International Game Technology (IGT), the largest developer of slot software and machines in the world, announced an impressive 41-percent profit increase for the third quarter.
A Bold Step into the Online Arena
When IGT ventured into online slots in 2005, not everyone was onboard, including many of its shareholders. There was undoubtedly money to make in the online sector, but historically, that market had been cutthroat, fickle and inconsistent. For this Nevada-based company, there was also the issue of looming online gambling laws in the U.S., and the UIGEA did go into effect May of the following year.
Today, IGT isn’t just still the top dog in the industry; it’s also the brand experiencing the greatest and most consistent level of growth. IGT’s most recent expansion, a Canadian-based contract, resulted in slot machine sales being up by 12 percent to $259.2 million. Furthermore, the company’s interactive revenue has jumped a whopping 69 percent to $72.5 million overall. In fact, the only area where IGT witnessed any regression at all was in networked machines, both online and in traditional casinos; that revenue fell four percent down to $247.2 million.
Despite significant concerns over the volatility of the market, the decision-makers at IGT held firm to their vision. In retrospect, one of the key decisions was to purchase WagerWorks rather than build a new online presence from the ground up. WagerWorks gave them proprietary software technology, an established presence in the market and a revenue stream that was already in the black.
WagerWorks also provided IGT with some important licenses, such as Star Trek and Ghostbusters as well as some of the most popular slot machines in brick-and-mortar casinos. For a company like IGT, the issue with an online slots division is that, as CFO John Vandemore puts it, “it feels the brunt of consumer discretionary challenges.” IGT has been able to overcome this, however, by building a recognizable online brand that players associate with some of the biggest licenses and largest progressive jackpots.
A Plan for Tomorrow
Perhaps the most exciting aspect of IGT’s success is that there’s no indication of it slowing down. IGT has also been very aggressive about maintaining it; for instance, last year it purchased Double Down Interactive, a developer of socially networked casino games, and revenue on just the Double Down game is up 40 percent to $680k daily.