There is nothing wrong with a few curves.
That was thought of many observers walking through the Global Gaming Expo trade show floor two weeks ago in Las Vegas. Some of the newest slot machine products – destined for casino floors in 2019 – have a distinct curve to their style.
Think of a giant iPad with a 20-degree sway.
“We estimate that curved screen format slot machines now represent roughly 9 percent of the slot floor and should continue to grow in the coming years,” Eilers & Krejcik Gaming research principal Todd Eilers said during a G2E presentation.
Some of the latest titles – International Game Technology’s “Adam Levine,” Scientific Games’ “James Bond,” and Aristocrat’s “Big Bang Theory” – were displayed on various curved-screen cabinets.
Whether this translates into slot machine sales – the yearly-asked question at every G2E – is still to be determined.
Deutsche Bank gaming analyst Carlo Santarelli queried Las Vegas Strip casino operators during G2E on their reaction to the new games. The response to IGT’s slot machines was the best product feedback the company has experienced since its $6.4 billion merger with lottery giant GTech in 2015.
“Operators noted that the product, specifically the product coming from the legacy GTech studios, has played very well, which has helped IGT drive increasing (sales) in casino operator-purchased video product in 2018,” Santarelli told investors.
Macquarie Securities gaming analyst Chad Beynon said games attract players, not a stylish cabinet. The operator sentiment toward the new games was “the best we’ve heard in years.”
Eilers added that manufacturers have rolled out a numerous Asian-themed slot games, which are seeing increased on slot floor presence throughout North America.
“Most suppliers now have a meaningful number of Asian themed slot games,” Eilers said. “We estimate that Asian content now represents roughly 8 percent of the slot floor and should continue to grow.”
Slots from Scientific Games and Aristocrat Technologies “affirmed themselves” as the leading products in participation games while IGT and AGS had the best for sale games, Beynon wrote in a post-show research note.
Jefferies gaming analyst David Katz said he saw “competitive” games in the booths of every major manufacturer. The hardware, software and content displayed during show could entice the interests of casino operators over the next year.
“Overall, we view the current slot environment positive on the strength of industry gross gaming revenue with product offerings broadly stronger than at any point in history,” Katz said. “The companies in our purview are demonstrating stronger hardware, software and content and should be well positioned to achieve their respective expectations.”
Scientific Games rebound
Beynon said Scientific Games, which has experienced a 60 percent decline in its stock value since the beginning of the year due to a $9 bill debt load, “demonstrated perhaps the newest and most cutting-edge intellectual property” across its product portfolio.
Scientific Games kept its newest products hidden behind a secured wall (CDC photo)
Hidden behind a walled-off display booth – an invite from a company representative was required for entrance – included the newest James Bond-themed slot machine based on the film “Die Another Day.” The cabinet used a technique where when the curved display rises to reveal a 3D enhanced bonus prize game.
SunTrust gaming analyst Barry Jonas said casino operators were “constructive” regarding Scientific Games’ products. He said regulatory delays kept the initial generation of James Bond games in the sidelines.
“(The games are) now on casino floors with strong results as per our discussions with operators,” Jonas said in a research note. “Feedback on the offerings from some international operators was particularly strong.”
Much of the attention focused on the company was geared toward non-slot businesses – particularly the company’s OpenBet sports betting system. Scientific Games has deal to provide the systems to Caesars Entertainment casinos.
Katz said the company’s products “are too good for the shares’ decline not to correct.”
Distributed gaming market
Scientific Games – along with Aristocrat Technologies – are looking to slice into the distributed gaming market by introducing bar-top video poker games.
Distributed gaming – a limited number of slot machines operated in bars, taverns and locations where alcohol is sold – has grown to 10 states. For example, Illinois now has just under 30,000 slot machines in locations outside of the state’s riverboat casinos and the games are becoming a larger percentage of the gaming market.
Jonas said IGT has “dominated the video poker market,” but slot companies see an opening. He said IGT has roughly 100,000 installed games around the country.
“We could see this next round of innovation potentially threatening their market leading position over time,” he told investors.
Analysts were still impressed by IGT’s trade show booth. Much of the pressure the company has faced this past year comes from issues surrounding its relationship with the Italian lottery.
AGS closely watched
Several analysts said AGS, which had small G2E booth a year ago, is quickly becoming a company to watch.
“AGS is no longer below the radar,” Katz wrote in his post-G2E report, citing a broader content offering and its expansion beyond Class II Indian casinos into traditional gaming markets, such as Pennsylvania.
“While no timetable was provided, significant events such as legalization in Brazil could accelerate its achievement,” Katz said. “AGS continues to present the clearest path for growth.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
