Light & Wonder’s CEO Matt Wilson breaks down the company’s Asia strategy, core concentrations, growth areas and most exciting avenues. While remaining confident in its tried-and-true products, the company is also doubling down on its three main segments – with expectations for growth across all fronts. A confident approach is pushing the company to meet its proposed financial targets, with expectations for high CAGR as it aims for the number one spot in every market.
Since joining in 2020, what have been the major developments with Light & Wonder?
Since starting in 2020, pretty much everything has changed. I started in March of 2020, which is maybe the worst time to start in a new job in a new organization. But, you know, I think COVID was a real catalyst for us to think about things very differently in the organization. And I think, you know, we went through a big strategic review process, and we transformed from Scientific Games into Light & Wonder.
What’s the impetus behind acquiring the remaining shares in SciPlay?
So I think the way the best way to think about Light & Wonder now is… Scientific Games was this diversified group of assets, everything from a lottery business, to a sports platform business to a content business. And now, as Light & Wonder, the best way to think about us is we put content and technology at the center of our universe. And then we have these three, what I call a unique but complementary, businesses.
We’ve got the land-based business, which is really about building great table games, great slot products, and deploying them on casinos all around the world, including here in Asia. And then we also have an iGaming business, which is about taking those games, deploying that into the gaming ecosystem in Europe, in the UK, and also in the fast-growing US market.
But then, the third leg of our stool is our social casino business called SciPlay. We’ve owned historically 83 percent of that business, and we just made a tender offer to buy back the remaining 17 percent.
Really, I guess what was behind that was trying to clean up the platform and just make the businesses kind of fit together in a really streamlined way, really taking the complexity out of the operating model and just having this hyper-focused organization about building really great games and deploying them across these three complementary businesses.
How much is Asia contributing to Light & Wonder’s results?
It’s amazing to see the rebound that we’re seeing right across Asia, in the Philippines, Singapore, but even here in Macau. I think even six months ago, people were really questioning the resiliency of this market, and maybe suggesting wouldn’t come back. And I think, my sentiment is challenge or question the Asian gaming market at your peril.
It’s exciting to see the rebound. It’s a testament to the operators out here and the resiliency. So it’s a fundamental pillar of what we’re trying to do in the gaming business. It’s a market we’re completely committed to. We’re building very bespoke product for this market by a team that really understands that that’s driven a lot of our success. And so we see this rebound continuing in the coming years and intend to play a significant role in that.
Where do you see the most growth potential in Asia?
I think the Philippines is a hyper-growth market for us and the industry at large. I think over the next three years, we see significant expansion in the Philippines. We also see great opportunity here in Macau as the operators are rebounding and looking for fresh products on their floor to drive engagement with players.
So, I think it’s a combination of all the markets. I think one of the interesting things that we see is kind of a convergence in the product requirements across all of the markets that we operate here in Asia. So, a great game that we build for Macau can quickly be taken to the Philippines or Singapore. So, we’re here to participate and support the market wherever the growth is, and we see it across multiple different areas, but in particular the Philippines
How has Light & Wonder’s secondary listing on the Australian Stock Exchange helped?
We listed on the ASX, that’s our secondary listing, our primary listing is the NASDAQ. And really what we were trying to do with that secondary listing was tap into the investor base here in the Asia Pacific region, both in Australia and in Asia in general. So, I think the Asian and Australian investors have a really deep understanding of the gaming market and investors love nothing more than investing in something they really understand.
And I think many investors have had success, investing in the space and so we wanted to bring an offering to market that was unique and interesting for them. And we’ve seen a great pickup. We listed in in in May earlier this year and we see now almost $2 billion of market cap traded on the ASX, so it’s been incredibly successful.
How important is it to have established IP versus creating original content?
I think established IP and franchises is really important. I think we are the benefactor at Light & Wonder of being this kind of roll up and aggregation of multiple different companies. We are WMS and Bally and Shuffle Master. If you think about those companies, which were acquired to make up what is now Light & Wonder, they have unbelievable franchises under the hood.
We’ve spent over a $1 billion in R&D over the last decade, building these games that players know and love and really core to our strategy is taking those great franchises. DFDC is a great one here in Asia or […] and really redeploying those across our entire ecosystem. So, building the next generation of those for the casino floors here in Asia, but also then deploying those same games into the social casino business and also into the iGaming channel. So again, we have these three unique but very complementary businesses to deploy these franchises across
How is Light & Wonder working with the shift away from in-person gaming?
We’ve done a lot of research around this actually. And the research that we’ve done suggests that the younger consumer is really a cross-channel native player. So, they’re looking for these experiences not just in the casino environment, but also in mobile, free to play, spaces and in iGaming channels, where they’re prevalent, in the US in particular.
So I think adapting the offering to understand that there’s this digital native consumer, coming through the demographics, the next generation of gamers are going to look for something vastly different from the prior generation. And I think that goes back to our strategy of being kind of omni-channel present, we’re across all the different verticals, we’re great in land-based, we’re great in the digital version, so we’ve positioned nicely for that kind of evolving shift in demographics.
Will there ever be a slowdown in your audience base?
No, I think consumers are still looking for that those great land-based experiences. There are different use cases. Players are playing on their phone, at home, that’s a very different experience to go to a casino like you see here in Macau, and the amenities and benefits that come with that. So I think they’re very complimentary in terms of kind of the user consumption model.
Are you expecting growth across all three divisions, or will one shine?
I guess we’re the benefactor of the ability to really invest behind our ambitions as Light & Wonder. We cleaned up the balance sheet, we created a much financially improved capital structure. So now, we’re able to invest in all three of these businesses. And we saw in the 2Q23 results, double-digit growth across all three businesses, we’ve seen that for three consecutive quarters now. And nothing suggests a slowdown in the businesses over time. And I think all three are positioned nicely.
It really comes back to this idea of: invest in great content that players want to play, and then deploy them in all the channels that they want to play them. So, I think the business is positioned nicely for growth, we’ve put these investor day targets out to 2025 of $1.4 billion in EBITDA by 2025. And we feel really convicted that we can get there, which is a 15 percent CAGR (compound average growth rate) from here to that number. So yeah, we’re a growth business that’s driving a lot of excitement in the investor community. So we’re positioned really nicely for growth.
How are you vying for the #1 stop in all the markets that you’re in?
This is the thing that gets us out of bed every day. It’s about really driving behind your ambitions to achieve that number one position in all the markets in which we operate. That’s where we want to get to, you know, we’re closer in some markets than others. I think in Asia, we’re a number one supplier in this space, that was evidenced by the conversations I’m having with customers this week. So we’re positioned really nicely in this part of the world.
But there are other parts of the world where we’re a clear number two, and the challenger brand. And so we’re pushing really hard in Australia, in the US and in the iGaming market and in Social Casino. So yeah, the job’s never done. So we’re pushing really hard to get to that number one spot. And with that, we’ll come great financial benefits for the investor base.
What else are you hoping to see going forward?
I think a culture and a leadership group can be really galvanized by a situation like the COVID pandemic, I think we’ve come out of it stronger. I think we have a team that’s really unified, that wants to win, I think we talk a lot about the financial outcomes are driven by the ground game.
It takes a team that wants to be together, and wants to be on a journey, and we really have that here at Light & Wonder. And so I think we’ve positioned nicely. I think the team chemistry and dynamic positions us really nicely to continue the growth and really take advantage of these opportunities that are emerging through the recovery in Asia and in other parts of our business.