That seems to be the question a lot of online gaming operators are asking themselves at the moment.
Regional markets seem to be the new online gaming battlegrounds for the established and less established operators. The pronouncements by the EU competition commissioner (Charlie McCreevy) that regional country markets need to open up their electronic borders to online gaming operators has encouraged a stampede into (primarily) under-developed EU markets.
Established operators like Paddy Power (Ireland), Ladbrokes (UK), Expekt (Austria) and CentreBet (Australia), have market-leading presences on their home turf but are now widening their net to target in-country bettors in immature markets such as Spain, France, Germany and Italy. They are also competing with newer operators like Fubo.com, Gnuf and PartyBets.
So – the question is – if you have a market leading brand and product in a particular market, does this translate to a natural success in a new regional market or you could say…
…if you have built it, will they come? It’s a question that’s on the minds of a lot of people, spending a lot of cash in the gaming space.
These “new” markets include Spain, Italy, France and Germany. The challenge is to localise a proven product in to markets that a) don’t have the same historical betting mentality as maturer countries and b) provide a betting and gaming experience that reflects the needs and wants of those new markets.
A lot of operators ahve had a fairly easy ride in their home markets. The value of really being first to market (in the online space) in certain countries has given operators like Paddy Power, Sports Interaction, BWIN and CenterBet a real head start and has generated a lot of revenue, in a short period of time.
These revenues have then allowed and supported further customer acquisition activities, as well as ensuring healthy balance sheets. This is where the “Field of Dreams” analogy starts to rear its head…
There is evidence to suggest that operators that have successful operations in their own market, have assumed that by simply replicating this product and overall experience – in another local market eg: Spain – that the customers will continue to roll in. “We’ve built it, they will come…”. And yet, it seems like there’s a harder battle on the cards here.
For example, when Ladbrokes announced that they were going to target the Italian market they talked about a 5 year plan and an investment of £100 Million. That was in 2006. They did secure an Italian license, and also announced that they would start by investing £1.3 million in an Italian odds-setting service. Over a year later, Ladbrokes have no more than 800 Italian accounts in betting on their site. That doesn’t seem much of a return so far…
Paddy Power have pushed into Spain, it’s been a significant investment and my sources close to Paddy Power tell me that number of funded active accounts are low – and this is borne out by the fact that in their interim statement of the 3rd September in ’07 – there is no mention at all of their Spanish (or for that matter other local market) numbers. That may seem like a bit of a stretch by me – but I know PP’s fondness for numbers – and they ain’t there.
There’s also a lot of other info that I’ve picked up from people involved in the industry, pointing to a real dogfight in the new local markets. In particular, I’ve been talking to the people who provide the software to operators (that I deal with regularly) and they’ve seen slower than expected growth in these areas.
Why is this growth slow? Here’s my 2c…
* Poor localisation by operators – a failure to appreciate the local nuances of language, syntax and tone has meant that the localised product may be theoretically correct, however it doesn’t read or scan correctly.
Think of it as the equivalent of welcoming someone to your country by hositing their national flag – but outting the flag up, upside down.
* Misunderstanding the “local” mindset – just because a country may be passionate about sport, doesn’t necessarily translate to a passion for betting. There needs to be a holistic approach that recognises that the reason that there may not be a local passion for betting and gaming because there hasn’t been a historical culture of betting. Educate the local market, give them opportunities to try simple things ie: a “How To Bet” tutorial focusing on a simple over/under bet.