IGT shares double down on social miss

IGT shares double down on social miss

Monday, March 13, 2017
DoubleDown struggles after losing first-mover advantage

Booming lottery revenues led by Italy and North America couldn’t mask the continued problems at IGT’s social gaming unit where the company admitted that trading in the last quarter of the year had been “challenging” due to increased competition.

Speaking to analysts after the company’s share price took a hammering on the back of the disappointing news on DoubleDown, IGT chief executive, Marco Sala, said that a proliferation of new operators with compelling content and player experiences was making it tough to turn around the business.

“DoubleDown has proven competitive content and stable monetization rate, but no longer enjoys the early mover market advantages,” he told the analysts last week.
He added that the company has been investing in platform upgrade to DoubleDown to provide greater flexibility for faster gaming productions and updates and that the company has also planned out a multi-app strategy that will focus in particular on promoting the company’s traditional stepper titles to the social audience.

In comments that contributed into a 15 percent share price fall on the day, Sala said that the upside to the remedial work “won’t happen overnight and we don’t expect to begin seeing the impacts of these strategies before the first quarter of next year.”

DoubleDown’s revenues are contained within the North American gaming and interactive segment of IGT’s results. The company said the reporting unit had seen revenues fall back to $368m from $378m in 2015 due to the DoubleDown weakness.

In comparison, North American lottery sales were up 6 percent to $284m while Italian lottery revenues were boosted by a 15 percent rise in total wagers. However, other international lottery revenues were down to $220m from $265m, largely due to the downturn in UK lottery revenues.

Analysts at Union Gaming suggested the sharp sell-off in the share price was an overreaction to the news on DoubleDown. “While the lower outlook for 2017 can be largely attributable to the unfavourable comparison, the stabilisation of DoubleDown appears to be taking longer than we had expected,” said John DeCree. “As a result, given the challenging first-half 2017 comparison, a longer-tailed recovery in DoubleDown, and a light new casino opening schedule, we are remaining on the sidelines for now.

“However, we believe the core fundamentals of lottery and gaming are intact and that the shares were oversold post-earnings.”

The old IGT – pre-merger with GTech – bought DoubleDown in 2012 for $500m. At the time it was a leader in the social casino space, however, in recent years it has been overtaken by more nimble operations.

Totally Gaming says: The degree to which the social casino market is still changing – and at pace – is evident from the IGT commentary on the problems it is facing with DoubleDown. Still, the company will be happier with the news from its gaming machine and lottery businesses where the prospects look much more reassuring.

Latest

Codeta unveils new logo as part of major website rebrand

Political worries weigh on Kangwon Land

Codeta unveils new logo as part of major website rebrand

Political worries weigh on Kangwon Land

Muckleshoot Casino’s virtual reality system proving a success

Macau search trends support Wynn mass grab

Gaming Products & Services Directory

The essential directory for the gaming industry