A bold as brass punt by Australian gambling and poker machine giant Aristocrat Leisure to go global by diversifying into online games, content and digital transactions appears to be paying off quickly, after the company booked a whacking 17 percent lift in first-half profit to 31st March 2019.
Like it or loathe it – which many critics of the encroachment of gambling interests into the traditional games space do – Aristocrat’s big digital bet is quickly chalking-up positive numbers with revenue growth in its digital division rocketing 37 percent to US$586 million (it’s US-based), delivering earnings of $175.8 million, a jump of 17 percent.
The poker machine and casino industries have long been an exercise in computing dating back to the 1980s.
Put away all the flashy graphics, bells, whistles and blinking buttons and the hardware is essentially a tricked-up and networked gaming PC running software programmed to deliver to the house, albeit with some winds for the punter along the way.
But what’s changed dramatically over the last decade is the rise of online casinos and card games like poker that allow humans to compete against each other from almost anywhere in the world, a trend that has seen many jurisdictions legally ban online gambling – partly out of fear of social harm, usually out of fear of revenue loss from officially licensed outlets.
The breadth and sheer chutzpah of what Aristocrat dubs its “digital strategic context” is laid bare in its latest investor pack, the numbers it pitches to reel in institutional investors.
“In 2014, Aristocrat only participated in the Core Slot segment of Social Casino, which represented an addressable market of less than US$2bn. Through acquisitions of Plarium and Big Fish, Aristocrat is now targeting a US$32bn market opportunity,” the company said in its investor pack.
Aristocrat pounced on Big Fish in January 2018, snapping-up the free-to-play gaming giant for $1.3 billion and giving it access to around 12.4 million users every month. Its hits to date include Gummy Drop!, Big Fish Casino and Fairway Solitaire.
And there’s plenty more on the way with gaming action for the whole family. In January Big Fish announced a collaboration with Disney “to develop and release Toy Story Drop!™, an all-new free-to-play match-3 puzzle adventure game on mobile.”
“Our talented studios and developers have been perfecting games in the match-3 space for over a decade. We couldn’t be happier to introduce the world to the new and challenging puzzles in Toy Story Drop! ahead of the anticipated next instalment in the film series,” said Big Fish Games’ managing director and president, Jeff Karp, in the announcement.
Aristocrat, is of course, highly conscious of its social responsibilities going forward. It’s not just about balance sheet growth and dividends.
“It should come as no surprise that we take our responsibility to do the right thing for our customers, players, shareholders and each other, very seriously. Being a responsible business and a good citizen is critical to our vision of a long-term, sustainable and vibrant games industry. It’s what we’re proud of,” Aristocrat’s corporate social statement on its website says.
Or you could consider the pitch that Big Fish makes on its Google Play home page.
“If you love puzzle, strategy, and logic games that challenge your brain, you’ll be addicted to the unique card layouts and special “hazards” that you won’t find in standard card games like Pyramid, Klondike or Spider solitaire.”
Whatever you think, revenue and profit have both surged on the back of the Big Fish deal.
Aristocrat delivered a half year net profit after tax (before amortisation of acquired intangibles) $422.3 million, for the period to 31st March 2019 a leap of almost 17 percent on the back of stronger revenue which skyrocketed almost 30 percent to $2.1 billion.
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