The pandemic has brought about a ‘step change’ in the development of the Italian betting market, said Microgame CEO Marco Castaldo (pictured, left), who believes that operators are now beginning to realise the online growth potential.
Speaking ahead of next week’s SBC Digital Italy, he explained why those operators who can differentiate the overall user experience by specific player segments will gain a competitive edge, and how Microgame’s entire service approach was designed to bridge land-based and online betting, bringing the machine user experience into the online domain.
SBC: Italy’s regulated online GGR grew by 45% in 2020. Was this simply the result of the enforced closure of retail outlets, or is it a sign of a longer-term swing towards online?
MC: Obviously, the lockdown is a major factor behind this performance. However, it would be a mistake to see the growth solely as a short-term blip. In Italy, online gaming penetration is still much lower than other markets, so the potential for the underlying growth was, and remains, very strong.
The pandemic represents a step change, trend-wise, for different reasons. First of all, many new players have fully experienced gambling online for the first time in the last few months. For most of them, online will remain a major part of the playing experience. This means that the boom we saw in 2020 has a solid base that won’t disappear.
Furthermore, the land-based industry has now overwhelmingly embraced the multichannel prerogative. Some operators have already moved in this direction but many have not, and they represent the next wave of growth. Also, consider that the lockdown channel effect we are seeing comes primarily from betting shops.
We have yet to see the online impact from the gaming machine segment, which represents over 50% of total industry GGR, pre-pandemic. I believe we will look back on 2020 as a turning point in the development of the market, establishing multichannel as a dominant theme.
SBC: The Italian online casino sector has enjoyed sustained growth over the past five years. How can operators effectively expand their product to meet demand, while still differentiating their offer from the competition?
MC: The basics are more important than ever. A strong portfolio of games of course, but it must be managed dynamically, continuously refreshed and targeted at different segments with effective promotion and engagement tools. Not surprisingly, various slot titles derived from successful machine games are doing very well now, but much more can be done on this front to capitalise on the key growth opportunity.
In general, the edge will go to those who are able to differentiate the overall user experience by specific player segments, looking at betting shop punters and street machine players for example. So precise targeting is key to managing the player journey, but a complete betting and gaming offer is just as important. I have no doubt that the winners will be those who can best leverage a rich portfolio of entertainment opportunities for the player.
Player behavior during lockdown is illuminating in this respect. I’m thinking of sports of course, but card games and bingo are extremely relevant when you look at the number of potential players, the segmentation opportunities, as well as the entertainment and social aspects.
The scope of the change in the market, post-pandemic, is such that operators need to rethink their strategies and make sure they invest in the critical resources for the future. This means people and know-how, technology as well as the right partners. The business model grows in complexity, and getting the make vs buy decisions right assumes greater importance.
SBC: With online surging, what advice would you give to traditional retail-first businesses that want to strengthen their online presence?
MC: There’s a window of opportunity so timing is key. To begin with, I would focus on leveraging the operator’s key asset – retail distribution – for affiliation of online players.
I’ve seen land based operators waste precious time to try to assemble an online offer, resulting in a less effective proposition for the player and for the distribution channel, while delaying rollout. Since there is no time to build, I strongly believe the offer must be fully outsourced at first, to a partner with the right capabilities.
Assuming the operator has a licence, right capabilities means a combination of three things: first, a solid multichannel solution for land-based affiliation including an appropriate product suite and the right back office and affiliation tools; second, turnkey outsourcing capability including not only the full portfolio of verticals but also training and customer service; and finally, the flexibility and tech capacity to customise the operator’s offer and develop tighter integration of the player journey across channels over time to reflect the operator’s distinct strategy and positioning.
The objective down the road should not be just to implement a solution that will leverage the existing retail network, but to grow the overall business. If the operator has no licence, the partner also needs to be a licensed operator in order to provide all of the above with a highly customised white-label solution, at least until the next licensing round.
SBC: What does Microgame have planned for 2021?
MC: First of all we are progressing a major effort to start up around 20 new customers, most of which have entered in the last licensing round. This year, we will continue to invest in our service organisation and technology because we want to do our utmost to make their business in Italy a success.
On the product and platform side our proprietary stack is constantly evolving. After having completely renewed our pre-match offer, this year we will launch our new live sportsbook, including the addition of a new live data feed supplier as well as a completely redesigned, high performance front end.
On the casino front, we are working on the third generation of our game allocation engine including a tighter integration with our CRM system, and we are adding engagement tools to our single back office which can be deployed across the entire portfolio of 29 suppliers (eight suppliers to go live in Q1/Q2) – even customers who are not on our player account and casino will benefit from these developments.
This is a very distinctive aspect of our casino service model, which bridges full casino outsourcing with aggregation to provide a distinct, high value-added service enhancing player experience and engagement.
On the Player Account and Shop platform side, we are working to refine our multichannel tools, including our in-house designed CRM system which integrates the player and retail views for more effective promotion strategies.
Microgame is a pioneer in multichannel with over 20 years experience, and our entire stack and service approach was born to bridge land-based and online betting. The new frontier, for us, is enhancing our multichannel offer to gaming and casino. We are working on bridging the machine user experience into the online domain, and vice-versa.