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 75,000 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. It sells products mostly in North America, but it also serves international customers in about 10 other countries.
IGT generates just over 50% of its 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 (45%) comes from more traditional product sales and service contracts. The company is working to increase the number of customers paying under recurring revenue contracts.
In 2010 IGT's revenues decreased thanks to a weak economy that caused fewer new casino openings, additional competition, and lower spending from existing casinos. It was also affected by the closure of charitable bingo facilities in Alabama. Despite this drop in revenues, IGT's operating income increased for the year due to cost saving initiatives. As a result of a restructuring in 2010 and 2009, the company's total workforce was reduced by more than 15%.
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.
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. In 2011 IGT purchased 90% of Swedish online gambling firm Entraction for about $115 million in order to strengthen its interactive portfolio. In 2009 the company acquired the global operations of Progressive Gaming International. Complementing its current technology, the acquisition increased IGT's system-install base, providing the company with a more complete product offering.
As far as divestitures go, in fiscal 2010 IGT discontinued its operations in Japan due to difficult market conditions there. It also divested its majority interest in DigiDeal, a provider of electronic table games, due to low returns on its investment in that business. – less