J.P. Morgan -14th Annual Slot Market Survey
Light and Wonder gaining momentum
Asia Pacific Equity Research
September 11, 2023
In this year’s 14th Annual J.P. Morgan Slot Survey, we investigate the health of the Australian slot machine market, and assess the shifting dynamics of industry participants moving forward. In short, our key findings include: 1) the outlook for Light and Wonder looks positive, however Aristocrat remains the clear industry leader; 2) Replacement spend to increase; but at a lower pace than 2022; 3) Cabinet inflation to continue; 4) per player expenditure down and declines appears to be weighted to larger venues.
• Aristocrat remain dominant…however outlook for LNW promising: Aristocrat remains the clear leader across all categories including: 1) 12-month performance; 2) Highest floor share; 3) “new” floor allocation; and 4) linked jackpot performance. However, Light and Wonder has shown a significant improvement year on year. 77% of survey respondents (representing ~90% ofmachines) intend to increase their allocation to Light and Wonder in the next 12 months; versus 25% in 2022 (representing ~60% of slot machine. In addition, 90% of responses (representing ~96% of surveyed slot machines) saw an improvement in Light and Wonder’s game library over the last 12
months. Notably, when weighted by slot machines represented, Light and Wonder appears to be gaining more floor share than Aristocrat at present.
• Replacement and conversion cycle: The proportion of venues intending to increase spend on replacement machines was 52% in this year’s survey; down compared to the 71% of venues looking to grow in 2022. In addition, 2023 also has the highest level of respondents expecting a decrease in replacement spend since 2017. At least part of this outcome appears to be a shift in allocation towards increased conversion expenditure expectations; 52% of respondents (representing 76% of machines) are expecting growth in conversion spend over the next 12 months, versus 50%of respondents in 2022 (representing 73% of machines).
• Cabinet inflation and per player spend: Inflationary expectations remain elevated. 87% of survey respondents expect prices to increase at least 2% over the next 12 months; in-line with last year’s ~88% of respondents that expected prices to rise. The weighted average 12-month price change (based on percentage of respondents) is expected to be +3.3%, in-line with 2022 and well above the historical range since 2017. Conversely, given the cost of living pressures experienced over the last 12 months, per customer expenditure has weakened. 39% of respondents (23% of machines) estimate an increase in player expenditure; while 48% of respondents (67% of machines) estimate a decrease in player expenditure.J.P. Morgan, Slot Survey