Slot manufacturing giant IGT showed great foresight with the purchase of DoubleDown Casino at a time when many were questioning the future of free-to-play casino games. IGT has developed and leveraged DoubleDown and it has become a powerful tool for their customers. Robert Melendres, Executive VP for Interactive Group, talked to Casino International Online about its evolution…
Casino International Online: An awful lot of companies aren’t leveraging their intellectual property; some not at all and some really badly. For some companies it’s becoming a drain on resources and cash flow to even try and leverage it and a lot of the major players are very, very late to this particular party. What’s IGT’s position? You’ve been doing well in the area a little while already after all.
Robert Melendres: Yes, I think it’s a little bit of an advantage. We’ve been in the interactive business for well over a decade now, but in the past we’ve really focused our energies on regulated markets, online gaming in Europe, primarily the UK. The other reason is that because were regulated in the US we didn’t have the liberty to do a lot of, or interest a lot of, the grey markets, so a lot of the opportunity wasn’t available to us. But we’ve been around now for ten years; we’ve learned how to of course build the technology to deliver the product, so we have a very stable, very scalable remote gaming server where we distribute slot content and table games, and that’s what we’re leveraging: years of investment and years of experience.
Our plan and strategy with DoubleDown – and with all our channels moving forward – is to build product once and deploy everywhere. That gives us a tremendous advantage. It means the same game, same game mechanics and same math, exploited through the various delivery channels, and that channel can get pretty huge – it’s not just land-based, it’s also VLT, Class 2, online and now it’s social.
CIO: What’s the development chain?
RM: There’re two different ways. We have some product built first for the ‘land’ business and then imported over to interactive. Some is built by interactive and now our guys are so good, it’s being imported in to the land. As part of the interactive-specific product development we put emphasis on innovation, so when I look at my studios, a portion of that studio is dedicated to doing game mechanics and new types of games. This year alone we’ve already filed around 45 patents just from the interactive team and the studio development and technology development related to it.
We spend 200 million dollars a year in R & D and we protect it. We get it out there into the marketplace first and foremost, but we also protect it. So we’re a leader in the industry and people love to copy. They did it with DoubleDown, they do it with our games, they do it with game mechanics that we develop. And meanwhile, you know, $200 million is a lot of R & D investment.
CIO: Imitation is supposedly the most sincere form of flattery though… IGT is obviously well known for developing licenses and the way that licenses are purchased has changed because of new delivery channels with mobile and online. People are going to buy a license as a vertical property, if you will. Do you develop licenses just for online or do you mostly focus on proprietary property?
RM: As a company overall IGT licenses for all channels. It’s really important to us because we want to offer to players a whole convert strategy. I think you play the same game in casinos, on the phone, on the tablet, on the desktop, and it’s hard to have that unless you have the rights to distribute across all those channels, so that is our core strategy. If there’s a great title, that we think would work well in the interactive space, even if the land doesn’t want to invest in it, we will pursue those. On a selective basis we might do it for interactive-only, but it’s not the strategy.
We’re also passionate about building our own brands. You’re going to see more and more of that. We have great brands: Cleopatra’s a great brand, Wolf Run is a great brand and Kitty Glitter – believe it or not – is a great brand. Our demographic – especially core slot demographic – love that game and with games like that there’s so much that we can do in re-purposing those brands. Game King is a fantastic brand for video poker and we’re really leveraging that brand, including on DoubleDown.
CIO: Monopoly is one of those brands where you don’t necessarily own the vertical license but you’re still very much developing the online property. Tell us a little about that – we know Monopoly Plus will be live on Double Down in October.
RM: Monopoly is an example of a great new game mechanic that we put in to it, where it has a levelling out, so as you keep coming back it knows who you are, it knows where you left off, and then you continue to be able to move up levels – and as you move up levels the RTP actually improves. And so it incentivises people to want to be a tycoon as they continue to play it but it also (as they continue to move up to the higher status) improves their RTP, so that’s an example of really creative mechanics that we’ll come out with on Monopoly.
CIO: What’s the DoubleDown Casino Partner Program about?
RM: Player engagement is up significantly for casinos that are on the programme and then we work on how they would monetise. It’s about reach, retention and revenue, and how we can help casinos with those important things. So once a player leaves the casino, they incentivise them to go on their website, like give them 100,000 free chips, or a million free chips. The player goes on their website and there they’ll have DoubleDown waiting, so they’ll go in and then they’ll be able to play the same games they played on the casino floor. That means the same slots, game mechanics, math models, volatility, same Game King. But they also can play multi player poker, bingo and roulette.
CIO: If the property’s using a player tracking system, can the player log in using a player tracking system and actually accumulate player points through DoubleDown?
RM: We don’t have it connected today to the player tracking system, but even without that they can use it as possibly the most powerful marketing tool that they could devise and I’ll give you an example of how that would work: We ran a video poker torment with Casino Del Sol. We incentivised the player to come and play video poker and Game King and if they played they could be eligible to play in a live tournament inside the real casino, and for those who got selected we would fly them in and give them money and credits to do it as well. The players loved that idea, and so we have over 350,000 players who played. The person who won actually did not win through DoubleDown, but went themselves into the casino to try and play the tournament, and ended up winning the tournament, so even people who didn’t come through that programme but played in the programme went.
The most important statistic of all is that when we ran that tournament for them, we helped increase their video poker play by 20%. People can be focussed on things like ‘will it work with my loyalty system’, which is important, and we will get there at some point, but even today they can increase their business on the floor through the programme and they should use it as a marketing tool because, at the end of the day, they want to drive people into their casino and have them spend money and entertain them there.
CIO: Twenty per cent is a huge figure. When you say that it seems so simple…
RM: It’s kind of a no-brainer. I was on a panel at G2E with a number of other competitors and they asked each of us ‘how much does that cost to do this?’ And I said, well, it doesn’t cost, it’s a partnership and it’s a revenue share partnership, and we can get a casino up within 24 hours; it’s a simple iframe. But in order to make it successful both sides have to agree to use that tool to market. We iframe in the product and around it they have the opportunity to market to their players, and incentivise the player to come in. If they didn’t have that, if they were just looking to market, it’s very hard to keep a player on the site. By them playing the games, and them being on that site, on average the players are on 30 minutes a day, and that’s huge. To get that kind of marketing spend, as you well know, would be so expensive. And that’s several hours a month so it’s a powerful tool. One of the main messages I want to get out there is you don’t have to wait for all the high technology in the future, you can do it today and do it quickly.
CIO: What proportion of the company’s turnover is from Interactive?
RM: Right now I can only tell you what we’ve given in our last quarter’s report, which was over $70million of revenue. The other figure that we let people know is that we have grown, over the last year, over 100%. And we grew, sequentially about 40% quarter on quarter, so we’re experiencing significant growth.
CIO: Presumably there’s a road map; what are the next areas for growth?
RM: There are five areas. First and foremost is mobile, mobile, mobile. You hear everybody say it but it really is.
CIO: Are you enjoying the same kind of head start on that side too?
RM: We do have a bit of a jump start on that, but I’m not satisfied either. I think we’re going to double, in fact I am doubling the investment of mobile in 2014 from what I have in 2013, so that means resources, people, output of games and optimisation for tablet, and back-end optimisation in the case of DoubleDown. So it’s all about mobile for me; that’s the number one highest priority. The second one is that most of our business on the DoubleDown side has been built in English language countries, and who monetise very well, but we have begun this year our globalisation efforts. We translated into Spanish, German, French and Italian, and we’ll continue with that trend, but it’s not just translation, we’re also localising. In Spanish for example we have several games that are coming out; we have one that we’re ready to release, I’m not sure where it is right now on DoubleDown side, but it’s called The Day of the Dead, and it’s a Mexican-themed, Spanish, Latin-themed game. Our globalisation effort is the second most important thing.
CIO: Where else?
RM: Our third area is the verticals. So you’ll see right now, certainly in DoubleDown, we have reached number one status on slot content but what we need to do is get that same level in bingo and poker, so you’ll see significant focus on these other verticals.
The fourth area, after the verticals, is platform enhancement, and that’s just everything from stability to platform, to meta gain [adding perceived value to a social game like a loyalty programme, a way of reaching different levels, trophies through gameplay etc], to other virality options and features within the product. And the last one is massive marketing efforts in driving our brand, making DoubleDown famous. So those are our five key areas of growth.