Aug. 11--ATLANTIC CITY, N.J.--Forrest Gump noted that life is like a box of chocolates. The casino industry, though, is something different. More like a box of breakfast cereal. 

Yes, just like the kind of cereal you may have crunched on this morning. And this is not some weird metaphor about the gaming industry is turning soggy or stale, or how it needs more fiber. This is an honest-to-goodness comparison between two industries that have much in common. One builds its boxes out of cardboard, the other builds them out of bricks, but they are kindred spirits inside those boxes. 

The casino industry has much to learn from the experience of the breakfast bunch, and can ignore that experience at its own peril. 

The cereal industry, dominated by a few key players, got into trouble in recent years. The battle plan in Battle Creek, where industry bellwether Kellogg Co. is based, was to fight for market share, to go spoon to spoon against the other cereal moguls. 

This became the industry norm. When one company developed a honey-coated oat bran, followed by fiber-filled raisin bran, competitors would soon stock the shelves with their own offerings. Advertising campaigns began to mimic advertising campaigns. All that was missing was a wrestling match between Tony the Tiger and Count Chocula. 

Then, a funny thing happened. Consumers stopped paying attention. Instead of choosing between Fiber One and Corn Pops, they chose bran muffins at Starbucks. They eschewed Cracklin' Oat Bran in favor of Manhattan bagels. Quite often, those busy Americans stopped eating breakfast altogether, leaving Fred Flintstone to wallow alone in a bowl of Fruity Pebbles. 

While companies were battling for a slice of the cereal pie, they failed to note that the pie was shriveling. They saw themselves as cereal makers, not as breakfast providers. 

A similar phenomenon is occurring in the gaming industry. In Atlantic City, for example, the gaming industry is viewed as one large, slow-growing pie. And the name of the game is to fight for market share. 

Wall Street analysts, and, yes, on occasion, even newsletter publishers, focus on shifting share. Who is up? Who is down? Who is winning the battle in win per square foot, and who is down in monthly slot revenue? 

The battle has long been for a slice of the gaming pie, while the real war has not yet been engaged. The real enemy is not the casino down the street, but the multiplex cinema in the suburbs, or the all-inclusive resort in the foothills, or the professional sports team nearby, or ... you get the idea. 

Many gaming executives appear sanguine about the future, perhaps a bit too sanguine. Every year, more and more baby boomers reach those prime gaming years, when their outsized wallets start to match their outsized paunches. Conventional wisdom holds that all casinos have to do is hang out their "open for business" signs and baby boomers will do what their parents did: Make a beeline for the Boardwalk. 

Indeed, if baby boomers were just like their parents, the smart casino companies would sign Shecky Greene and his ilk to long-term contracts. But life, and the baby boom generation, doesn't work that way. 

Casinos will have to get used to smaller gaming budgets and larger appetites for other attractions if they want to win the war for discretionary dollars, and not merely the battle for gaming dollars. 

But don't leave the breakfast table just yet. You've just heard the snap and crackle of our analogy. Here is the pop: Cereal manufacturers also learned that couponing is a lousy way to build loyalty. Consumers were inundated by cents-off coupons as manufacturers wielded them as weapons in the war for market share. But once the coupon spigot was turned on, it couldn't be turned off so easily. Consumers became loyal to coupons, not cereals, and became inveterate brand switchers. 

That is a lesson that should warm Paul Rubeli's heart. The chairman and CEO of Aztar Corp. has long inveighed against the growing use of cash-back programs and bus promotions as ways to build market share. 

In the end, they destroy loyalty and inflate expectations. Cereal manufacturers have learned that the path away from couponing is a lot bumpier, but if everyone rides it together, the path is at least navigable. 

The lesson for gaming companies is clear. The winners will be those who fight for a share of the entertainment dollar, not merely for a slice of the gaming pie. Those who do, who reinvent themselves as entertainment companies who do more than offer cash back to customers, will eat their competitors' lunch. Or, better yet, their breakfast. 

-- Michael Pollock publishes Gaming Industry Observer -- www.gamingobserver.com -- a newsletter that tracks trends that affect the casino industry. 

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