Daily News Poker News Online Gaming News Investor News Vegas News Featured Articles
Strategies & Tips Books & Movies
Gaming Life Gaming Tips Comps & Promos
Investor News
HOME > NEWS > Investor News > Inside Gaming: Customer panel praises IGT

Inside Gaming: Customer panel praises IGT

23 December 2013

By Howard Stutz

Rather than having only IGT - International Game Technology executives tout the company’s products to the investment community, the company put its customers on the hot seat.

The move could have backfired. But it didn’t.

Several analysts attending IGT’s annual Investor Day presentation in New York City earlier this month said the customer panel — which included a Canadian gaming official, three American Indian casino executives, and an Illinois slot machine route operator — provided a fresh perspective on the slot machine giant’s games, systems and strategies.

The panelists didn’t just say nice things about IGT. They also told investors and analysts what they thought IGT could do better. The group even offered an assessment of competition in the gaming equipment sector.

“What we found interesting, besides commentary that was broadly supportive of IGT’s content and customer service, was the positive commentary certain of these customers had on Bally Technologies improving competitive positioning,” JP Morgan gaming analyst Joe Greff told investors after the meeting.

IGT officials also addressed the competitive landscape, which somewhat transformed in 2013.

Bally Technologies, Inc. recently completed a $1.3 billion acquisition of gaming equipment provider SHFL Entertainment. Besides acquiring SHFL’s table games and management systems, Bally now owns the company’s Australian slot machine division, which reaches into Asia.

Meanwhile, slot machine maker WMS Industries Incorporated was bought in October by lottery giant Scientific Games Corporation for $1.5 billion.

Also, analysts gave high marks this year to smaller slot machine providers, such as Aristocrat Technologies, MultiMedia Games, Inc. and Konami Gaming, Inc.

Those rivals, as a group, have cut into IGT’s long-standing position as the industry’s leading provider of slot machines and gaming equipment.

Macquarie Securities gaming analyst Chad Beynon said IGT leaders had a bit of a chip on their shoulders, letting it be known the company remains the industry’s No. 1 manufacturer by annual revenue, total games in the field, market share, and research and development spending.

“In some ways, we’re facing the same competition, but just a slightly different color,” IGT Chief Financial Officer John Vandemore said in an interview last week. “We’re not threatened by competition. It’s something that makes us better.”

Two years ago, IGT used its first Investors Day to unveil the IGT Cloud, an information service delivering slot machine content to networked casinos. The company considered the product the next step beyond server-based gaming technology.

The 2012 Investors Day was overshadowed by a proxy fight for control of the company’s board that diverted management’s attention for several months.

This year’s panel discussion, however, earned IGT accolades.

Deutsche Bank gaming analyst Carlo Santarelli said the investor day was more informational than incremental.

Vandemore said having customers discuss the company was unique.

“We didn’t want the panel to be a commercial for IGT,” Vandemore said. “We told them to be as forthright they wanted. We thought it gave an unvarnished point of view on the state of the industry.”

The audience also heard from IGT CEO Patti Hart, Vandemore and Executive Vice President of Global Sales Eric Tom during the morninglong session at the Waldorf Astoria. There was discussion of the company’s early 2014 outlook, as well as opinions on broader industry trends.

But not everyone was impressed.

“We think little new commentary was shared, leaving investors, in our view, a bit unfulfilled,” Greff said.

The company said several of the slot machine products it introduced at the Global Gaming Expo in September have reached casino floors, including the game based on the movie “Avatar.”

IGT has benefited from its partnership with the movie’s producers, bringing actors dressed as the Na’vi characters and incorporating design elements such as the “Tree of Souls” in regional and Indian casinos to celebrate the launch.

During the presentation, IGT management hit on the company’s overall theme of returning more than $1 billion of capital to shareholders since 2010. Additional color was provided on IGT’s interactive division, which is led by social gaming giant DoubleDown Casino.

The financial community has gotten past the $500 million IGT spent to acquire DoubleDown almost two years ago. The real investment is how company content is used across different venues, from free-play social games, to land-based casinos and now Internet markets.

IGT is offering 20 different slot games on New Jersey online casino platforms. Company officials said 5 million wagers had been placed on the games since the end of November.

Credit Suisse gaming analyst Joel Simkins said the New Jersey real money trends were positive, but it’s still early in the Internet game. He said IGT believes real money Internet gaming benefits from social gaming through DoubleDown.

“Management spent the majority of the day reiterating that its vast gaming content library and differentiated social gaming platform are key advantages in positioning itself as a leader in social gaming,” Simkins said.

One trend IGT has found: Social gaming customers tend to lose excitement for noncasino themed games, such as FarmVille and Candy Crush, while casino games endure the test of time.

Vandemore said social gaming is still a modest contributor to IGT’s overall revenue — less than 10 percent a quarter — but it offers a high opportunity for growth.

“As a tool, DoubleDown allows us to design better games for the land-based casino world, which is where the revenues are expected,” Vandemore said.


Copyright GamingWire. All rights reserved.

 
Howard Stutz
FREE NEWSLETTER
Sign up for Casino City's Newsletter and a Chance to Win an exciting Casino City Prize
CONTACT RGT ONLINE  |  EDITORIAL STAFF  |  SITE MAP  |  CASINO CITY  |  AUDIOVEGAS