MGM Resorts Online Game to Attract New Customers - 5th October 2011


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MGM Resorts International is moving into social gaming in an effort to attract more gamblers to its casinos, said MGM Chief Executive Jim Murren at casino industry conference last Wednesday.

The firm fully expects to soon announce a new social media game, he said, that would be along the lines of Zynga Inc.'s popular online game FarmVille. It would allow players to pretend to be casino moguls, he said.

The game-playing industry and gambling industries, he said, "are on a collision course."

Murren was speaking at the keynote address Wednesday at a conference entitled the Global Gaming Expo.

Murren didn't provide more details about the plans. Among hospitality companies, Marriott International Inc. has created an online game that allows players to manage a virtual hotel restaurant. Marriott's game is designed to be an employee recruiting tool rather than for acquiring customers.

Murren indicated MGM's game would be for trying to grab new customers.

"The demographics of (online) gamers are really right in the strike zone of the gaming industry," Murren said, pointing to the connection between non-gambling gamers and gamblers.

MGM is also among several large casino companies pushing hard for Internet gambling to become legal in the U.S.

MGM generates most of its revenue from casinos on the Las Vegas Strip and also owns around half of a casino in the robust gambling enclave of Macau. The company's stock price has lost nearly half its value since July on concerns of the U.S. economy and, more recently, concerns about a slowdown in growth in China. The company is still carrying a massive amount of debt.

Murren has consistently been among the most upbeat among gambling operators regarding the future of Las Vegas, even in depths of the recession of a couple years ago. He said he sees a wide gulf between what he thinks the company's stock price is and actual financial results and outlook.

"I turned my Bloomberg off about three weeks ago," Murren quipped.

After a deep downturn, both MGM and Las Vegas as a whole have shown signs of sustained but slow improvement in gambling revenue this year. Still, some observers are concerned by continued bad economic signs.

"We have exceeded our forecast and that of the street the last two quarters and had a nice third quarter as well," he said. "The market is valuing us about where we were three years ago in the teeth of recession and it just doesn't connect with me because we don't see anything inside our business that would suggest that that is accurate."

The company is optimistic about growth in Macau, he said, and has developed designs and plans for a new casino there. MGM and other casinos are awaiting government approval for their new projects.

His comments about Macau echoed those of Michael Leven, president of competitor Las Vegas Sands, who on Saturday said at a conference in Las Vegas that the company doesn't see negative signals there despite investor concerns.

MGM is also working on developing around 20 non-casino projects throughout China, Murren said.

Media Man is following up.

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