a cheap endeavor, but PENN also just announced outside of Chicago in New Orleans, they're moving from, again, an old vessel to landside. Bally's another company to work with just made a move in Iowa, they just made a move in Baton Rouge. So, I think you'll see it continue for sure, and I think it's a good thing.

Yeah. And those multi-level floors too, I remember Don Retzlaff saying on his third deck, he said, "We could be just giving away buckets of money up there. We couldn't get a soul to go upstairs." You know?

Yeah. Don worked in Alton, Illinois, and I don't know if you've been to that property, but Don would tell me all the time, "That vessel's now what, like 30 years old or so," and it's literally-

Yeah, that was one of the original Aztar boats. Yeah.

It's sloped and slanted, right?

Yeah, yeah.

So, it's like being on the high seas. So these things aren't easy to fix. So little by little that, I think you said 60, 65, that'll come down.

Yeah, I think so too. Wow. Okay, cool.

Well, Dan, time to move on to today's guest. So this gentleman is a graduate of the University of Cincinnati, where he was also the student body president, by the way. And he began his career in financial services as a senior associate at private equity firm, Alpine Investors. Then in 2010, he made his way into the gaming industry with a business development post at AGS. And after nine years with AGS and ascending all the way up to its senior vice president of slot product role, he made the leap to Bluberi, where he served as its CEO since 2020. I'm referring, of course, to Mr. Andrew Burke.

Andrew, how are you doing today?

Hey, go Bearcats. That was a good pull on the student body president. I hadn't heard that in a long time.

Yeah. Kudos to you for being-

It's good to be here.

... so motivated as a student. You know?

Yeah.

Very cool.

Yeah. It's the hardest place to be motivated is when you're a student, so. Everything else is easy.

You got it, man. Cool. Well, so Andrew, I think why don't we just start and you can walk us through your gaming industry background a bit and the path that led you there to your current role at Bluberi.

Yeah, thanks. I appreciate you guys having me on. It's really an honor to be here.

In what was probably the biggest stroke of luck in my life, I got a job out of the University of Cincinnati at a private equity firm in San Francisco called Alpine Investors. They were a small private equity firm when I got there, they're now a huge private equity firm and have done some pretty amazing things. But when I landed there in 2006, they owned AGS. And there's another story that they owned AGS only because they failed to buy VGT for $75 million, which is a whole nother thing. It's the one that got away forever and ever.

And I think that was picked up ultimately for a cool billion, as I recall it.

1.2? Yeah, I think so. It's like the one deal that got away. And fun fact, at Alpine, we tried to buy it again in 2008 for $500 million and they wanted 600. And so anyway, history could have been different.

But the private equity firm was small and owned AGS, had found this niche in the gaming business. And pretty much right away, I started working on AGS. We were doing other deals, but I was entrenched with the company, and I really just found it fascinating. And then in late 2010, post-market blow up, we weren't investing in a lot of new companies, we were entrenched in a lot of the businesses that we owned. And I really fell in love with the operational side of private equity, where you're working alongside the management team trying to improve an asset. You go from trying to, "Hey, does this work in a spreadsheet?" To, "Hey, let's actually try to do this," which is much more challenging and much more fun and rewarding when you can do it.

So I, as they say, jumped over the wall in late 2010 and moved to Las Vegas in January of 2011 to take a junior executive role at AGS. That was pre-David Lopez era. And then eventually, we sold the company to Apollo. I thought actually I was going to maybe go back to private equity or go do something else, but elected to stay and work alongside the Apollo team. And David Lopez, when he came in and that story's pretty well known, it was a pretty fun ride from there to the next phase of it.

And come 2019, we'd been post-public and been through a lot of different things, and I was called by a recruiter about an opportunity at Bluberi, which was a company I knew. I knew them because AGS had a sort of strategic relationship with them in the really early days at AGS, distributing some of their best games like Cool Cats, Royal Reels, Diamond Lotto. And so, there's not a ton of CEO jobs in the space. Right? I mean, there's small number of manufacturers and it was a risk, but it was one that I thought was the right one to take. And I've been there now almost seven years, I started in January 2020, and it's been an amazing, fun, exciting, thrilling ride. And we have such an amazing team, but it's fun to be sitting here today seven years later with all the stuff that's transpired with the company. It's been truly an honor to work here.

Yeah, cool. Well, back in 2024, we had Mike Brennan and Casey Whalen, they came on and we had a good time talking, and we covered the history, so the roots in Canada, that acquisition by Catalyst. And then just prior to having them on, you had closed that debt financing deal with Citizens Financial. So, can you bring us up to speed of what's been happening since that time?

Yeah, yeah, definitely. I mean, since you guys last spoke to the company, we've added over 100 employees.

Whoa.

Most of those in R&D, and we have really beefed up our core studios that I think Mike was talking to you about then, which is Drummondville, Reno, Monkton, and Austin. And actually in just the last nine months, we've opened three new studios. So we opened one here in Las Vegas, we opened an iGaming studio in Montreal. And then we just recently announced that we have signed some talent in Atlanta area, which has been a really cool opportunistic thing for a small private company like us to jump on.

We've also had significant growth in our premium recurring revenue business, which again, I know we'll talk about, but we've plowed a lot of those proceeds back into the business, almost all of those proceeds back into the business. And we've launched some cool new products. We had this crazy thing, the Lighthouse, which is a very Bluberi-esque innovation, I would say, our Jumbo cabinet, variance of the Beacon. And then lots of new markets, Nevada, Mississippi, Iowa, Quebec, the HHR market was brand new when we were speaking to you last. So, we've really started to fill in our licensing map over the last several years too.

And we've adjusted some of our assumptions along the way, we're big on data. And as we get more information and refine our thesis here, we are always looking to make changes and adjustments to our strategy, so.

Andrew, you mentioned Nevada and expansion. I know you launched in Nevada earlier this year and securing licensing and going live and getting approval is a big milestone and a long process. Just curious, how is that going, and beyond Nevada, and I know it's a long ramp up, what are next expansion milestones for you and the company?

Yeah, Nevada was a.... Can I say Nevada, not Nevada? Nevada was a really great evolution in our maturity. Working hand-in-hand with the regulators here and really understanding what they expect from a regulated company in our business was super helpful to our growth. And as a result of coming out of that process, we've really had a renewed focus and ramped up on just our overall compliance program, which has been really cool. But then on the business side, it's been absolutely amazing. We've installed over 700 units since the last week of December, and no slowing down. It's been a really fun market for us.

I would say a couple learnings. We weren't sure if the original Devil's Lock was going to work in the market or not, but we didn't want to skip it in case it did. And what we found is it worked really well in locals markets, not as much on the strip. And I think one of the takeaways I've had, which is worth a whole nother research project, but it's the impact of what I'd call the cruise player. So many people have seen our games on cruise ships prior to coming to some of these markets that we're not in, and they were already familiar with Devil's Lock. So that's not something we anticipate in the front end, but our Devil's Lock Slice and Dice game, the next evolution's done really well. Smokin' Train and Cash Raccoons have been huge hits for us here in the market. So, it's been an awesome rollout and really exceeded our expectations in a whole number of ways.

Awesome. And forgive me, because it's a big map in North America, and you offer in a lot of jurisdictions. Are there key jurisdictions that you're targeting over the next year to year?

Yeah, if we haven't applied to every North American jurisdiction, we will probably before the end of this year. So we still have Illinois, British Columbia, Colorado, and I think that's pretty much it left on the map. New Jersey, we're on the one yard line of the approval process with our games in the lab. Mississippi, we were just approved off the field trial, so we're pretty close to filling in the whole map at this point here in North America, yeah.

Awesome. So, I wanted to ask you about something completely different topic. So, I wanted to ask you about brand and culture, right? So from the outside, to me, it seems like the Bluberi brand, if I had to describe it, and look, you'll correct me if I'm miss-stepping here, is something in the neighborhood of fun, playful, creative, different. And to me, that comes across in your content, even your mascot, which you allowed the community to name the Bluberi. Is that accurate or close to accurate, or how do you think about your brand? Because it seems like you've done an incredible job of making sure that the brand supports the culture and that the culture supports the brand, or again, at least that's what it looks like from the outside. I'm really interested in how you created a culture at Bluberi, and how you think that differentiates you in the market.

Yeah, I really appreciate that question. We spend a lot of time thinking about our brand, and I think brand as a word, as a concept, is very misunderstood by a lot of people. But to me, brand is every interaction and pretty much everything we do, had a chance to tell our customers, our employees, our investors, what we are as a company. And it tells them we either care about what we're doing or we don't care about what we're doing.

And last year's tagline at G2E, I thought really summed it up pretty nicely, which was, "Playfully serious." We are trying to create an environment where you can come to work and focus on the job and the work, not the political landscape or the red tape, and you can really focus on. The thing that should be hard at Bluberi is the work, not the environment, we always say. And to do that, I think you have to have a pretty clear sense of self and who you are. And so, we have very clearly defined core values.

Our business is very serious. We run the business on OKRs. We have very managed weekly report outs and have and analyze more data than probably most companies our size do inside or outside of gaming. And so that's always what we're trying to get across is like, we like to have a lot of fun, we like to be ourselves, but we're also a really seriously run business and we run very aggressive board meetings and things like that, which I think is just the nature of where I came from, from private equity of having really good operating hygiene, we call it. And so yeah, I appreciate that it's intentional and it's fragile. I think it does take a village to make sure that you're doing those things.

And just I guess one more point on that, we try to measure along the way. So we dom twice annually, employee NPS survey. We also do round tables about every other year where myself and my team talk to every employee in the company that's not a director or above and solicit feedback. And then I still meet with every employee within a year of them joining the company and just try to spend 15, 20 minutes to hear how it's going. So, it's something we take very seriously, obviously.

Amazing. How many employees do you have now?

327 as of yesterday.

Wow. And growing and growing.

Yeah, and growing. That's right. Yeah.

Yeah, cool. So Andrew, I wanted to get into the product side of things a bit. Okay, so let's go back. I think you put out Devil's Lock about four years ago, right?

Yep.

Somewhere in that neighborhood of 2022, a big hit throughout the industry. Definitely put Bluberi on the map, in terms of a real class three contender, no doubt about it. But what was interesting, there was a lot going on there mechanically and mathematically with the game that was interesting. But without question, a big part of the appeal was the character-driven nature of that game, and that you have this little devil that's running around and actually has a role in the payouts and things of this nature, but also has this kind of mischievous sinister. I mean, it's a personality with dimension. This thing is a little prick when you're playing and interacting with this thing, right? So, it's like equal parts protagonist and antagonist.

But what I like is, because we're always looking at things that create emotional resonance and stuff, and we really like this idea of bringing this dimension to this character, which is cartoony as well, which wasn't really necessarily en vogue at the time it came out. So, can you walk us through the philosophy here? You put out a few things now that are really character driven, and I just wanted to get a view into that a bit.

Absolutely. Yeah, I think of the devil as firmly a protagonist, in my view. But yeah, I mean, we hit the market at the right time. I would love to say we were brilliant and we figured out something out that somebody else didn't, but I really do think there's a component of luck here where the market was pretty oversaturated, wanting something new, and we provided that in Devil's Lock.

I think Devil's Lock is a masterclass in why presentation matters. And I have this debate with people all the time, you hear all the time, "The math is the only thing that matters. The math is the only thing that matters." Well, when you look at the math of a game, the spreadsheet just says, "Pay them $100 on this spin." The spreadsheet doesn't say, "Hey, you can land $100 on the first reel stop, or you could land 25, 25, and 50 on the last reel stop, or you could lose the spin, the devil could laugh, he could rewind the game and pay you $100." Right? And so, that game really took that idea of, presentation as the most important element of the game, to the next level to me. And a character, as we call them, a helping hand character around here is such a great way to do that, because it can give you unexpected things along the way and along the journey.

Now, characters are in fashion now, but will they be forever? Probably not, right? And that's the way this business works, and so we've certainly tried to diversify ourselves along the way. So we have a lot of great character games, but a game that's doing really well for us right now, El Super Caliente, is a hot pepper game. No characters, no eyes, nothing, right? And so, we're definitely trying to learn along the way. I also think our talent in Montreal area in Drummondville is really heavy art and presentation, and that's where I think you see a lot of that come across in Devil's Lock.

And one of the coolest experience in my career was in 2023 or '24 at G2E, a bunch of game developers from a different company came to our booth and said, "You guys made making games fun again. Because we were building these heavily Asian themed, boring games, and along comes Devil's Lock, and the industry responded to it. And this is my pitch for why you need small gaming manufacturers." I guess the question I would ask is, without Devil's Lock, would Spooky Link exist? It's certainly influenced by it, right? It's a beautiful game in Spooky Link, and I think Dan Marks and team have done an amazing thing, but we made it okay to have this sort of mischievous character, if you will, that is sitting on a slot machine. And that's the beauty of this business, about a little company with way less resources than everybody else being able to do something different and unique and really stand out.

Yeah. And I see also you mentioned both Smokin' Train and Cash Raccoons. And what I see there is interesting too, in that it seems like you're blending all of these design elements in different ways. So the true persistence and perceived persistence you have in Smokin' Train, you have that nugget meter, which I think is a true persistence element, is it not?

It's actually not.

Oh, it isn't.

It's actually a re-presentation of a pot filler.

Okay. Okay. I wasn't sure exactly.

Which is so good that it fools everybody. But yeah, it is absolutely a pot filler represented, which is back to this whole concept about art. Right? You can make something look different to achieve an outcome.

Okay. And on Cash Raccoons where you have that vault bonus across multiple rounds, that's a true persistence element though?

Inside that specific round, but it still is the same kind of thing. It's a pot filler, so it'll reset, yeah, at the end of the game. Yeah.

But is that hybrid approach, and is that really a thing with your team? They're really looking to blend different elements of these things?

I think the biggest thing for us, and we're going to have a couple clones at G2E for the first time, but you won't even recognize the game. I think traditionally you think clone has just, take this art and turn it into that art. We've re-imagined the game in a lot of ways in a clone, which is just this further element of like, oh, okay, the market likes persistence-like things. Can we give them that without giving them persistence, by using art and presentation? Yes, yes, we can. And so that is really, I think, us thinking differently about how we've done that.

And some of these clones that I've seen that we've done in two of the games now, it looks nothing like the original game, I mean, at all. But it's the exact same math model, just re-presented in a slightly different way.

Okay, gotcha.

Andrew, I wanted to ask you about a couple things you mentioned earlier. So very briefly you mentioned premium, and then the other thing was the lighthouse signage. So I wanted to ask you about both, maybe starting with premium. And I'll go back, because I remember it was about a year ago, so I was still with Bally's at the time when we came to your office to do your pre-G2E showroom visit, and you were getting ready to launch a lot of new product.

One of those lines was you were getting ready, either you had just launched premium or you were about to launch premium. And at the time I was with a fairly large company, OpEx focused. We know in North America how competitive the premium space is. And you were talking about the launch of the product, and I had said to you I was always a little bit concerned when it comes to smaller OEMs moving into the premium space, just because so many times we've seen various companies move into it, realize how challenging it is and how competitive it is, and the high thresholds that operators have in terms of keeping that footprint. And when you launch with only a small number of themes, you run the risk of a very expensive operation in terms of developing very expensive hardware, putting it out there, and then operators really almost in a sense not giving you the chance just because you're going up against Dragon Link product and maybe making three, four, five times house average.

And so it was a perspective of, look, we want small, emerging, mid-size suppliers to do well and be able to compete on a level footprint, but we don't want to put people in a situation where we're causing them to fail because we're saying, "Yes, we want it. Oh, nevermind. Get it out of here. It's not meeting the great." And your answer was something on the line that you wanted folks to give you a chance, that Bluberi was very committed to this line and you were encouraging me to think about this differently and that you believe the risk was worth taking.

Can you talk a little bit about why the decision to move into premium, how you're thinking about it? I'm assuming those are risks that you think about and decided that, hey, it's worth it and we believe we're able to approach this differently in a way that we're mitigating those risks that can grow it. Because obviously, everybody wants that recurring revenue, right?

Absolutely. I think I remember that conversation very vividly, actually. It was a really great constructive one and I think the point still today, a year on, I feel even more strongly about, which is that we've gone into the premium space in a very calculated way. We're very well capitalized as a business now, we can afford to take a little bit more risk. We've also de-risked our recurring business just the way we've designed it. We're using our beacon cabinet, we have a sign, worst comes to worse, we're out the sign, not the beacon cabinets, which we can reuse or sell to our customer at a reasonable price. And so strategically, we've taken some time to de-risk our investment there.

But we are very committed to it because recurring revenue is the only way a small company can grow to become a meaningful alternative to the big guys in this business, period, full stop. And I think what I said to you, and I say to a lot of customers now is, "If you want to make an investment in a little company, you should put our premium recur on your floor." And this is the difficult part, I don't think you should hold us to the same standard that you hold the big guys to, because I think our advantage is that you can use us to negotiate an extra $5 off with a much bigger footprint that should more than offset any sort of decline in performance. Although we're working on the performance part, it's really hard to build premium games. The big guys build more premium games in a year than we build total games. And but I do think if operators want real diversity, you have to look at it like more of an investment in us.

And then we're willing to work with folks on the economic terms, the time. We have a really good committed roadmap that we're giving everybody visibility to. And we know it's hard and we know it's a big ask, but we do think that without investing in small companies and starting to maybe think about us in tiers, whether it's the big three and then the next middle market, it would be just really easy to just put only Light and Wonder, Aristocrat, IGT product on your floor. I can understand that too, it makes a lot of sense to me, but I think what we provide is diversification from that. And then you get new interesting games, right? You get a Devil's Lock type of thing from us. You get something unique that maybe a little bit more risky than somebody big wouldn't take.

And we talk about that a lot around here, why do we exist? Why do customers care that Bluberi exists? Why should you do business with us? And we're constantly trying to solve that with what I would call these subtle innovations and just ways of looking at things and doing things differently. But I think the market benefits from having six, seven, eight big competitors versus just a handful of big ones.

Yeah, for sure.

Yeah.

I mean, it's a great answer. And Nick and I talk about this all the time, the market's craving diversification, right? There's great product obviously coming from the big three, but it's becoming harder and harder as an operator to try to figure out, how do I round out my footprint in, right? So-

Our next-

Go ahead.

I was just going to say, our next premium game is Sir Mix-a-Lot. It has peaches and crazy lyrics. No way one of the big companies in our business would put that game out. And so for us, I think it is-

And this is the Sir Mix-a-Lot, with Baby Got Back and all that?

Yeah, Sir Mix-a-Lot. We have the Baby Got Back song licensed. It's something different and quirky and playful, and I think we've done it in taste, and it's something you can only get from us. You know? So that's what we need to continue to bring to the market to give operators reasons to say yes.

Great. So speaking about different, I don't know the signage package and the merchandising package on Sir Mix-a-Lot, or if it's coming out of that Lighthouse speaker, but maybe talk to us about the Lighthouse sign as well, because I think you've made a point to make merchandising a key area of differentiation, both with hardware and the signage. And that sign is complete, and I don't even know honestly if you refer to it as a sign, because it may be more than that. It's completely different than anything else on the market. And as an operator, it seems like signage is getting more and more expensive for OEMs in general, and that makes it more and more challenging, especially moving into the premium space. Tell us about that sign, but then also I'm curious, do you think the future is, like you're doing, distinct but also maybe simpler and more cost-effective signage to get it out there, whether it's premium or core, or do you think the trend continues to be bigger, more impactful, and more expensive?

I think it's probably both and. Our Lighthouse product, if you're not familiar with it, is a sort of obelisk right in the center of a four pack of games that has light and it has sound hooked into it. So when you hit our Shark's Lock Slice and Dice game, it'll yell, "Slice and dice," really loud in a way that draws attention to it. And it was a direct response to operators asking for premium products they could buy. We wanted to differentiate our core for sale business from our premium recur business, but we wanted to give a premium feel to our own purchased product.

And we have data that suggests that games perform better on the Lighthouse, because I think we heard this this year actually in pre-G2Es because I'll talk to you about another product we're rolling out. But an operator said, "Even now with the change in tax forms in the US, there's less hand pays on the floor, and so there's just less excitement about people winning." There's less events. Start with like, hey, we eliminated the coin where you knew somebody was winning, it was like, "Ding, ding, ding, ding, ding, ding, ding." Right? And so, how do you drive excitement onto the floor? We believe that answer is sound, and so the Lighthouse was our first evolution of that. We have games that are optimized for it, so a lot of sounds happen on it, but every game has some sort of sound hook on it.

We've taken that a step further and we're launching a product called the Sound Wave at G2E that is a six-pack, and it has basically an equivalent of a Bose speaker up on the top. And we've actually created audio stingers for winning, so a, "Jackpot," and a, "Bonus time," and really driving that excitement to the bank for players. And we think that's something that's just underappreciated and under innovated on. You can certainly think of some really good sounds in the business-

Sure.

... whether it's the Buffalo or whatever it is, if you think of a million of them, right? I think SEGA SAMMY has a great one on the way their training hammers down on the screen. And players, you can't choose to hear sound. You hear sound. And so, the sound experience we think is a better way to think about merchandise and to think about it doing it. We have a big internal debate. Is it a sign? Is it not a sign? It's like, don't call it a sign, it's an enhancement to the bank. And we really believe whether it's the Lighthouse or the sound wave, we're going to start optimizing all of our games for sound, because we think it's going to be really a differentiator. We're going to have a huge display at G2E around sound, around the sound wave, really trying to just really show how unique and special this could be, right?

And it's a risk, not everybody gets it all the time. And some people say, "Oh, it's loud." And it's like, "Well, that's the point." It's like, you want it to be loud, and I think those are the things that make the difference. And again, it's like that type of innovation you can only get from us. We're spending the time to do that, to think about it. We're taking a risk on it, and we think it could be a really cool opportunity.

Love it. And the Lighthouse, you can buy it or you could also lease it if you want?

That's right. Yep, you could do either, and it's a very reasonable purchase price. It's like sub $10,000 to own the sign. We're always constantly trying to drive our COGs down so that we can get that on more banks because we know it adds to product performance, so the more affordable and reasonable I can make it for you guys to put it on the floor, the better it is for both of us.

And did you have a bunch of debates on that one, Andrew, internally about, are we going to include monitors or exclude monitors on the Lighthouse, or was it always just that?

No, because we wanted to make it a more low cost, easy to say yes to experience.

Gotcha.

And so we just said, you know what? And you know what the genesis was, that the sound on our old cabinet, the B-49 was so good and it would rumble the ground around it. And we tried to switch vendors going to our new cabinet and we lost a little bit of that. And so we were like, man, we've since switched back even midstream of the Beacon cabinet. But we were trying to capture that feedback we were getting. We were getting all this feedback about sound when the original B-49 came out with Devil's Lock and some of those games, and we really just wanted to go deeper on that and go further on that. And so, that was the evolution of it. And it's turned into just a really cool, innovative, a very Bluberi-esque product, I would say.

Yeah. Cool, cool. Well, and as you were talking a little bit earlier about the competition in the space and entering premium and stuff, I wanted to pose this question to you. We had Rob Ziems on last month and I asked him this question as well, but with your private equity background, I think it's also interesting. So do you think the ship has sailed in terms of, let's say, a slot company, just through a traditional startup, a slot company just bootstrapping with a few bucks and try? Do you think that ship has sailed? Do you think it's even possible anymore?

Yeah. I don't think it is. I mean, if you have $50 million, you might be able to get there.

That level of bootstrapping. Yeah, exactly.

But yeah, if you're like, "Hey, we're going to get mom and dad to throw in the credit cards," I don't think it's possible. I think you really have to be... and we talk about this a lot here, and it's back to your point about premium, Dan. It takes a lot of guts to do what we're doing in some ways, and it takes guts from our investors to believe in our thing, but you're putting a lot of money out hoping you're getting a good return on it. It takes two years to launch a new studio and get them to ramp and put out a quality title.

And I have this debate with people, they're like, "Well, AI is going to solve that." And it's like, our best game developers can't repeat their own success, so I don't know how you're going to train a AI model on having them build games. Until AI can build an Academy Award-winning movie consistently, we're building full length feature films here, not YouTube shorts. And so, it takes the time it takes to build a great game.

Like you said before, you could clone a game and math could be exactly the same, features could be exactly the same, it may perform completely differently, right? So, you need the human touch-

Yeah, you can clone a game [inaudible 00:42:40].

... and creativity [inaudible 00:42:41], right?

Yeah. I mean, clone the game developer, they'll still come out with something that doesn't work.

Exactly.

It's the way it is. It's a very tough, hard pseudoscience to build great products. And so, I just think it's so difficult. And the market is more competitive than it's ever been. So going onto a floor, back to your brand, the expectations that operators have of little companies is just as high as expectations as they have of big companies. And so, you have to have enough capital to withstand that and to withstand some bad titles and some cycles. And I think it's too difficult.

Yeah, I'm largely with you there. I think it's really the fundamentals have really changed from those days when people were still doing that, for sure.

Yeah. I think to get licensed in every jurisdiction in North America is something like seven or $8 million. So just to get licensed, and that means you have to have a product that you can approve in all those jurisdictions and is worth bringing to all those jurisdictions. It's very difficult.

Yeah. Plus all the people who can go through the licensure process, right?

That's right. Yeah.

That's not easy either. Okay, so I know we have, well, obviously we have G2E coming up, so you want to talk a little bit about what you have going on G2E and any other initiatives-

Absolutely.

... you have rolling?

We like to think that we have a really outstanding pre-G2E and G2E program. We spend a lot of time prepping for both of those, and we give a really unique demo. If you're at the show, you should come by and get the demo, but we have these things we call pods. So every customer comes in, sits down in their assigned pod. The sales rep has their own pod assigned to them, so you don't have to snake them through the booth waiting for all the games to be available.

Cool.

And on the games, we have them turned into multi-games just for the purpose of the demo so that each game you can demo two to three games. And we also have PowerPoint slides on them so that you can learn a little bit more about our story, our investment and development. But this is, again, back to that serious part of our playfully serious. We really spend a lot of time prepping and preparing for G2E to make sure that from the second you walk into our booth to the second you walk out of it as an operator is very, very tailored to you and to what we're trying to tell you. And we're in the full swing of pre-G2Es right now and really excited about G2E too.

Okay, cool.

Yeah.

Well, and then do you have any other initiatives or anything coming up that you wanted to promote, Andrew?

I do have, you guys were talking about brand and my marketing team told me to make sure I plug this, but on the Monday of the trade show at 10:00 AM, I'm going to be giving a presentation on the Bluberi brand and how we built the Bluberi brand. So, that's part of the G2E education series. We're really passionate about here, as you guys know, and it'll be a good chance for us to put it on paper for the first time and really try to explain the story and the evolution and how we got from where we were to where we are.

Cool. And is that on the G2E floor? Are you streaming it, or [inaudible 00:45:59] presentation?

It's going to be in Titan room 2303, so one of the education halls before you walk into the show, and it's at 10:00 AM on the 28th, Monday the 28th. So, really looking forward to it. It's going to be a good presentation.

Okay, cool. Well, Dan, do you have anything else you wanted to add or ask for today?

No, I think we're four weeks away today. So, looking forward to seeing everything in the booth, Andrew.

I mark the passing of my life by G2E.

Yeah, kind of the same.

I wake up and I'm on the floor and I'm like, "How did I get here?" And it happens every year. So, can't wait.

Okay, very good. Well, Andrew, thanks so much for your time today.

Thank you, guys.

And Dan and I are Bluberi fans for sure, and we love the innovation that you guys are bringing to the table and new approach to things. And yeah, all we can say is keep up the good work. It's always exciting-

Thanks so much.

... watching you guys.

I really appreciate what you guys are doing. I think it's great to tell everybody's stories and to hear so much more about everybody in the industry. I think it's really cool. There's a lot of great things happening in the business right now.

Yeah, cool, thanks. Okay, great, guys. Well, thank you so much both of you for your time today, and yeah, we'll be seeing each other in the flesh here in a few weeks, I think.

Sounds great.

Okay. Thanks so much, gents.