International Game Technology (IGT) has hit the jackpot in the casino gaming business. The company is the world's largest gaming machine manufacturer, with a product portfolio that includes traditional reel slot machines, video slots and video poker, and progressive payout machines. All total, IGT services nearly 77,000 company-owned and casino-owned gaming machines. The company also makes casino management software systems for tracking activity on the casino floor, as well as multiplayer game software and customer relationship management (CRM) systems.
IGT maintains 60 offices across six continents. It sells products mostly in North America, but also serves international customers in Africa, Asia, Australia, Europe, the Middle East, and South America.
In fiscal 2012 and 2013 North America contributed more than 75% of the company's total revenue.
IGT generates revenue through product sales of proprietary gaming equipment and service agreements under which the company collects recurring fees, some of which are based on the amount of money wagered on its machines. The rest of its business comes from more traditional product sales and service contracts.
Sales and Marketing
The company is working to increase the number of customers paying under recurring revenue contracts. IGT's advertising costs were about $68 million in fiscal 2013. The company has been spending more on marketing and advertising in correlation with social gaming revenue growth.
IGT's revenue increased by 9% in fiscal 2013 compared to the previous fiscal period. The spike was primarily due to increased revenue derived from product sales, and Interactive; partially offset by declined revenue from Gaming operations. The company's North American revenues increased in fiscal 2013 mostly from the growing social gaming revenues.
The company's net income increased by 11% in fiscal 2013 compared to fiscal 2012. The bump came from increased revenue that was partially offset by increased expenses, increased marketing efforts, increased acquisition-related costs, and increased income tax expenses during fiscal 2013. IGT's cash flow increased by $761 million in fiscal 2013 compared to fiscal 2012. The increased cash was the result of decreased capital expenditures and a lack of acquisitions during the year.
A key strategic initiative of IGT is to invest heavily in product development to make games that will attract attention on the crowded casino floor. It has a variety of game themes designed to appeal to game players, including several based on licensed brands and entertainment properties such as popular game shows Wheel of Fortune and The Price Is Right. IGT has also introduced a multigame slot system (MultiPLAY) that allows gamblers to play up to four slot games at once with progressive payouts. In addition, the company is putting emphasis on developing and expanding its casino information management systems and server-based gaming platforms that help operate multiple gaming machines.
Mergers and Acquisitions
To help maintain its leadership in the industry, IGT has struck a balance of making strategic acquisitions in other gaming companies, while divesting other non-core operations. The company shelled out $500 million in early 2012 for Double Down, creator of Facebook games such as the DoubleDown Casino.