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Best of Howard Stutz

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Howard Stutz
 

TV shows, movies again the main theme at G2E

13 October 2014

LAS VEGAS -- The trade show floor at the Global Gaming Expo (G2E) 2014 looked more like a cross between TV Land and Netflix.

New slot machines concepts were displayed for casino floor decision-makers earlier this month during the annual three-day gaming industry get-together, with the 300,000-square-foot Sands Expo and Convention Center space resembling a giant casino.

As has been the case in recent years, popular television shows and movies were the main theme of G2E.

“Mad Men,” “The Flintstones,” “Sons of Anarchy,” “Friends,” “Wonder Woman,” “The Ellen DeGeneres Show,” “The Jetsons,” “Austin Powers,” “Duck Dynasty” and “Gremlins” were among the licensed brands prominently displayed in a slot machine format.

Actress Lynda Carter — Wonder Woman from the 1970s TV show — spent a few hours in the Bally Technologies, Inc. booth signing autographs and posing for photos next to the slot machine that bears her likeness.

In the Aristocrat Technologies booth, a motorcycle from “Sons of Anarchy” was set up near the bank of slot machines depicting the FX series. Show attendees were invited to pose for pictures astride the bike.

Likewise, a mock-up of the “Friends” couch from the Central Perk coffeehouse and “The Flintstones” Stone Age car were displayed in the Expo’s lobby for photo opportunities.

IGT - International Game Technology set up a dance floor near its games based on television talk show host Ellen DeGeneres.

But is the star power behind the games enough to deliver sales?

The slot machine industry was a challenged business well before the Great Recession influenced casino companies to find ways to shave costs. It was easier to rehabilitate older slot machines than to pay for new games and titles.

A lack of new casino openings domestically in 2015 will continue to challenge game sales.

“There are few major new sales opportunities, and a hypercompetitive environment for casino floor space continues to exist,” Union Gaming Group analyst Robert Shore said. “There isn’t much must-have gaming equipment product right now that most operators feel they need to purchase.”

Buckingham Research Group, Inc. gaming analyst Brian McGill told investors he downgraded the number of slot machines he expects to be sold in the United States in 2015, a figure much lower than actual sales figures from 2013 and what’s anticipated this year. McGill predicted sales of 57,000 machines this year and 55,000 in 2015.

“We actually think these estimates could be optimistic,” McGill told investors after he toured the G2E trade show. “Operators are struggling, and we think it is unlikely that they have increased budgets to spend on slots. This is another headwind for the overall industry.”

Wells Fargo Securities gaming analyst Dennis Farrell Jr. said investor-community opinion concerning gaming equipment suppliers was soft going into G2E, and nothing has changed.

“The tone and sentiment around industry trends remain cautious,” Farrell said. “Our sense is the third quarter may look similar to the first half of 2014, however there is optimism regarding the longer-term outlook.”

CLOUT FROM TV/MOVIE GAMES

There were some bright spots.

Analysts said several of the television/movie games could have drawing power.

Aristocrat’s “Sons of Anarchy” drew attention after last year’s G2E debut of machines based on “The Walking Dead” cable television series. “The Walking Dead” has become one of the industry’s more popular games this year according to sales figures.

Aristocrat also displayed slot machines based on the movie “Ted” and the highly popular series “The Big Bang Theory.” Company officials said the game titles are somewhat downplayed because the content is still being developed.

“Aristocrat had the best overall show in terms of innovation and sex appeal with another round of high-profile premium leased games and several unique hardware designs,” Eilers Research Principal Todd Eilers said.

Shore said IGT’s Ellen DeGeneres slot machines could be a strong draw for middle-age female gamblers because of the demographics of the television series.

He added that the IGT’s new spinning-reel cabinet, which houses some of the manufacturer’s time-tested game titles such as “Double Diamonds,” provided a good update to a popular product.

“It’s a familiar mechanical reel with a dash of modern technology (that) doesn’t overshoot the core slot player,” Shore said. “I thought IGT had some good games for probably the first time in a few years.”

But McGill wasn’t impressed with IGT’s game content and predicted the company’s slot machine sales could sink in coming months.

Gamblit Gaming, licensed in Nevada in June, displayed several concepts that combine traditional a slot machine with entertainment-style video games.

On tables that resembled giant iPads, Gamblit CEO Eric Meyerhofer showed off gambling products that were similar to “Words with Friends” and “Angry Birds.” However, the games have a wagering element with spinning reels.

In “Police Pooches,” players launch police dogs to destroy zombie cats. Players can make side wagers to earn power-ups to help destroy more zombies.

The games also have a stand-up-style slot machine.

Meyerhofer, whose company is headquartered in Glendale, Calif., said the games will be launched at casinos in the United Kingdom to build data on customer performance.

“This is a new platform that is taking a different approach to engage customers,” Meyerhofer said. “We’re looking forward to hearing feedback from the industry.”

Gamblit’s goal is to provide content to a traditional gaming manufacturer.

GAUGING THE WAVE OF CONSOLIDATION

But games weren’t the center of attention at G2E.

The wave of mergers in the manufacturing sector will provide new ownership to some of the industry’s largest slot machine providers.

Wall Street is still gauging the impact of the consolidation, which includes the largest names in the manufacturing sector.

“The competitive landscape is transforming before our eyes,” Shore said. “We will be monitoring closely to see how the contraction among major suppliers might impact pricing dynamics in the marketplace from that point forward.”

In July, Italian lottery giant GTECH Holdings said it was buying IGT for $6.4 billion.

On Aug. 1, Scientific Games Corp., the New York-based lottery provider that bought WMS Industries last year for $1.5 billion, said it would spend $5.1 billion for Bally. Last year, Bally bought gambling equipment manufacturer SHFL entertainment for $1.3 billion.

In September, payment transaction provider Global Cash Access said it would pay $1.2 billion for slot machine maker Multimedia Games.

Also, Aristocrat is buying slot maker Video Gaming Technologies for $1.3 billion.

Macquarie Securities gaming analyst Chad Beynon said the mergers would further the distribution of games and other licensed titles through multiple platforms, including casinos, lotteries, online gaming and social gaming.

“There have also been several smaller deals during the last 24 months as companies became more vertically integrated,” Beynon said.

The mergers, which could all be final by the middle of next year, will provide more than $600 million in cost savings, often described as synergies.

McGill said casino operators will continue to look for the best deal, including games from smaller manufacturers. He said he thought Multimedia Games had the best content at G2E.

“Despite the announced consolidation, we think competition remains intense,” McGill said. “We heard many companies are being very promotional to move games.”
TV shows, movies again the main theme at G2E is republished from GamingMeets.com.