ow, International Game Technology is involved in research and development on its next generation of server-based systems that allow casino operators to manage and change games and lets players switch games without leaving their seats.
"IGT invested us$ 189 million or 7.5 percent of total revenue in R&D in fiscal 2006," Matthews said at the company's annual meeting. "This year, we plan to invest more than us$ 200 million in R&D - more than our next three competitors combined."
Among new games the company introduced over the past year or has in the works involve group play in which several people seek the same jackpot, including progressive ones.
"It's not just winning - it's having people know that you won," Matthews said.
With the decline in slot replacements, IGT reported a flat first quarter on January 18, and share prices have since fallen about 15 percent. Shares gained a 2.46 percent, to close at us$ 39.95 on the New York Stock Exchange on Tuesday after Goldman Sachs upgraded its recommendation from neutral to buy. Shares had traded from us$ 33.11 to us$ 48.79 in the last 52 weeks.
"Our 2007 survey showed that there is tremendous interest in downloadable gaming (72 percent of slot managers said they would install the games)," analyst Steven Kent wrote in a client note. "Increasing realization of the downloadable opportunity is a long-term catalyst." In the short term, Matthews said the company intends to continue to double its earnings per share every five years - 14 percent a year - although he conceded that would be challenging given the listless growth of the industry.
Along with adding new games, he said the domestic market had grown with the approval of gambling at race tracks in Pennsylvania, Florida and Arkansas, five casinos in Pennsylvania and efforts by tribes in California and Florida to upgrade their casino contracts. Internationally, he said regulatory changes in Japan could generate the replacement of 1.5 million units by the end of September.
While the huge market in Macau, which surpassed the Las Vegas Strip last year as the world's gambling mecca, is largely driven by table games, IGT is developing machines that replicate those games without requiring a dealer. "We are the global market leader everywhere we serve," Matthews told some 250 shareholders at the meeting - most of them IGT employees.