Gaming strategies in order to survive in a lean period
In 2011 the Global Betting and Gaming Consultants (GBGC) made a research on how the slump of 2008-09 affected the gambling of the most important markets of the world. From the data collected we can deduce that the gaming world, unlike what many people believe, is not exempt of the deterioration of the economic scene.
In short, the research of the GBGC highlighted that the field of amusement machines is dynamically most suitable to overcome a negative economic cycle because the decrease of the field is limited. Moreover, the field quickly raises again with the improvement of the economic scene.
In front of an economic development, generally the sports betting have rate of growth much higher than other gaming fields. The decrease tends to be more marked when the income at the disposal of the players decreases but the recovery is faster when there is an economic growth and the consumer’s feeling improves.
The field of lotteries, on the contrary, tends to resist during the economic slumps, as sales goes down not much. However, when the economic situation improves, even in a strong way, the lottery sales grow only at a moderate rate.
The field that suffers more than any others, during an economic slump, is the land based casino. The casinos are the ones that lose the biggest revenue when the economy suffers, and are the slowest ones in the recovery when the economy recovers.
Following up the research, the question is the following one: “Which are the strategies of the various gambling operators during the slump periods?”. The question is particularly relevant for the operators in Europe. Apart from Germany and the Scandinavian countries, the income at disposal of the families of all the European countries has worsened in 2011 and it will continue to worsen until at least 2013. The research of GBGC wants to analyze the strategies of the operators to overcome the lean periods.
William Hill (WH), the British giant on sports betting, in 2011 increased its sales both on its stores and on the online operations. Active players on the online part increased from 1.34 million to 1.40 million, an increase of 5%. At the same time, the yield per player increased from 187 pounds to 228 pounds, an increase of 22%, considering the decline of the income at disposal of the English people, the result is quite amazing. However, the number of new customers has decreased from 808 000 in 2010 to 790 thousand in 2011. In addition, the acquisition expense for each new customer increased of 43%, from £75 to £108. In fact, the marketing budget for the sole online field rose from £61 million to almost £86 million, an increase of 40%. So the WH made two bets, and it won both of them. The first one was that new customers will spend more money than WH needed to acquire them, and the second one that the acquired customers would increase their “spend”. How did it do? Mainly increasing the channels and the applications that clients can use to play and wager, it adopted a strategy of “cross selling”, that is to say it launched promotional activities and games that involve both the shops and the online customers, it turned the sports wagerer in poker, casino and bingo players. This fact allowed the increase of collection for each player. Furthermore, the effort to expand the gaming channels to include the smart phones gave good results, in 2011 the collection by mobile phones has increased over 500%.
IG Index, which is skilled in betting on the financial market, the spread betting, has just released its results for the third quarter (in England the financial year ends on March 31). The bets of the IG customers in Europe decreased of 18% compared with the same period in 2010, but the turnover increased of 4.2% with the increase of the number of customers of 26.7%. Unlike WH, the IG didn’t acquire customers by increasing its own marketing budget, but making some investments on the technological platform (a platform rich in information that allows instant payments) and offering more innovative services, such as the new Insight program, which allows customers to analyze, for free, various financial markets. The IG, as the WH, has also invested to enable its customers to bet with the mobile phones like iPhone and iPad, Android, Windows Phone 7 and Blackberry.
The use of technology to acquire and keep customers also generates highly innovative products.
Advant Games, a Finnish software company that provides services for the operators, developed a product called TiltCtrl. The software enables operators to detect and prevent the tilt of online poker players, that is to say, induced by frustration the players start to play more money and this leads them to lose a big amount of money in a short time. Following the tilt, players usually change site and the short time gain for the operator turns into a long term loss. This technology allows to keep the customer for a long time and it goes well with the policy of playing responsibly.
A well-proven strategy is the sponsorship, especially in sports. Bwin is perhaps the forerunner of this strategy, being the sponsor of important football teams such as the AC Milan and the Real Madrid. But Betfred, the third English bookmaker after WH and Ladbrokes, become the sole partner of Kitbag.com. Kitbag.com is an English successful firm selling sport products online. The idea is clever because the people who enter in the Kitbag websites already have the credit card in their hands.
There are also some strategies that can be defined as “reactive” ones. The Spanish casinos for example have been very damaged by the hard economic situation, in 2009 they lost 14% and in 2010 9.5% of the takings from gaming. In 2010 the per capita expence on gambling decreased of 7.3%, compared with 2009. From 2007 to 2010 the casino’s customers increased by 30%, but at the same time the takings of entrance fees (you pay to enter in the casino in Spain) decreased of 14%. It’s clear that the casinos decided to diversify the services they offer to the customers by offering discos, restaurants and bars, and someone even organizing weddings.