As an alliance of two distinctly complementary companies, the GTECH-IGT merger creates several unique opportunities, says IGT Senior Vice President International Sales Sabby Gill. The combined entity’s regional games lineup stands to benefit tremendously from IGT’s commitment to churning out alluring Asia-attuned titles
The US$6.4 billion merger of two giants in their respective fields is marching forward to its expected conclusion this month.
The world’s leading lottery provider, Italy-based GTECH, announced in February that it had completed US$5 billion in high-yield financing needed to complete the buyout of the world’s leading gaming equipment supplier, US-based International Game Technology. Meanwhile, the deal continues to receive the myriad regulatory nods needed to create the world’s biggest gaming company—it gained US federal antitrust approval in August, got the OK of GTECH’s shareholders in November followed by IGT’s in February, later that month Nevada gaming regulators gave it the green light, and in March it was cleared by the High Court of the UK, which is where the newly formed holding company of the combined entity will be based.
Also last month, it was announced the combined entity would adopt the IGT name and a logo bearing the distinctive GTECH globe and colors. Analysts believe adopting the IGT name is the right move. “Within the equipment world, outside of Italy, IGT has a well-known reputation that overshadows GTECH’s and, more importantly, can help grow market share going forward,” according to Macquarie Securities gaming analyst Chad Beynon. Union Gaming Group analyst Chris Jones echoes the sentiment, saying, “It makes a lot of sense. The most important gaming markets, such as North America, Australia and even Asia, are more aware of the IGT name than the GTECH brand.”
In Asia in particular, IGT has made major strides over the past three years with its “market-attuned” game-development strategy, which means a lot of things, but can be distilled down to the recognition that an appealing package, while important, doesn’t cut it if the game mechanics, the math and the cultural context aren’t all sound. It means garnering the ability to understand local tastes and preferences in some profound ways.
It’s a strategy embodied in a lineup of new games rolling out onto markets around the region. One game that’s proving especially popular is San Xing Bao Xi, or Lucky Dragon as it’s known in English, which features a fire dragon in the base game who reveals random expanded substitutes to increase the number of awards, along with the Fu Lu Shuo multi-progressive. The game, like all of IGT’s new releases, is compliant to Macau’s latest 1.1 electronic gaming machine standards. Other strong new titles, according to IGT Senior VP International Sales Sabby Gill, include Dancing Lion, Shaolin Kung Fu, Tokidoki and Golden Dragon. Tokidoki is an iconic lifestyle brand from Japan, while Golden Dragon is a wheel-type game, similar to IGT’s immensely successful Wheel of Fortune and Megabucks products, that was created in collaboration with Las Vegas Sands Corp. “They have placed 100 units of those. So that’s a big one for us. It’s a theme they came up with, so we gave them a level of exclusivity to be able to place the games before anyone else. It’s a six-month period. As soon as that’s up, we can start placing machines with everybody else,” adds Mr Gill.
Golden Dragon is a linked product based on average minimum banks of 12 up to 200. The base game is a 243-way, 400-credit buy in, it has the ante-bet component, the trigger for the wheel is every 120 games, and three scatters left to right will trigger the wheel.
As IGT Macau Sales Manager Gavin Jones explains, “Inside the wheel, there are free games, free games with an additional bonus, and unlike other wheel products that IGT and other manufacturers have released historically, these are multipliers of stake, awarding up to 888 times. So they’re very attractive to players as they stake up.
“As I bet down, the value is reduced. So no one is left out of it. Because everyone who goes into the wheel and wins one of the metered prizes will win the value as per their stake level. No one’s being rewarded over or under what they contributed to the prize. That’s really important and what’s going to drive the popularity of the product. If I want to be a minimum bet player, that’s fine. I’m going to be rewarded exactly in keeping with my stake. That’s something you don’t see these days, when people are contributing to progressives they haven’t bought.” As for the ever-popular Wheel of Fortune, “we have extended the existing Sony license for another ten years, and we were able to expand the Wheel of Fortune use to also cover Asia from a for-sale perspective,” reveals Mr Gill. “Previously we’ve only ever leased that game, but now we’re able to sell that here. For all of the other jurisdictions it’s going to be available but more on a lease basis.”
Inside Asian Gaming spoke further to Sabby Gill about the merger and the combined entity’s upcoming prospects in Asia.
IAG: What are your thoughts on the GTECH-IGT merger?
The great thing is, the tie up between the two companies— largest global supplier of lottery, largest supplier from the casino manufacturing side—the combined company ends up being a US$6 billion [in revenue] company, and from an EBITDA perspective we’re about $2.2 billion, which means that we’re about twice as big as the next major player.
Because we’re a complementary merger, I think everyone’s looking forward to the opportunities, since there isn’t really that much overlap between the two organizations.
GTECH is extremely strong in the lottery space, IGT is extremely strong in the casino space. We’re extremely strong in the social gaming space with the Double Down acquisition. We have our interactive, online content, whereas they’ve got a platform which we’ve never had before, so you can sort of marry those two together as well. And that’s really the benefit of being two companies with very little overlap compared to what the competition—which are undergoing more of a pure acquisition—are going to be going through.
It also broadens our geographical reach. You look at places like Peru, South America. GTECH has a direct presence there; we don’t, but there’s a huge demand for our product there. So being able to leverage each other’s strengths is really the rationale behind the acquisition.
In August, IGT announced a tie-up with LT Game in Macau. What does that bring?
When IGT was selling into the local market, we had some great relationships that came from our corporate clients like Wynn, Las Vegas Sands, MGM and everybody else. But we were never really able to penetrate what I would say is the second–tier level of operators. Somebody like LT, who has long-standing relationships across all of the different operators, really what they’ve been able to do is give us more sales coverage than we’ve ever had before. Now we’re really leveraging their relationships in the tier-two satellite casinos. But they’ve still got great relationships with the major accounts as well.
Reciprocal to what they’re doing for us in Macau is what we’re able to do for them in North America. Looking at different jurisdictions, helping them with the regulatory approvals and all of those different markets because we’ve been through it so many times with all of our games and new releases of product, etc. So we’re able to help and they’re able to leverage that. From what we’ve seen there’s a lot of interest in North America for their products.
What are the key markets for you in Asia beyond Macau?
The other key markets for us are the Philippines, things like City of Dreams Manila. We have quite a big footprint in there at their opening, including providing their system. We also have placements at Resorts World Manila and Solaire. Another key market for us is Korea. We signed the relationship with Matsui, where Matsui are actually our distributor in Korea because of the way the proposal process works where you must go in as part of a consortium of three or four different vendors together in order to bid, so we’re leveraging Matsui. That’s going extremely well now.
Another key market we’re looking at is India, where you’ve got the possibility of the boats in Goa, we have a number of placements there. There’s also Daman, which is due to open with Deltin Group. They are due to get a license soon, so we’re in conversations as well with them around some placements.
And really it’s all of the other key markets. Singapore is always going to be a key market for us with Marina Bay Sands and Resorts World Sentosa, as well as Genting in Malaysia.
We’ll go wherever the business is, and hopefully there’ll be new openings, like Japan.
We don’t hear a lot about systems in Asia. You have the City of Dreams contract. Where else do you provide systems? How big is that for you in Asia?
From an installation perspective, if you look at most of the major operators, especially the ones that are US-based and moved across to Asia, they’re already using our system because we’re there to leverage the global expansion. There are a couple of other sales opportunities that we’re currently working on. I can’t go into too much detail. But systems is a big focus for us. There’s a fair amount of functionality that we’re building into the product to make sure it meets all of the local regulatory requirements. Systems strategy for us differs by region. Here, the key focus for us is really trying to extend the Advantage product into those key markets. City of Dreams is taking them. There are also bolt-ons like the bonusing applications. Service Window is another key focus for us, where that’s going on trial at a number of operators. There are one or two going on in Macau in the short term, and in the Philippines City of Dreams opened with Service Window.
And finally, we’re all now familiar with IGT’s commitment to producing market-attuned product. What are the other main elements of your game-development strategy?
The approach that we’ve taken around why these games are so different to what we’ve talked about previously is this whole concept of VIP. So it’s really about, first thing is volatility. Where players are driven to play the ante bet, which is something that we haven’t really concentrated much on previous games.
The other thing is innovation. If you’ve seen some of the bonus games, there’s Golden Dragon where the multiplier on the wheel is dependent on the stake itself, it’s not 1,000 credits, for example. So our approach to producing bonus features has really changed.
The third one is presentation. So if you look at the graphics, the character set, and everything else that appears on the front end is as true to life as you can get at the moment, rather than choosing fake characters or something that doesn’t really portray what we’re trying to show. We’ve done a lot of extensive research to make sure all these character sets and graphics really articulate themselves to the culture.
You’ll see with a lot of our new games, if you look at the real estate of the game itself, it’s really gone to the edges of the screen, whereas if you go to more of the classical, US-based games, there tends to be a lot of information out there, where you’ll see 3, 4 or 5 different reels, so it’s very different with the amount of space. Here it’s maximized as much as possible. The only fields you’ve got on there are your credit, your bet and your win. Because when you’re a high-volatility player, that’s all you’re concerned with: What am I betting, what am I going to win on this particular spin, and how much do I have left to play with?