Australia-listed casino slot machine maker Aristocrat Leisure Ltd has room for growth in the land-based sector, particularly in North America, says a report from JP Morgan Securities Australia Ltd. But the brokerage added that several “questions” present themselves, including “developing/publishing in Asia”.
Analysts Donald Carducci, Shaun Cousins and Shalin Doshi wrote following an investor day held by the gaming firm: “Aristocrat Leisure has headroom for growth in multiple North American segments. There is no indication design and development spend will abate as management aspiration for market ‘leadership’ is new.”
JP Morgan said the market opportunities in North America involved segments including so-called Class II video slots, video lottery terminals, Class III stepper slots – all in relation to either outright sale of equipment or involvement in gaming operations – and for bingo equipment.
Aristocrat Leisure has consistently claimed to have a large share of all the new slot machine units delivered to operators in the Macau market.
JP Morgan stated, referring to the general global appeal of the firm’s products: “Although Aristocrat Leisure could theoretically have 100-percent market share within a segment, it is unlikely they will exceed 35 percent to 40 percent market share as gaming floors seek to maintain diversity of offering.”
The brokerage said the investor day had “clarified” Aristocrat Leisure’s digital portfolio strategy regarding recent acquisitions, while “reiterating the core land-based opportunity”.
The analysts added that the brand’s digital portfolio management strategy was “sound”, although it said “platform/genre risks remain”.
The brokerage noted – citing information from SuperData Research Holdings Inc, a games data and market research firm – that in the online games market, “’social’ as a category and personal computer free-to-play (F2P) are in decline”.
JP Morgan further stated: “’Console F2P’ and ‘mobile battle royale’ platforms and genres are growing.”
In a late April report, JP Morgan had suggested Aristocrat Leisure was hedging risk in online gaming thanks in part to the breadth of its product offering.
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