COVID-19 creates more hurdles for gaming industry
SG has already reduced 2020 CAPEX by a third and announced furloughs and layoffs. “As the year plays out, we’ll see if they take more drastic measures, depending on how quickly customers resume operations and what those resumed operations look like,” the expert said.
Recurring revenue streams, which were already under pressure, are bearing the brunt of operator closures. The table games segment has also been “relatively flat” since SG’s merger with WMS and subsequent acquisition of Shuffle Master. SG’s systems business, which is typically profitable, is also likely to be impacted “quite a bit” over the next 18 months. However, social gaming, sports betting and real money gaming are the industry bright spots.
The specialist rounded out the three industry “giants” to include Aristocrat and IGT. As each player has a different overarching strategy, COVID-19 is being tackled by them “in different ways”. Meanwhile, five of the smaller vendors have gained substantial market share over the past 10 years, with some “ankle biters” coming to the fore.
In terms of what the future holds for SG, “everything could be on the table”, including spin-offs or a full sale, according to the specialist. However, the company has a “concerning” amount of debt. For the industry at large, the expert anticipates the pandemic will force suppliers and operators to “become more efficient and come out stronger in the end”. Although the waters will be rocky in the short term, “gaming has shown over the years that it is resilient”.
The biggest challenge is not knowing the conditions under which operators will reopen. For example, they may be restricted in how many machines can be in use at one time, while other social distancing measures could vary across jurisdictions.
To access all the human insights from Third Bridge Forum’s Scientific Games – Medium-term Gaming Industry Headwinds & Long-term Outlook Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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