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BYI shines at G2E and dare we say, there is actually earnings visibility.


Our BYI thesis (formulated post FQ4 punt) was that improved systems visibility and growth would be the delta versus the industry beginning in Q3 FY2012 while significantly lower guidance set the bar low enough for meet and beats (see our note, "BYI 4Q POSTVIEW" 08/04/11).  Well, systems visibility remains fairly high and now it looks like BYI may actually beat the September quarter.  The Street is at $0.42 and we think $0.45 is the better number.

Meanwhile, our G2E takeaways were quite positive for BYI.  Management seemed more bullish on the outlook than we have seen in some time.  Their new games seem to be doing well in the field.  They may finally getting some traction with iVIEW DM which could meaningfully enhance their already strong recurring revenues.

Here are our notes from G2E:

Emerging technologies:

  • iDeck: gives you much more functionality on the games like Pirate Quest. iDeck is like iPad for new game mechanics
  • Alpha 2: 3D hardware tracks your head movements to give you a perfect visual perspective.  Biometrics will let you personalize the games to each player.
  • Total Blast: an example of a game that links the land base casino to social networking sites like Facebook. It has a skill-based bonus game that awards prizes.  The game aims to attract a younger demographic. 
  • BYI interactive:  BYI will integrate information from from online and land based play so casinos can have a complete view of their players activity. BYI is in the process of building online casino portal sites for their clients that will promote free play when casino patrons are not at the facility (similar to WMS) in the US and possibly for pay play internationally where internet gambing is legal.  In the next 12 months, BYI's plans to go live with an international site first.  When players make any changes online those changes will appear when they play at at the casino.  The online sites will also allow players to post stats on Facebook starting at the end of the fiscal year.
  • Generally they are much more methodical about player testing than they were in the past.

Systems

  • TableView:
    • Can recognize and count how much is being played. It  allows casinos to track players, average bets sizes, dealer productivity and allows pit managers to yield manage.  BYI's Tableview is not an RFID technology so casinos need not replace chips and tables. The new technology add on's are scheduled to be commercialized over the next 12 months.
  • Business Intelligence (all approved):  New product which helps create and measure the performance of various marketing campaigns by allowing casinos to create which segment players, offers, offer costs, and effective dates of the campaigns.  This will allow casinos to estimate the profitability and review actual vs estimated productivity of each marketing program.  Product will allow casinos to see which machines are played by the people that got offers and track back where the people came from as well. 
  • Quintile analysis: Will track popularity and profitability of slot machines. By changing the denomination, slot managers will be able to predict the profitability of machines and therefore better yield manage the floor.
  • Key Kiosk:  Replaces player cards without having to go to a live casino representative and allows the casino to market to customers on the spot.
  • STM (service tracking manager): messages tech support with any issues and service requests and directs them to the appropriate client/location. It also prioritizes customer service.
  • Elite Bonusing Suite:
    • Virtual Racing promotional event: goal is to drive more rated play and coin in.  Coin-in increased by 15-17% when the tournaments were run at the test site.  Any game can be converted into a tournament game regardless of manufacturer.
  • Cost of an iVIEW DM:
    • List price of $2K
    • 1x Standard license fee of $

    • Maintenance fee: 18-20% of the license fee

    • Elite bonusing suite software: $

  • iVIEW DM content available today:

    • Virtual racing
    • Tournaments
    • Uspin (cash, prizes, etc) different types of spinning wheels.
    • Information banner on screen bottom.
    • Almost ready: Watching fights/games/etc - little harder since it requires high speed streaming video which many casinos lack
  • iVIEW DM Units deployed ~1,600 currently but they are rolling out at several sites
    • Mohegan (has 6k slots in total)
    • BCLC (12,000 VLTs in total)
    • Caesars: Initially just at Horseshoe but potentially at many more properties
  • Other Canada contracts are 6 months behind

For sale Games

  • All for sale games: Alpha 2 Pro Series V32 and Pro Curve
    • Pro Curve: curved LCD with a touch screen over it.  This year, they have 10 new game mechanics on the Curve and 17 titles which will ready in 6 months
    • Some new game features include Stacked Wilds and Ratcheting Wilds
    • They can do more things video wise.   They also have a 3 reel Curve similar to BYI's 3 Reel mechanicals
  • New interactive games: Fishing for Loot and Total Blast
    • Fishing for Loot has a male and female version. Total Blast  has a video game like feature in the bonus round with a the appearance of skill based element.

Game operations

  • Wheel products are doing great.  In general, BYI is starting to stagger the content for game operations WAPs to minimize cannibalisation
  • BYI acquired 2 new brands: Michael Jackson and Grease
    • Michael Jackson is the first surround chair for BYI.  It also has a U-Spin feature.  Michael Jackson release targeted for calendar Q2 2012.  Grease is designed by Cash Wizard designer ( which already has an install base of 700-800).  Grease has 7 bonus rounds and will be customized at each casino.  Target release date for Grease is Calendar Q1 2012.
  • Over 2K cash spins out there (U-Spin/Cash Spin)
  • The concept is you can have skill in appearance but it still has to be random, at least where cash prizes are at stake.  Atari Pong was approved but didn't get traction since the machines were not ergonomically popular. iDeck helps solve some of the issues Pong had.
  • Their new boxes, even the top boxes, are 100% digital - making the replacement of titles much more seamless