Here is our quarterly update on slot ship share.
IGT appears to be gaining traction even if the September pull forward is normalized. Konami was also a big winner in 2H 2012. It comes as no big surprise that WMS was a big share donor in the second half of 2012, while the other top 5 manufacturers gained share at its expense.
WMS’s share fell 5% in 2H11 to 19% which represented an acceleration of the 4% share loss WMS experience in 1H11. Most of the hit that occurred in 3Q11 when their estimated ship-share fell to just 15%, down 8% YoY. WMS’s 4Q recovered to an estimated 22% (down 2% YoY) if we include the 957 deferred units that were shipped but not recognized in the December quarter. Excluding the 957 deferred units, WMS’s ship share in 4Q would have been 17%, down 7% YoY and 16% for 2H11. WMS ended the year with 21% ship-share and we believe that WMS’s ship-share in 2012 will also be around 20%. 1H12 will likely be a period of share loss for the company. As we wrote on WMS: NOT OUT OF THE WOODS YET on 01/27/12, we continue to be concerned by WMS’s pattern of pulling forward demand. Despite the recognition of the sale of 800 Maryland units in 1Q12, we estimate that WMS’s share will drop to 17% - largely due to the deferred units counted in 4Q11.
IGT picked up the most share in 2H11. We estimate that IGT’s ship share increased 2% YoY to 30%. All of its ship share gains were driven in Q3, when estimated ship-share reached 40% - their best market share since 2Q08. IGT’s 4Q ship share plummeted to only 21%, driven by the pulling forward of demand into their year-end September quarter. However, combined, those quarters showed an increase. For the year, IGT’s ship share also increased 2% to 30%. With all of the new openings in 2012, IGT should generate an increase in ship share since they usually get higher market share of new openings and they are the only game in town when it comes to video poker. We estimate that 1Q12 ship-share will be 34% for IGT.
Konami, BYI, and ALL gained between 80-110bps of market share in 2H11. Konami gained 110bps of market share due to a very strong December quarter where its share spiked to 18%. Part of the spike in 4Q share was because Konami didn’t recognize any Kansas units in the 3rd quarter, which is also why their ship share decreased YoY in 3Q. For the year, Konami’s ship share increased to 15%, up 2% YoY. We believe that further ship share gains will be a challenge for Konami. The company could experience a ship share decrease in 1Q12 since 1Q11 ship share was a record 20% for the company.
BYI gained 90bps of market share in 2H11 to 15% with all of the gains skewed to the December quarter. We believe that December share gains of 2% YoY were driven by strong video content and a greatly improved Alpha 2 box. For the year, BYI’s ship share was flat YoY at 15%. BYI should continue to be a share gainer in 2012, with high-teens ship share.
For the first time in a long time, ALL gained market share in NA. 2H11 ship share increased 80bps to 13%. While ALL does not break out the quarterly detail, they did say that shipments were back-end loaded towards 4Q. Of the 4.4k units shipped in 2H11, we assume that about 2.5k where shipped in 4Q11, implying 4Q share of 15% vs. 13% in 4Q10. Like all the other manufacturers, ALL’s strongest ship-share quarter coincided with their fiscal year end. We assume that ALL should be able to maintain their ship-share of 12% in 2012.