G2E 2011: Games with thrilling new twists shine

The Global Gaming Expo's trade show in Las Vegas last week seemed more like Disneyland than Bellagio.

The technology available to slot machine manufacturers has allowed developers and designers to create games that are a combination of amusement park rides and gambling devices.

WMS Industries, for example, displayed "Aladdin & The Magic Quest," which has a jackpot bonus system simulating a magic carpet ride. The specially designed chair is a motion simulator that moves in conjunction with the video display.

At Bally Technologies, hitting a jackpot on the new "Michael Jackson King of Pop" machine triggers a bonus wheel that includes one of six songs and videos. The player sits in a chair equipped with surround-sound speakers that rival the best home system.

Bally also displayed slot machines with other jackpot bonus award technology. Players can either play arcade-style skee-ball on a touch screen, blast enemy star cruisers or try to swallow up fish with bubbles.

Not to be outdone, International Game Technology unveiled its "Ghostbusters" slot machine, hoping to capitalize on the success the company has had with games themed after the "Sex and the City" HBO series and "The Hangover" movies.

IGT also offered G2E attendees a chance to play "Big Buck Hunter Pro," in which the bonus jackpot is an arcade-style shooting gallery. Players use plastic rifles to shoot elk, deer and bighorn sheep displayed on a 3-D video screen.

But, will all this high-tech wizardry sell slot machines?

Sales revenue in the manufacturing sector has suffered in recent years. Casino operators have been hesitant to spend on new equipment. Instead, their money is being spent on restaurants and other nongaming amenities.

Deutsche Bank gaming analyst Carlo Santarelli spent three days walking the G2E trade-show floor in the Sands Expo and Convention Center and meeting with slot machine company leadership. He doesn't think the market for replacing older slot machines with new games will change soon.

"Based on our conversations, we remain convinced 2012 replacement activity is likely to remain flat, at best, and has the potential to decline year over year should the macro climate worsen," Santarelli told investors. "We did not meet with a single management team or industry contact who presented a forecast for replacement growth in 2012."

Overall, analysts were impressed by the trade-show floor and the advancements in technology. In previous G2Es, the advancement of server-based gaming technology, which links slot machines in casinos through a central computer system that better tracks game play and performance, was all the rage.

The focus is now on the games themselves.

Many analysts, leading investors on tours of the trade-floor booths, said Bally's Michael Jackson game had garnered the most discussion. IGT's booth was impressive, while some called WMS' content "back to basics."

The big three slot makers could soon face competition from companies such Konami Gaming of Japan and MultiMedia Games of Austin, Texas, which was recently licensed in Nevada.

"Our G2E booth tours show the increasing competitiveness of the slot business as most exhibited marked improvement across product segments," Jefferies and Co. gaming analyst David Katz said.

However, in the reality of today's economy, some wondered whether the new games are overwhelming.

"Relative to prospective demand potential, there might be too much quality content coming to market," J.P. Morgan gaming analyst Joe Greff said. "This, plus anecdotal comments from meetings with several slot managers, leaves us concerned that pricing and lease terms may be pressured.

"Most of our conversations with public (casino) operators indicate that replacement activity over the next year will continue to be modest," Greff added.

Slot machine makers are pinning their hopes on new markets opening over the next few years. Ohio is opening four new casinos starting in 2012, while lawmakers in Massachusetts and Florida could pass legislation for casino expansion.

Bally Technologies Chief Executive Officer Richard Haddrill said the newest games will help open new markets in more jurisdictions.

"Those new markets want to open with the newest and best products," Haddrill said. "The technology has gotten better for the players and the operators."

Some of Bally's most discussed slots -- the games themed on Michael Jackson and the movie "Grease" -- won't be in casinos much before next spring. But before and during G2E, the company set itself apart from its rivals by announcing casino slot machine system management deals, including ones with the Mohegan Sun in Connecticut and the British Columbia Lottery in Canada.

The systems deals seldom include slot machines.

Themed slot machines often come at a price. The costs to acquire some popular licensed movie titles often rival the production budgets of the movies themselves. Licenses usually include securing video clips from the movies, images of the actors and the rights to use songs from the films.

WMS President Orrin Edidin said despite any amount of research, some titles don't translate well for gaming. WMS has succeeded with such themes as "The Wizard of Oz" and "Lord of the Rings," and with popular board games it licensed through Hasbro.

"We roll about 50 percent of our revenues back into (research and development)," Edidin said. "That's probably our most important expense."

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.