Is There Anything Gaming Companies Got To Celebrate In 2008?

With 2007 drawing to a close, time has come to take stock on what has been a difficult year for the vast majority of online gambling companies. The US backed UIGEA anti-gambling legislation has made it a difficult year for most listed operators, and the smoking ban in the UK has hit traditional gambling companies harder than expected. What 2007 has shown, is that gaming firm’s need to continue to think strategically and be open to new ideas and markets. Old school attitudes inherent within the industry are being challenged by new entrants attracted to an industry with relatively low barriers to entry. As the Rank Group can testify, stand still and you will ultimately go backwards.

Rather than look backwards and dwell on the short comings of the previous year, gaming companies should take stock and focus on the key challenges that they will face in 2008.

Theses will include:

1. Television advertising
2. New markets
3. Industry consolidation

How the major industry players tackle these challenges will be key to their financial performance and industry positioning. But exactly what should they be looking out for?

1. Television Advertising

As Ladbrokes can testify, television advertising can be a tricky and expensive affair. Their first advertising campaign experienced difficulties with the Advertising Standards Agency over concerns of glamourising gambling. On the other hand, 888’s campaign has been clever, creative and new, and is clearly aimed at attracting new players to the industry. William Hill have been exceptionally quiet in this area, but may well be bidding their time in an attempt to identify what works rather than diving in feet first.

What is clear is that targeted television advertising does work. Party Gaming stole a march on the competition by investing heavily in this medium in its early years in the US market. In briefing their agencies, gambling companies are going to have to be clear about exactly what they are attempting to achieve. Based on the dire experience suffered by Mansion and 32Red with football shirt sponsorship, general brand awareness advertising via television should be avoided at all costs. Campaigns should be smart, fun and targeted towards a specific product, rather than attempting to cover a broad range of products. Whatever method is chosen, advertising campaigns need to direct players to the site in a way that can be tangibly measured in order to determine an accurate Return on Investment as well as to statistically prove what is and isn’t working. Ultimately the success of advertising campaigns should be determined by commercial analysts and not marketing personnel. 888 have mastered this in their recent campaign, directing players to a portal site, and this should be used as a benchmark for all other firms.

2. New Markets

Company Secretaries should consider being a little cheeky and adding an item to the agenda at the next Board meeting titled “Nintendo Wii”. The recent success of the Nintendo Wii over the Playstation 3 is tantamount to some fundamental business strategy that the gaming industry could learn from. Fortune favours the brave, but more importantly favours those that differentiate from industry norm. Few would argue that the gambling industry is as a competitive over crowded market. Key to the success in 2008 will be identifying market trends before competitors and then being first to the market, whilst maintaining the balance of retaining focus on their core business.

The rise of 3D poker and the success of PKR Poker in 2007 should be taken as an indication of how gaming companies need to continually assess their current product base in order to drive their business forward. Investment should be made in market research to determine exactly what ‘Joe Public’ make of the companies product range. Whilst expensive, it brings a realistic perspective that is lacking within many companies.

Attempts should also be made to bring in new personnel to the industry. Too often companies continue to recruit tried and tested, but ultimately poorly qualified and skilled individuals with industry experience over more talented external candidates. This merry-go round approach breeds mediocrity at a time when new ideas and momentum are required. HR Departments should be briefed accordingly.

3. Industry consolidation

Despite endless talk of consolidation, it is unlikely to occur until after the repeal of the UIGEA. However, when it does expect to see some movements, particularly in new and emerging geographical markets. Expect the entrance of one of the US land based casino’s at some stage in 2008, most likely via a take-over approach of an under-valued listed gaming company.

All in all, 2008 represents an opportunity for most firms to put a difficult year behind them, and to prepare themselves for what is likely to be a year of upheaval and consolidation in a challenging 2009.

About the author:

Bristol based Dan Crowley is an analyst specialising in the online gaming industry. He can be contacted via email at danielcrowley1972@yahoo.com

Comments

1 Comment so far

J Davis on January 9, 2008 12:58 pm
US players can still play online if they know which payment resources to use. Banks resent their new law enforcement responsibilities under UIGEA. You are absolutely right that online gaming companies will have to come up with new ideas and strategies in the future.

J Davis