Inside Asian Gaming

inside asian gaming March 2015 8 Cover Story THE X FACTOR Another variable that will have a profound effect going forward on Macau’s mass-market gaming revenue—and might already be exerting its sway in the market’s current softness—is the rapidly evolving tastes of China’s middle class. At the turn of the millennium, China’s middle class was an almost negligible force. According to a study published in 2013 by management consultancy McKinsey & Company that’s come to be considered the definitive overview of China’s rising middle Mass Market’s Unbroken Run Ends | Macau Gaming Revenue by Segment 42,498 48,412 51,627 53,235 52,482 52,232 51,051 47% 49% 51% 31% 23% 8% -1% 73% 74% 74% 72% 71% 70% 68% 13,263 14,305 15,702 17,177 18,379 18,822 20,297 31% 38% 42% 42% 39% 32% 29% 23% 22% 22% 23% 25% 25% 27% 2,760 2,888 2,897 3,105 3,455 3,361 3,233 46% 47% 30% 25% 25% 16% 12% 5% 4% 4% 4% 5% 5% 4% 58,521 65,605 70,225 73,517 74,315 74,415 74,581 43% 46% 48% 33% 27% 13% 15% VIP Revenue (MOP mn) YoY Change Share of Total Revenue Mass Table Revenue (MOP mn) YoY Change Share of Total Revenue Slot Revenue (MOP mn) YoY Change Share of Total Revenue Total Revenue (MOP mn) YoY Change 1Q ‘11 2Q ‘11 3Q ‘11 4Q ‘11 1Q ‘12 2Q ‘12 3Q ‘12 “These G2 consumers today are typically teenagers and people in their early 20s, born after the mid-1980s and raised in a period of relative abundance. … They are confident, independent minded, and determined to display that independence through their consumption. UnionPay crackdown might be felt only later. Discounting the effects of the smoking ban and UnionPay crackdown would largely cancel out the mass-market revenue decline in the fourth quarter. Even without these two major drags, however, mass market growth would likely still have downshifted for a myriad of reasons, among them China’s slowing economy, the supply constraint imposed by the table cap, the lack of significant new attractions ahead of the arrival of the second wave of Cotai resorts and Macau’s infrastructure bottlenecks.