Here is the full text of the recent EGR article that I was approached to write on “The industry innovation struggle…”. This was published in the year end EGR magazine (December Issue – link behind paywall here).
The industry innovation struggle.
Why & what’s next?
1996 was a breakthrough for the betting & gaming industry. We saw both the first recognised online sportsbook (Intertops), and the first online casino (InterCasino). Interestingly – not related. Bingo appeared in late ’96 via Bingo Mania. The first recognised Poker Room product was Planet Poker in ’98.
It took a leap of faith, investment, risk-taking, and significant innovation to get these products to (initial) market, and as the industry has grown and matured, we’ve seen other vertical additions that have included Virtual Sports, Live Casino, Financials & Lotteries.
These verticals are between 15 and 20 years old. We’ve seen little that’s been adopted into the mainstream of the channel verticals since these eight. Sample areas of (attempted) vertical product innovation that have had significant investment included Social Betting (PP + BetDash, 888+Magic888 and apps like BetYou and YouBetMe) and Financial Trading, yet neither of these areas command any significant real estate today on the bulk of mainstream Operators.
I’ve at on boards & in meetings for companies that have products that they believe may be either “disruptive” or brand new for the betting & gaming industry. The first question from industry incumbents & Operators tends (without fail) to be “who are you live with?” – and if the answer is “no-one yet…” the reply in virtually every case tends to be “…come back to us when you are…”.
If I look at my betonexperts experience, combined with conversations that I’ve had over the last few weeks and months – there is a consistent level of opinion (from Senior industry people) that the industry is really struggling with obvious innovation.
Reasons? Primarily, the industry is used to clear & consistent ROI from the “easy money” of incumbent products and the industry has been slow to embrace people from outside the industry. We’ve been choosing people from inside the industry to oversee innovation – and that’s meant that the horizons being explored are potentially too inward-looking.
Some opinions? William Mace, Head of Innovation for Unibet believes that one of the reasons that the industry has struggled with innovation is because “…the industry has simply taken an offline (betting) experience and simply moved it online…”. Carla Maree Vella, CEO of Optimizer Invest (who have invested in multiple start-ups) believes that “…aligning a gaming company to entertainment formats people are familiar with will be key (to innovation)…”. Ari Lewski, Director of Digital Sports Tech (who’s customisable prop bets product has recently been integrated by Coral) said “…the feedback to us (so far) is that Operators see a large untapped area for player betting as there is a disconnect between demand and supply (of markets)…”.
From a wider industry perspective overall business innovation has been driven via two key areas. The first is the very public M&A environment that’s been prevalent over the last 2 years or so. The second has been the move whereby we’ve seen the powerful Affiliates move directly into the Operator space.
The most obvious example of how M&A can drive business innovation is the Paddy Power / Betfair merger. The former Paddy Power CEO, Andy McCue was quoted as saying “…The combined company will have increased capacity to develop new betting products and to distribute them across more than four million active online customers in Europe, the US and Australia.” Having a core fixed odds brand (Paddy Power), combined with an exchange brand (Betfair) allows the combined entity to cover all the bases in terms of the gambling demographic. Without this merger, both companies would have been forced to stretch their core competencies to develop attractive product offerings that stretched far enough to cover both the more casual and/or exchange punter.
One of the best known (and successful) examples of affiliates moving into the Operator space was the CasinoChoice / Costa Bingo family – which has ultimately morphed into BGO Entertainment.
The move from owning individual portals, to a group of complementary portals, and then making the leap to monetising players directly – has accelerated significantly in the last 24 months. The affiliates that make the leap may not be innovating in terms of product, but the move sends a message to the larger Operators that customers will go to where the best content is – and it’s this content area that looks like a key battleground in the coming quarters.
Organic search has historically driven much of the highest value customers, and global SEO is rapidly changing to focus much more heavily on quality content VS more traditional SEO tactics. I expect to see even more strong content driven affiliates moving into the Operator space in the back of this, as well as more acquisitions by Operators (of affiliates with strong content) to drive their own content innovation.
My own work, research & experience has shown innovation movement in a number of key areas. I’ve already mentioned innovation in content – but I see player betting (performance, head to head markets, etc) also an area that’s easily understood and is a clear fit with current Sports markets. It also has a clear crossover with eSports.
There are also clear opportunities for Operators to improve overall customer experience by studying how the Social Media giants curate and present content. Give people what they are familiar with from another channel and adapt & improve it for betting & gaming.
AI trading & risk management via improved managed trading services is also an area that’s grown hugely in the last 12 months, and I believe is the future of trading in the industry. Keith McDonnell (CEO, KMI gaming) made the point to me recently that “…truly innovative areas like DFS and eSports will always be compared to core revenue generators.” And maybe (in my opinion) it’s partly this attitude of “if we can’t generate similar revenues as fast, from something new, we’re not interested…” that this is where the challenge lies with Operators in terms of changing their thinking.
Final thought and potentially the biggest challenge? Be prepared to embrace risk and make failure ok. Now – there’s an innovation challenge for the industry.
Liam Casey consults with betonexperts and helps betting & gaming businesses tackle common challenges & help Senior Management get no bullshit answers when they need them. He’s available on a contract, project or long-term basis.