What Jefferies Equity Research analysts in Australia called “Dragon wars” have broken out between Aristocrat Leisure and Light & Wonder. Aristocrat has been suing Light & Wonder for intellectual-property infringement in Australia and is now doing so in the United States. This has the potential to thwart Light & Wonder’s rollout of its new Dragon Train game.
Light & Wonder’s “market-share gains in both the U.S. and Australia are coincident with [Aristocrat’s] commencement of legal proceedings against LNW in both jurisdictions,” Jefferies’ team concluded.
That was among the takeaways from a Jefferies roundtable with top Aristocrat management. Another was that the market for sales of terrestrial slot games was decelerating. The Australian-traded stock was consequently rated “Underperform.”
On a brighter note, Aristocrat’s National Football League-themed games were said to be outperforming expectations. Company brass told the assembled analysts that the rollout in North America of the NFL-licensed slots was the fastest in company history.
Aristocrat’s American-football slots were reported as outperforming the company’s competitors overall in terms of net installations. “They also indicated that not all NFL product was performing quite to expectation, so we have to at least consider what could happen to net installs in a cabinet that can be returned to [Aristocrat] should NFL prove not to be the rainmaker that both [Aristocrat] and its customers hoped for,” wrote the Jefferies team.
The Aristocrat executives reiterated a belief that social gaming was the coming thing, long term, despite market signals to the contrary. That said, Aristocrat promised cost control and targeted user-acquisition spending on social gaming going forward.
As for real-money gaming (RMG) online, the company reported that Anaxi was experiencing success, but it was “too small to move the needle.” A $2.4 billion investment in this sphere was promised.
“Whilst we fully expect RMG to remain a high-growth sector,” wrote the analysts, “clarity on the unit economics from [Aristocrat] will be welcome and enhanced by the RMG strategy day scheduled for June 2024, where we would also seek guidance on when this investment is likely to meet its ROIC hurdle.”
With Everi Holdings and International Game Technology (IGT) enmeshed in a merger, the Jefferies boffins saw an opportunity for Aristocrat — and rival Light & Wonder — to gain market share in land-based slots. Though Aristocrat holds the leading terrestrial position in North America, analysts warned the competition was intensifying.
