BY HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL
LAS VEGAS REVIEW-JOURNAL
Posted: Sep. 30, 2012 | 2:03 a.m.
Updated: Sep. 30, 2012 | 10:29 a.m.
Updated: Sep. 30, 2012 | 10:29 a.m.
It wasn't enough that slot machines with the likenesses of Judge Judy, Spider-Man, Dolly Parton, top NASCAR drivers, and the Oompa Loompas will be unveiled at this week's Global Gaming Expo.
The legendary rock band Kiss didn't want to be left out of the picture.
No word, however, if band members Paul Stanley and Gene Simmons will be decked out in full Kiss makeup and costume when they introduce the machine Tuesday at the WMS Industries booth at the Sands Expo and Convention Center.
Gaming equipment manufacturing industry leaders believe this year's four-day trade show and conference is focused more on the game, rather than the economic downturn that has depressed sales of new slot machines going back four years.
International Game Technology Chief Executive Officer Patti Hart said manufacturers have been single-minded in their concern about the return of the replacement cycle, or the period of time that casino operators change out older games with newer products. During the recession, slot floor managers held off buying new machines and technology in favor of more cost-effective upgrades of existing games.
"I don't think the replacement cycle will ever make its way back to the high point," Hart said in an interview at IGT's Las Vegas offices last week. "People are more return-oriented in their purchasing and application of capital. When capital is scarce, I think people are more judicious on how they apply it."
IMPROVING MACHINES
Rather than scaring off customers with new technological advancements, the slot machine industry has improved products created in recent years. Games have been upgraded with newly licensed themes that integrate flashy titles, images and music - along with a payout system that offers periodic jackpots that industry insiders believe will keep a slot machine player's interest.
IGT, for example, is introducing games based on the "Judge Judy" mock courtroom reality television series, country singing star Dolly Parton, the crime drama "CSI" and the adult- oriented cartoon "Family Guy."
The company will also display video slot machines featuring the artwork from marine life artist Wyland. IGT said a portion of the royalties generated from the game will go to the Wyland Foundation, which supports healthy oceans and waterways.
WMS has Spider-Man, a slot machine that incorporates images from the movie, "Willy Wonka & the Chocolate Factory" (the Gene Wilder classic, not the Johnny Depp version), including the miniature Oompa Loompa characters, as well as its Kiss slot machine.
"Everything that makes Kiss one of the most well-known bands of all time is featured in this game," said Rob Bone, WMS senior vice president of North American sales and marketing.
"We know that bringing a player-popular brand like Kiss to life creates some big platform shoes to fill, but I'm confident we've succeeded," he said.
Not to be outdone, Bally Technologies will introduce a slot machine themed after the Las Vegas-based reality television series "Pawn Stars" and a NASCAR-themed game with images of drivers Dale Earnhardt Jr., Jeff Gordon, Kevin Harvick and Jimmy Johnson.
Despite the new titles, some analysts believe new machines are a tough sell.
Deutsche Bank gaming analyst Carlo Santarelli told investors in a G2E preview report that there is little optimism that casino operators would accelerate spending on new games in 2013 and keep the replacement cycle largely stagnant.
"Content and innovation will again be the key to identifying the winner from this year's G2E as we no longer believe the show serves as a positive catalyst for the group in general," Santarelli wrote.
EVOLVING INDUSTRY
Janney Montgomery Scott gaming analyst Brian McGill said a replacement market of 50,000 slot machines two years ago would have seemed well below historical levels. Last week he told investors he refined his calculations but reached the same conclusion.
"Replacements will see slow growth going forward, with the industry at close to 60,000 units in 2013," McGill said.
He said the one change in two years is that smaller game makers, such as Konami, have slipped in their market share to single-digit percentages. He expects IGT, Bally and WMS to combine for roughly 70 percent of new sales over the next year. The thesis played out last week when Bally announced a deal to sell roughly 4,000 video lottery terminals in the new Illinois route market.
The analyst community's assessment has only encouraged Hart and leaders of rival manufacturers. She said the industry has "been treading water for several years" just to make do.
"We have allowed ourselves to be tethered to this notion that the replacement cycle is going to come back sometime soon," Hart said. "But across the industry, we've realized it's not coming back. Generally I feel like the industry is taking a big step forward this year.''
American Gaming Association President Frank Fahrenkopf Jr., whose Washington, D.C.-based organization produces G2E along with Reed Exhibitions, said roughly 430 exhibitors signed up for the trade show, taking up 262,000 square feet in the Sands Expo, a 5 percent increase from last year.
Fahrenkopf said about 24,000 delegates will attend G2E.
"I think evolution is the key word at this year's show," Fahrenkopf said. "The industry is evolving through expansion, such as Ohio, Massachusetts and Maryland."
GROWING REVENUE
Fahrenkopf noted that there are now 21 commercial gaming jurisdictions in the United States. Through August, 18 of those states have combined for a 5.9 percent increase in gaming revenues compared with a year ago. Even if Ohio, where commercial casinos opened for the first time May, is excluded, gaming revenues nationwide are up 5.4 percent.
"The good news is we're not seeing flat year-over-year gaming revenues," Fahrenkopf said. "Clearly, we're evolving."
Internet gaming, primarily the U.S. legalization of Internet poker, continues to dominate the gaming landscape - so much so that Monday's G2E sessions will focus entirely on Internet gaming.
For the slot machine sector, Internet gaming has been a focus, primarily through social gaming on websites such as Facebook and other platforms. IGT and other game makers are using social gaming to introduce slot machine titles to buyers.
"The social gaming platform has clearly become important to our gaming companies," Fahrenkopf said. "It's become a good way of marketing to casino customers."
Contact reporter Howard Stutz at hstutz@reviewjournal.com or . Follow @howardstutz on Twitter.
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