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Aristocrat’s rise linked with digital revolution

Wed, Aug 14, 9:03am by Staff Writer

Aristocrat is a global gaming provider and game publisher and the largest Australian gaming company with a current market capitalization of $18.9 billion.

After listing on the Australian Stock Exchange in 1996, Aristocrat Leisure initially found its success in the manufacturing of gaming machines, Yahoo Finance reports.

Amid fears of tightening regulation and the ethical scrutiny placed on gambling in recent years, it decided to diversify its operations into the lucrative mobile gaming industry.

In 2017, it acquired the Israeli based studio Plarium, shortly followed by the Seattle-based gaming company Big Fish Games.

These short years have seen unprecedented growth in the digital gaming segment, which now contributes to 39 per cent of total group revenue.

With many works in the pipeline, and collaborations with huge brands such as Disney, Aristocrat Leisure is well on its way to becoming a powerhouse in the $32 billion mobile gaming industry.

Driven by these strategic investments, the group achieved an extraordinary result for the 6 months ending March 31, 2019.

Total revenues grew by a staggering 35 per cent to US$2.1 billion, with net profit after tax up 34.9 per cent on the prior corresponding period.

Despite an expectedly slower demand for gambling products in the Australia and New Zealand region, its profits were more than compensated by a record 17 per cent growth in earnings from North America.

The importance of the company’s international earnings are further emphasized when its reported operating revenue growth of 29.8 per cent is compared to a constant currency growth of 20.8 per cent – highlight the role of currency diversification.

Even so, both of these figures are dwarfed by the staggering 37 per cent revenue growth in the digital segment, thanks to a full year contribution from Plarium and Big Fish Games.

Aristocrat names new land-based CEO

Aristocrat has brought all of its land-based operations under a global chief executive officer, calling the move the next step in its evolution and growth.

Intergame reported last month that Mitchell Brown has been appointed CEO of land-based, responsible for all of Aristocrat’s regulated gaming business worldwide.

At the same time, chief financial officer Hector Fernandez has been promoted to president of Aristocrat Americas, replacing Matt Wilson, who has left the company and accepted another position elsewhere.

Creating a single global land-based business “will facilitate thorough and coordinated delivery of transformation and growth projects across our regional teams, along with more integrated product and technology strategy and seamless execution,” Aristocrat Group CEO Trevor Croker said.

“Bringing together our land-based operations also positions us to more effectively serve an increasing number of global customers and sets the business sup for its next phase of growth.”

Bowen has spent 15 years in senior roles in all of Aristocrat’s major regions, including the Americas, and has worked to turn around the business in Australia and New Zealand, Croker said.

Online entry key to profits soaring

A foray into online games appearing to be paying off though, with the company booking a huge 17 per cent rise in first-half profit to March 31st, IT News reports.

The encroachment of gambling interests into traditional games spaces is what Aristocrat has gambled on, and its paid off.

Their digital bet is chalking up positive numbers with revenue growth in its digital division up 37 per cent to US$586 million, delivering earnings of $175.8 million.

The poker machine and casino industries have long been an exercise in computing dating back to the 1980s.

Put away all of 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.

What has changed dramatically over the past decade is the rise of online casino 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 breath of Aristocrats digital strategic context is laid bare in its latest investor pack, with numbers in 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$2 billion.

“Through acquisitions of Plarium and Big Fish, Aristocrat is now targeting a US$32 billion market opportunity,” the company said.

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 12.4 million users every month.

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