Melco Crown Entertainment Case Study

CNN News reported in November 5, 2015 that Melco Crown Entertainment, a gaming tycoon open its latest resort namely Studio city in the gaming capital Macau. In the open

ceremony, a short film was commissioned by the resort, starring Martin Scorsese, Leonardo DiCaprio, Robert De Niro and Brad Pitt. Studio city also invited many Hollywood A-listers to come to the ceremony. Moreover, the resort adopts a number of non-gaming attractions including 4D Batman simulator ride, magic show by world-renown illusionist Franz Harary and the world’s first ferris wheel designed in the shape of figure 8, which also represents fortune in Chinese culture. On the other hand, the gaming side of the resort just accounts for 5% of the entire room. This event reveals
It writes “Even Melco Crown Entertainment CEO Lawrence Ho admitted that nobody visits Macau for non-gaming amenities.” and it quotes Lawrence Ho’s word from an interview done by Macau Daily Times, saying "Non-gaming doesn't make any money and it will never make any money. For all the foolish people out there that think non-gaming is going to save [Macau's] day, it's not.” In order to clarify this section, I found the original report of the interview from Macau Daily Times and first of all, Ho never mentioned anything like “nobody visits Macau for non-gaming amenities”. Therefore it is completely a fallacy that is misleading the readers. Instead, Ho is a believer of integrated resorts with more non-gaming attractions. What he really means by saying “non-gaming doesn't make any money” is that non-gaming is more like acting a role of attraction to draw gaming business rather than make money itself. Therefore, the author is making a card-staking
The argument is reasonable in the old days when gaming industry was still dominating the entertainment market in Macau. At that time, investing on non-gaming was a waste of money because its return could nearly be neglected compared with the gigantic revenue gained by casino. However, owing to the weakening strength of gaming industry, the situation also has changed. Non-gaming entertainment now serves as the direct attraction for consumers rather than gambling experience. So I think the author makes a fallacy of false cause because the small revenue share of non-gaming is not necessary to result in a constraint of diversification nowadays. Try to consider a case that if non-gaming amenities work perfectly, attract ing millions of new visitors and nearly each of them goes gambling. Naturally, the gambling revenues would be much more than non-gaming revenues because the profit margin of gaming is much smaller while people tend to pay more on bets. In this way, gaming and non-gaming would both develop and promote each other circularly, which is a good sign. Therefore, it is okay for non-gaming to involve small revenues as long as it works