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WMS losing market share? It appears that way, at least for the last two quarters. Even more surprising is that IGT has actually gained market share over that time. See the first chart.
  • Part of the explanation is that slots to new casinos and casino expansions comprised a bigger share of total slot sales. IGT’s market share into the replacement market always lags because, as the industry’s largest supplier, the company offers volume discounts and ancillary products and services if operators guarantee a target share for a new casino. As can be seen in the second chart, new unit sales jumped to 75% of total units in Q2 2008, although it dropped off dramatically in Q3 while IGT still maintained its market share.
  • IGT also tends to do well in locals markets due to the popularity of video poker, a category which it dominates There were a number of new locals oriented casinos that opened in Q3. Quarterly market shares can fluctuate significantly. However, it is somewhat encouraging that IGT’s market share seems to have stabilized at around 40%, about where it was from Q4 2006 to Q3 2007.
  • Overall, Q4 sales to new casinos and expansions are likely to be up around 40% year over year. No wonder there was so much optimism at G2E last week. The suppliers are generally having a good quarter. I’m a lot less optimistic about 2009, particularly the first half.