Aristocrat to over a bevy of new games amid digital growth spurt
Aristocrat Leisure has more than a dozen mobile video games in the works.
The Australian Financial Review reports 19 games are in the pipelines for the $20 billion gaming machine giant, which has stamped its authority in the digital sector after it drove the company to an after-tax profit of $752 million last financial year.
The result included a near $2 billion revenue injection – more than 40 per cent of the income reaped – from the digital segment.
Aristocrat chief executive Trevor Croker said this would continue to build.
The release of the financial figures on Wednesday triggered a surge in Aristocrat’s share prices, which traded up almost six per cent oat $33.62 in afternoon trade on Wednesday.
“It’s a significant business in its own right. I’m confident in our ability to grow the digital business,” Mr Croker said.
The chief executive confirmed there are 19 games in the pipeline, after stating his satisfaction with the contribution of subsidiaries Big Fish and Plarium.
The pair of game developers entered Aristocrat’s stable early last year, meaning the 2019 financial year is the first full reporting period involving the subsidiaries.
“What we’ve been able to offer them is our capacity to grow and invest for growth in them for the longer term,” Mr Croker said.
Digital game acts as a the pin up for future growth
He drew particular attention to Plarium’s RAID: Shadow Legends, a turn-based role-playing game, the first Aristocrat venture into the genre.
Mr Croker said: “The game is already delivering very significant growth numbers and delivering considerable revenue to the business. It is still scaling quite well.
“What this has taught us is that we can go into adjacent genres within the digital business and be successful. It has shown us how to scale similar games quickly.”
The potential of a digital business prompted chairman Neil Chatfield to declare the future for the company was global and digital.
The 64-year-old stepped down as Seek chairman last December, but remains on the boards of Costa Group and Transurban Group and said there was much to be excited about, not least the potential for further growth and expansion into digital when he spoke to AFR in March.
There were some issued to be ironed out he said, including how to best keep the conservations flowing with a chief executive poised to move to the United States – but for Chatfield, the opportunities were enticing.
“Every company needs to be bold,” says Chatfield, adding that few industries have successfully married digital and legacy businesses. He sees that as one big opportunity at Aristocrat.
Aristocrat has its sights set on the world
The other is the potential for further global expansion.
The success of their digital business has not meant Aristocrat would be seeking to wind back operations of its land-based gambling machine operations anytime soon.
“We still have a long runaway on our land-based business. It continues to present opportunities, not just taking share against our competitors, but also entering new markets,” Mr Croker said.
He said the opportunities were small compared to those of the digital business but did not think there was a tug of war between the segments.
“I don’t see it as a trade-off at all,” Mr Croker said.
“We’ve got a large addressable market in the digital world where we are only an emerging player, and we’re getting stronger and stronger in the land-based business.”
Aristocrat’s land-based operations in the Americas, which reeled in $1.9 billion, was the only segment to better the digital business.
And overall, the pair contributed $3.7 billion in the year ending September 30, or 84 per cent of the $4.4 billion of revenue Aristocrat recorded for the 12 months.