The poker machine manufacturing market is very competitive. So, you would think that one company’s troubles would be to another company’s advantage. However, this does not seem to the case for IGT. As the pokie provider lowers its earnings prospects, its competitors are also starting to feel the pinch. Earlier this week, IGT announced that 7% of its international workforce will be let go in the coming year.
As well, the company has lowered its expectations for revenue in 2014, anticipating that sales will not see much improvement. A decline in sales for IGT would normally mean a boost for other pokie developers, but competitors are now seeing hindrances as a result of IGT’s troubles. On Wednesday, IGT’s shares had declined by 8.28%.
Other poker machine providers also saw a drop, a Bally Technologies’ price dropped by 2.20%, WMS dropped by 3.57% and Multimedia Games feel by 5.99%.
“We believe (IGT) will stoke broader industry concerns related to the emergence of smaller industry competitors and their related impact on the level of absolute demand and pricing able to be achieved by the industry’s larger players,” says Steven Wieczynski, gaming analyst for Stifel Nicolaus Capital Market. IGT’s cuts will amount to more than $30 million in savings, and it is hoped that it will be sufficient enough to help the company recover.
In the meantime, its competitors could quickly scoop up IGT’s portion of the poker machine market share. Whether IGT is losing development, marketing, sales or design resources as part of its budgetary cutbacks, other companies like Aristocrat, Bally, WMS and Konami can compensate. Already, many of these competitors are increasing their presence in the United States, a marketing in which IGT has already lost a great deal of sales.
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