Aristocrat Leisure (ASX: ALL) is keeping its cards close to its chest amongst talk that it could be looking to taking advantage of the US gaming industry consolidation, brought on by the improving economy after the GFC. It has said that it wouldn't be taking an active role in it, yet when there is online gaming opportunities like Facebook's (Nasdaq: FB) tie-up with Zynga (Nasdaq: ZNGA), money still can be made.
Aristocrat, a developer, manufacturer and distributor of gaming machines for gambling venues, has been active on the online front, last year buying Product Madness, one of Facebook's largest operators of slot games, and this year launching its online casino games system called nLive in the North American market.
For Facebook, slot and gambling style games offer a gaming experience yet there is no real money payout. Jamie Odell, the company's CEO and managing director, said that some people just like to play gambling games, and are willing to pay cash for virtual currency to do so. He expects to see more "real money' mobile gambling games grow as more governments allow virtual casino games on the internet.
Having begun working with the US-based GameAccount Network to develop a gaming software business, it also took part in the sales process of Multimedia Games (Nasdaq: MGAM), a slot machine maker, and is buying the rights to some of the most popular US TV shows like "The Walking Dead" for new game themes.
What really attracts the company to online gaming and gambling are the very attractive profit margins. Although one of the largest manufacturers of gaming machines in the world, its online customer base increases along the growth of sites like Facebook and smartphone networks.
CEO Odell said, "Once you get the cost base in place, everything else is virtual, there's no hardware. If you take the player base, which through Facebook is clearly millions, and the games take in, let's say, 30 cents per player per day, the math becomes quite easy."
Australian companies like Jumbo Interactive (ASX: JIN), an online lotteries operator, have also been entering the $60 billion US lotteries market because of the sheer scale of size and growth potential when compared to the $4 billion domestic market.
Foolish takeaway
As some industries, like clothing and electronics retailers, have struggled to compete with online sales and service providers, and are only recently revamping their business structure to save themselves from being left behind, gaming companies stay on the cutting edge of technology and stand to reap a lot of money for embracing new ways.
Be on the lookout for disrupting technologies because they reset the business landscape, and offer the next stage of innovation.
Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."
More reading
- Indonesia to buy 1 million hectares of Aussie land for beef
- More growth planned for Santos in PNG
- One reason to avoid buying bank stocks
Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
