Scientific Games: Instant Games and the Quest for New Growth

The search for new growth areas in the European lottery market can feel like a quest for the Holy Grail.

As lotteries search for the next big thing, they seek products that will attract new and lapsed players, especially Millennials aged 18-34. However, the way forward could look less like an old, weathered treasure map and more like a new, shiny instant win game. Instant games could help slay the two-headed monster of finding a new growth area and attracting younger players.

The European market is not yet tapping into the potential of instant scratch games, which have been much more popular in the U.S. The average instant weekly per capita spend for the Top 10 European lotteries is approximately €1.93, while the Top 10 U.S. lotteries average €4.28. The gap has narrowed between Europe and the U.S. in recent years, but the potential available growth is massive—around €35.1 billion per year, says Kevin Anderson, Vice President, Business Development for Scientific Games in Europe, Middle East and Asia, whose 30-year career in the global gaming industry spans just about every continent and product line.

“In the USA, instant games’ success is universal. In Europe less so, but things are changing,” Anderson shares. “The adoption of best practice, better targeting and lottery management’s dedication to providing players with great experiences are driving the category onwards and upwards.”

The upside of instant scratch games is backed by recent research. At EL Industry Days in June 2018, research firm Kantar presented results from a study commissioned by The European Lotteries showing that instant games can be the key to unlock new growth and reach the elusive Millennial segment. The study found that 59 percent of Millennials prefer the play mechanics of a scratch ticket, compared to only 27 percent who prefer raffle or draw. Number-matching games fared little better at 29 percent.

In addition, Kantar concluded that if the lottery prizes were attractive enough, Millennials would wager more on a game than older players. The maximum Millennials would be willing to wager on one game is €9.54, which is 11 percent more than Generation Xers (€8.48) and 23 percent more than Baby Boomers (€7.38).

Scientific Games researched players segmented by motivation in its ONEVoice™ study to discover how to engage players across gaming verticals. Results have shown that consumers choose what to play based on what they feel is most entertaining. For example, a player segment Scientific Games identifies as Enthusiasts spans socio-demographic segments. The group is driven by big prizes, exciting visual stimuli and good odds. They allocate a high proportion of their entertainment budget to gaming, and they prefer to spend on more expensive games. Lotteries have the challenge of tapping into these player segments to earn a greater share of their gaming wallet.

Price point plays a major role in a portfolio strategy. Scientific Games has long advocated higher payouts and price point positioning as drivers of demand for the instants category. This approach has contributed to some notable successes across Europe.

“Higher-priced instant games have sometimes been positioned no differently from lower-priced games,” Anderson points out. “The Kantar findings illustrate that if the positioning is correct, if the games meet the motivational needs of the players, the value of price can be much higher than currently available in most markets.”

So if players are willing to spend more on exciting games and they prefer the game mechanics of instant products, what should lotteries do to capture this potential revenue?

It comes down to effectively managing instant games in the lottery’s portfolio and providing the proper distribution and retail support, Anderson said.

“Lotteries must choose partners that have a complete understanding of the role of every game and the interactions within the portfolio,” Anderson advises. “Picking the odd game here and there from multiple vendors to try to please everyone is counter-productive to a unified strategy.”

Research programs, advanced data capture and intelligent interpretation provide the European lottery industry a whole new level of sophistication in understanding how to position instant games. To help lotteries capitalize on this knowledge, Scientific Games has built and implemented an array of tools and advanced services around the instant product category. Retail solutions such as their SCiQ® ecosystem and PlayCentral® HD self-service terminal make instant games more attractive to customers in the store and collect valuable data about player preferences. Interactive second-chance games and loyalty programs extend the fun and enable lotteries to connect with players better. The company’s full instant category management and advanced logistics make ordering and distributing games more seamless than ever.

“New technology like SCiQ greatly improves the attractiveness and ease of lottery at retail, and our full instant category management methodologies have proven effective for the top instant lotteries in the world,” Anderson says. “With advanced data we can now identify which games complement and which cannibalise, and we ensure that the attributes that appeal to the most receptive segments of players are represented in the right proportions.”

While lotteries try to determine the best way to growth, the closest they might get to a treasure map is research and data. Will instants lead to the prize that European lotteries seek? So far, the data shows that a fully developed instant product portfolio could lead to happily ever after.

All ® notices signify marks registered in the United States. © 2018 Scientific Games Corporation. All Rights Reserved.

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