BYI: UPDATE FROM LAS VEGAS

Here are the BYI notes from our meetings in Las Vegas last week


Replacement demand:

  • Casino budgets were set by corporate in October/November- so calendar 2009 will remain lackluster
  • They are not expecting big improvements in 2H09
  • They think normal replacement is 7-10 years. So 70-100k is "normal"
  • Ohio, IL and Italy are all centrally determined markets and BYI claims that WMS can't really participate in those markets

New casinos/markets:

  • BYI attained 20% market share at City Center, IGT got 50%, WMS got 22%
  • Illinois - They are meeting with a distributor in Chicago.  Video poker pays back 98% so you need a multi-pack offering. They don’t think that IGT gets more than a third. Systems is another big opportunity.  With respect to timing, they will have a better idea on timing Thursday
  • PA - doesn't think VLTs will happen

Participation:

  • They only have a few products in the WAP category. They have 700 digital towers in the queue - lap or fixed fee
  • BYI differentiates their participation games by performance solely
  • They have 14 test banks to see what works.  Licenses are tough to get and expensive. They are launching new games in the WAP business, which is a very tough segment to penetrate
  • WMS is doing a great job in WAPs and community gaming. WMS is being very aggressive

Mix:

  • Steppers: strongest space
  • Video: think that this will be their strongest G2E
  • V32 video is performing very well for them. They don't have great video for cinevision. They will do a bunch of wheel games too

International:

  • The international market is a huge opportunity for them - 16% of revenues and 22% shipped
  • Europe is 70% Novamatic
  • Australia - ALL owns that market 60-70% but is 3rd in terms of ship share. BYI is about 20% there
  • BYI has very good relationships in some European markets/Australia
  • They are re-launching in Australia this month.  A monopoly expires in Victoria in 2012 - so that's a big opportunity consisting almost entirely of video machines
  • They are working on South America/Europe. They are getting bombed by distributor type deals

General commentary:

  • They don't think the economy is recovering - just bouncing along the bottom
  • No question that new units will be way down next year

Products:

  • They have 40k S6000k’s in the field
  • They have 46 titles on the big spinning reel games. Digital towers.  V32 (tower like - similar to “Deal or No Deal”).  Have 7 new titles vs just one
  • Dual vision is like a wheel of fortune game - 2 people can play together.  The performance has been very strong - couples play it. Daily fee or participation
  • Fireball - it’s their hottest title. Digital tower series
  • Power strike - very strong - cinevision
  • Reel money - V32 really cool. Cash meteors - can spin - touch screen
  • Cash wheel - spinner on cinevision