IGT makes inroads into new markets

Apr 19, 2005 6:40 AM

As reported in GamingToday several weeks ago, slot machine sales this year have cooled as an industry-wide conversion to coinless machines has largely run its course, and new jurisdictions such as Pennsylvania and New York have been slow to develop.

International Game Technology (IGT), the worldwide leader in slot machine production, has felt the pinch with slumping domestic sales, but the gaming giant is striving to offset the slowdown with new market opportunities.

IGT reported a first quarter decline of 35 percent in domestic slot sales, and analysts predict a bigger slide — from 40-45 percent — for the second quarter ended March 31.

"For the quarter, we are estimating 11,000 replacement sales ”¦ down from 23,400 in the year ago quarter," said Steven Kent, analyst for Goldman Sachs.

But IGT has made inroads in international markets, in which its sales jumped 73 percent in the first quarter, mostly on the strength of sales to Japan.

"We believe international business is key to the second quarter, as Russia, Japan, South America and Italy all present volatile sales opportunities," Kent said. "We are estimating 29,120 units sold internationally in the quarter."

In addition to expanding its international sales, IGT is -focusing on developing innovative new games and new casino--management software to help weather the storm.

"We find that the real value is in creation," says Thomas "T.J." Mathews, IGT’s chairman and chief executive officer. "We’re spending $140 million this year on research and development. Our next biggest competitor is spending $50 million."

Mathews is keeping his game designers busy. At last year’s Global Gaming Expo, IGT introduced more than 180 new games, twice as many as it unveiled in 2003. There’s no doubt that there will be another big push this September.

Besides new games, IGT is developing what many insiders consider the slot system of the future — server-based games, which is sometimes called downloadable slots.

The new casino-management software would allow players to choose from a library of games — perhaps even hundreds of titles — in a variety of denominations, without leaving their seat at a "generic" slot machine.

The new system would also allow the casino to customize machines to each customer, so that bonus rounds, slot club points and other promotions pop up when a player inserts his or her rewards card.

Much like one of its slot players, IGT hit a cold streak. But with its track record — 70 percent of the 800,000 North American slot machines sold — IGT is expected to once again hit the jackpot.