Scientific Games | Investing in growth with instant games

With growing pressure to raise their contributions to good causes, lotteries are looking for the product that will help them boost revenues responsibly. Instant games have proven to reliably grow lotteries’ bottom line, as lotteries in the U.S. and Europe have seen. Using comprehensive market analysis, Scientific Games creates the best-possible portfolios of games for lotteries, supported by full lifecycle retail category management, compelling licensed brands, and multi-channel loyalty programs and promotions.

The global lottery industry faces new challenges from changing consumer and retail behaviours. Along with regulations and policy decisions, these changes place competitive and margin pressure on lotteries.

To meet the continuing needs of the good causes they support, lotteries must proactively leverage the unique value of their retail penetration by acknowledging the growth opportunity presented by a rich portfolio of instant games. Over the past two decades, retail sales of instant products have more than tripled, growing from $27 billion in 1998 to $89 billion in 2018.

In the U.S. market alone last year, annual retail sales of instant games topped $50 billion. Generating $14.2 billion in gross gaming revenue (GGR) in 2018, instant games nearly matched draw games ($14.6 billion). Gross gaming revenue from instant games has grown steadily over the last decade in the U.S., while draw game GGR remained relatively flat.

One of the top-performing lotteries in the U.S., the Florida Lottery contributed a remarkable $900 million of its $1.7 billion in contributions to education through the sales of instant games. With scratch-offs accounting for nearly 70 percent of sales, 2018 was the lottery’s seventh consecutive year of record-breaking profits for education. Last year, the lottery grew its $4.24 billion scratch-off product line by 9.6% to $4.65 billion. Other top performers have similar stories.

What is their strategy for sustainable, responsible growth? It is investing in innovation to grow their most productive product line: instant games.

Examining the Potential

“There is so much growth potential for instant category markets around the globe. But it’s important to invest in best-in class innovation to help develop the products and perfect the mix of products in the portfolio to generate proceeds for beneficiaries,” says John Schulz, Senior Vice President Instant Products for Scientific Games. Schulz has worked with lotteries around the world to help grow profits for 34 years.

“The cost of innovation to a lottery represents only a small fraction of the financial benefits that instant game innovation can deliver to beneficiary funding,” he says. “For some lotteries, the annual cost of the instant games contract can be paid for by just a few weeks or a few months of instant game sales. And for larger lotteries, even just a few days.”

By virtue of their charters, lotteries are mandated to operate as entrepreneurial businesses. To increase profits for beneficiaries, lotteries must continue to maximize profits from sales of world-class products and services.

“With an innovation-focused lottery business partner, there are creative ways to engage and entertain ever-changing consumers, including those who never or rarely play lottery games,” shares Schulz. “It begins with continual, comprehensive market analysis that evaluates the lottery’s overall performance, identifies opportunities, and defines our strategies for game creation, marketing and game distribution. And it ends with investment in products and technologies that empower innovation.”

Shifting Trends in Europe

In Europe, many lotteries have recognised the revenue potential of instant games and have innovated to grow their instant product lines. One of the largest and most successful, the UK National Lottery has developed the product from 17 percent of its product mix in 2005 to 43 percent in 2018—growing the category to £3.01 billion ($3.8 billion USD).  More recently, we have seen several Central and Western European lotteries re-focus their efforts on the instants category to record double-digit growth in each of the last four years.

“The trend is shifting in Europe, with more attention being given to instant games as lotteries look to grow revenue,” says Schulz. “Where instants were once a very small percentage of product portfolios, in some of the largest and most profitable markets, they now make up more than 40 percent of the product mix.”

Schulz explains that the basic building blocks for instant game portfolios in any market begins with 15 Determinants of Demand. Each of the determinants is analysed for the individual lottery before their games are created by Scientific Games, the world’s largest supplier and manager of instant games.

“We then use our industry and manufacturing expertise to heighten the games by adding the extra entertainment value today’s consumers are seeking,” he explains. “These could be anything from Scratch My Back® play on the back of the game, to LuxTouch® inks, oversized Gigantix® games, or unique paper stock options like Holographic, Sparkle® or MicroMotion™—all of these are enhancements lotteries can offer to add entertainment value to the lottery experience.”

An example of using the 15 Determinants of Demand to create consumer value is the £5 instant game, £100 Million Cash Spectacular, which combines big top prizes with fluorescent inks and high-impact messaging in the design.

Instant Success

Scientific Games’ player segmentation approach to creating games is based on the motivations of specific types of players, rather than demographics like age or gender. This allows the company to apply much more to its games—why players pick one game or even one colour game over another, why certain prizes excite them and others do not, why they play more at certain times of the year, even why they play games at all.

“By understanding all of this, we can create the best possible portfolio of games for a lottery. It’s not about a single game, it’s about a group of games—each uniquely different—and how they can drive performance together by interacting with consumers across all player segments, including those who play infrequently or rarely,” explains Schulz. “Each game is designed to appeal to a particular segment of players.”

To help lotteries appeal to a broader base of consumers, Scientific Games created linked instant play games in 2007. Launching 10 linked game blockbusters since then, the company continued to add excitement to lottery play with digital second-chance games featuring once-in-a-lifetime entertainment experiences using iconic brands such as WILLY WONKA & THE CHOCOLATE FACTORY™, MONOPOLY, DEAL OR NO DEAL™ and the incomparable JAMES BOND™ to reach the broadest-possible range of players.

Because of the excitement of big linked games and winners’ events, decades of consumer research, and specialty inks, papers and finishes, lottery games have become fast-moving consumer goods that help lotteries grow responsibly by expanding their player base—not by relying on the same segment of players to increase revenues.

With a commitment to responsible gaming, Scientific Games is paving the way for another 20 years of instant game growth. It looks to accomplish this through full lifecycle retail category management, compelling licensed brands, multi-channel loyalty programs and promotions, and expanding its customers’ game portfolios with new instant and digital games.


007 and related James Bond Trademarks © 1962-2019 Danjaq, LLC and United Artists Corporation. 007 and related James Bond Trademarks are trademarks of Danjaq, LLC. All Rights Reserved.

Deal or No Deal TM & © 2002, 2019 Endemol Shine IP B.V.

The MONOPOLY name and logo, the distinctive design of the game board, the four corner squares, the MR.MONOPOLY name and character, as well as each of the distinctive elements of the board and playing pieces are trademarks of Hasbro for its property trading game and game equipment. © 2019 Hasbro. All Rights Reserved. Licensed by Hasbro.

WILLY WONKA & THE CHOCOLATE FACTORY and all related characters and elements © and ™ Warner Bros. Entertainment Inc.  (s19)

All ® notices signify marks registered in the United States.  © 2019 Scientific Games Corporation.  All Rights Reserved.

This article or a portion of the article was originally published in WLA Magazine. For more information, visit www.world-lotteries.org.

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Synopsis

Français

Scientific Games | Investir dans le développement des jeux instantanés

L’industrie mondiale des loteries est confrontée à de nouveaux défis en raison de l’évolution des comportements des consommateurs et des détaillants. En plus des règlements et des décisions stratégiques, ces évolutions exercent une pression sur la concurrence et les marges des loteries.

Grâce à leur pénétration du commerce de détail, les jeux instantanés offrent aux loteries une opportunité de croissance. Au cours des vingt dernières années, les ventes au détail de produits instantanés ont plus que triplé, passant de 27 milliards USD en 1998 à 89 milliards USD en 2018.

L’an dernier, aux États-Unis, les ventes au détail annuelles de jeux instantanés ont dépassé les 50 milliards USD. Les revenus bruts des jeux instantanés ont régulièrement augmenté au cours de la dernière décennie, tandis que les revenus bruts des jeux de tirage sont restés relativement stables. Aux États-Unis, 900 millions USD sur les 1,7 milliard USD de chiffre d’affaire de la Florida Lottery, l’une des plus performantes du pays, provenaient de la vente de jeux instantanés. L’an dernier, la loterie a augmenté sa gamme de produits de grattage de 4,24 milliards USD de 9,6 % pour atteindre 4,65 milliards USD. D’autres loteries très performantes ont des parcours similaires. Leur stratégie de croissance durable et responsable consiste à investir dans l’innovation pour développer leur gamme de produits la plus productive : celle des jeux instantanés.

En Europe, de nombreuses loteries reconnaissent le potentiel des jeux instantanés et ont innové pour développer leurs gammes de produits instantanés. L’une des plus importantes et des plus réussies, la gamme de produits de la Loterie nationale du Royaume-Uni est passée de 17 % en 2005 à 43 % en 2018.

Scientific Games analyse chacun des 15 facteurs déterminants de demande de loterie individuelle avant de créer ses jeux, avec des caractéristiques qui séduiront les consommateurs. L’approche de segmentation des joueurs de l’entreprise est basée sur les motivations de certains types de joueurs plutôt que sur des facteurs démographiques comme l’âge ou le sexe. Chaque jeu d’un groupe de jeux est conçu pour plaire à une catégorie particulière de joueurs.

S’engageant envers le jeu responsable, Scientific Games cherche à développer l’activité des jeux instantanés des loteries à travers la gestion du cycle de vie intégral des catégories de vente au détail, de marques sous licence séduisantes, de programmes de fidélisation multicanaux et de promotions, et à élargir les portefeuilles de jeux de ses clients avec de nouveaux jeux instantanés et numériques.

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Juegos científicos | inversión en el crecimiento con los juegos instantáneos El sector global de las loterías se enfrenta a nuevos desafíos por los cambios en los comportamientos de los consumidores y el sector minorista. Junto con las reglamentaciones y las decisiones sobre políticas, estos cambios ejercen en las loterías presión sobre los márgenes y la competencia. Aprovechando su penetración en el sector minorista, las loterías cuentan con una oportunidad para crecer con los juegos instantáneos. A lo largo de las dos últimas décadas, las ventas en el comercio minorista de productos instantáneos se han incrementado en más de un 300 %, desde 27 mil millones de USD en 1998 a 89 mil millones de USD en 2018. El año pasado, en EE. UU., las ventas anuales en el sector minorista de juegos instantáneos superaron los 50 mil millones de USD. Los ingresos brutos de los juegos instantáneos han crecido constantemente a lo largo de la última década, al tiempo que los de los juegos de sorteo se han mantenido relativamente plano. 900 de los 1700 millones de USD en ventas de Loterías de Florida, una de las que mejor funciona en EE. UU., vinieron de las ventas de juegos instantáneos. El año pasado, la lotería incrementó su línea de productos de rasca y gana de 4240 millones de USD en un 9,6 % hasta 4650 millones de USD. Algunas de las otras loterías que mejor funcionan tienen historias similares. Su estrategia para un crecimiento responsable y sostenido consiste en invertir en innovación para que se desarrolle su línea de productos más productiva: los juegos instantáneos. En Europa, muchas loterías reconocen el potencial de los juegos instantáneos y han innovado para desarrollar sus líneas de productos instantáneos. La Lotería Nacional del Reino Unido, una de las más grandes y de más éxito, ha desarrollado el producto desde un 17 % de su mezcla de productos en 2005 hasta un 43 % en 2018. Antes de crear sus juegos, Scientific Games analiza cada uno de los 15 determinantes de la demanda para una lotería individual, con características atractivas para los consumidores. La estrategia de segmentación de jugadores de la empresa se basa en las motivaciones de tipos de jugadores específicos, en vez de en datos demográficos como la edad o el sexo. Cada juego de un grupo de juegos está diseñado para atraer a un segmento de jugadores en concreto. Con su compromiso con el juego responsable (RG), Scientific Games busca desarrollar el negocio de juegos instantáneos de la lotería mediante la gestión integral del ciclo vital en la categoría de comercio minorista, marcas con licencias atractivas, promociones y programas de finalidad multicanal y ampliar las carteras de juegos de sus clientes con nuevos juegos digitales e instantáneos.
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Scientific Games | Mit Instant-Spielen in Wachstum investieren

Die weltweite Lotteriebranche ist durch verändertes Konsum- und Einzelhandelsverhalten mit ganz neuen Herausforderungen konfrontiert. Gemeinsam mit Vorschriften und politischen Entscheidungen üben diese Änderungen einen Wettbewerbs- und Margendruck auf Lotterien aus.

Durch eine Verbreitung im Einzelhandel haben Lotterien mit Instant-Spielen eine Wachstumschance. In den letzten zwei Jahrzehnten hat sich der Einzelhandelsumsatz mit Instant-Produkten mehr als verdreifacht, und zwar von 27 Mrd. USD im Jahr 1998 auf 89 Mrd. USD im Jahr 2018.

In den USA lag im vergangenen Jahr der jährliche Einzelhandelsumsatz mit Instant-Spielen bei über 50 Mrd. USD Der Bruttospielertrag (Gross Gaming Revenue, GGR) von Instant-Spielen ist im letzten Jahrzehnt stetig gewachsen, während der GGR bei Ziehungsspielen eher gleichbleibend war. Die Florida Lottery, eine der leistungsstärksten Lotterien in den USA, steuerte 900 Mio. USD ihrer 1,7 Mrd. USD durch den Verkauf von Instant-Spielen bei. Im vergangenen Jahr hat die Lotterie ihre Produktlinie der Rubbellose von 4,24 Mrd. USD um 9,6 Prozent auf 4,65 Mrd. USD ausgebaut. Andere Top-Performer berichten Ähnliches. Ihre Strategie für ein nachhaltiges und verantwortungsbewusstes Wachstum besteht darin, in Innovationen zu investieren, um ihre produktivste Produktlinie auszubauen: Instant-Spiele.

In Europa erkennen viele Lotterien das Potenzial von Instant-Spielen und haben Innovationen entwickelt, um ihr Sortiment an Instant-Produkten zu erweitern. Eine der größten und erfolgreichsten Lottogesellschaften, die UK National Lottery, hat das Produkt in ihrer Produktpalette von 17 Prozent im Jahr 2005 auf 43 Prozent im Jahr 2018 ausgebaut.

Scientific Games analysiert vor der Erstellung seiner Spiele alle 15 Bestimmungsfaktoren der Nachfrage für eine individuelle Lotterie, um die Merkmale herauszufinden, die die Verbraucher ansprechen. Der Ansatz des Unternehmens zur Segmentierung der Spieler basiert auf den Beweggründen bestimmter Kategorien von Spielern und nicht auf demografischen Merkmalen wie Alter oder Geschlecht. Jedes Spiel in einer Gruppe von Spielen soll ein bestimmtes Segment von Spielern ansprechen.

Mit seinem Engagement für verantwortungsbewusstes Glücksspiel möchte Scientific Games das Geschäft mit Instant-Spielen bei den Lotterien durch ein Einzelhandels-Kategorienmanagement für den gesamten Produktlebenszyklus, überzeugende lizenzierte Marken, Mehrkanal-Loyalitätsprogramme und -Werbeaktionen sowie die Erweiterung des Spiele-Portfolios seiner Kunden mit neuen digitalen und Instant-Spielen ausbauen.

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