Supplier News

US – AGEM Index finishes 2015 in fine fettle

By Phil - 8 January 2016

The gaming equipment manufacturing sector posted a positive performance in 2015 as the AGEM Index improved by 15.47 points, up 8.5 per cent year-over-year to 197.32, which represents the third consecutive month of year-over-year growth.

Compared to November 2015, the index reported an increase of 2.99 points, up 1.5 per cent in the final month of the year.

In December, six of the 14 global gaming equipment manufacturers reported month-to-month gains in stock price, with one up by nearly 15 percent. Of the eight manufacturers reporting declines in stock price during the month, five were down by five percent or more, with two down by 10 percent or more.

The broader stock markets reported modest losses from November 2015 to December 2015. The S&P 500 ended the month at 2,043.94, which represents a loss of 1.8 per cent. The Dow Jones Industrial Average reported a decline of 1.7 percent, falling to 17,425.03. NASDAQ reported the greatest month-to-month decrease of the three major indices, falling 2.two per cent to 5,007.41.

Aristocrat Technologies contributed 3.67 points as a result of a 7.6 per cent increase in stock price to AU$10.21.

Due to a 4.2 per cent gain in stock price to $16.18, International Game Technology contributed 1.56 points.

With a stock price of ¥2,888, up 0.2 per cent, Konami Corp. (9766) contributed 1.08 points.

Due to a stock price of $47.84, down eight per cent, Crane contributed negative 2.59 points. Intralot contributed negative 0.36 points, due to a 15.2 per cent decline in stock price to €1.17.

As slot machine revenue has moderated in a number of markets, casino operators have sought new sources of slot revenue by targeting the younger millennial demographic. The advent of skill-based gaming provides an interesting opportunity to reach a generation that has generally resisted slot play, opting for non-gaming hospitality options, such as nightlife, dining and live entertainment.
With the adoption of regulations surrounding skill-based games by the Nevada Gaming Commission in September, operators are now free to dedicate portions of their casino floors to machines that appear more like an arcade game than a slot machine.

While pop culture themes have helped attract new players, skill-based games appeal to a technologically savvy millennial demographic while adding an engaging new element to the experience. A player’s skill can have a material effect on the outcome of the game and offers opportunities for players to progress in difficulty and even influence the game’s payouts. In addition, these games offer community or group play where multiple players can engage simultaneously, adding a social aspect to the gaming experience. Though these games are not yet featured on the casino floor, several operators see their potential to attract new gaming revenue.

While on the surface the potential of these new games is clear, the marketing surrounding them remains murky. Attracting younger players requires implementing forms of communication that millennials use every day. Social media is the primary form of interaction for the demographic and will prove to be an integral strategy in connecting these new gaming experiences with customers. Some analysts believe that this connection could go as far as a seamless integration of social media into the slot machines themselves. With this functionality, players may have the opportunity to join a “social gaming network” that will increase the connection between gamers.

The evolution of the slot manufacturing industry continues to evolve, as do technological advancements and the demographics of the communities in which casinos operate.

Despite the potential draw surrounding these new game types, questions still remain in terms of their profitability from the casino’s perspective given limited history. While skill-based games are still in their infancy, they offer a bright and daring future for the slot machine industry. With casinos beginning to experiment with the new products on their floors and the necessary legislation in place, players can expect to see these games arriving in 2016.