G2E 2021: Positive Outlook, New Directions
Last week saw the industry’s largest gathering in nearly two years at G2E 2021 in Las Vegas. While international attendance was naturally reduced and the show floor looked a little different than years past, The Innovation Group team and those we connected with were invigorated by the ability to exchange ideas in person and discuss the direction the industry is taking on the heels of significant change. Here’s what we’re thinking about on the other side:
International markets waking up more slowly
G2E was inevitably more U.S.-focused this year. Travel and logistics were a primary issue; however, we can observe that the international markets – especially bricks and mortar casinos – are waking up more slowly from the pandemic. A combination of tighter restrictions internationally and less robust local markets, continues to cause this geographic disparity. By G2E next year, we expect this trend to have largely balanced.
Sports betting and iGaming continue to dominate discussion
The sports betting landscape appears ripe for consolidation, with several multibillion-dollar acquisitions rumored or announced. Most interesting, perhaps, is the DraftKings (DKNG) acquisition of Golden Nugget Online Gaming (GNOG), a clear signal of the sports betting giant's intention to lead the iGaming market as well. Tribes, including many from the largest untapped U.S. market, California, were actively shopping for sports partners. While sports product was emphasized, social and iCasino offerings are ready and available for deployment from most operators. Media and sports team partnerships were also top of mind, with savvy teams now looking to monetize the burgeoning industry through not only viewership, but sponsorships, lounge branding, and even direct market access.
Direction of the gaming industry unclear… in a good way
Amid the more obvious discussions around sports betting, tribal expansion, and lasting COVID impacts, were more nuanced conversations about the gaming industry’s future. Of particular interest: what does the gaming company of the future look like? This is an evolving topic with considerable uncertainty. For one, the disaggregation of real estate and operations – into Propco and Opco – appears to be enduring, which should continue to maximize the value of each asset class. As for the rest of the industry, it is less clear. The various combinations of casino and route operations, internet and sports betting, and media and entertainment are part of a puzzle that is still being put together. But at a minimum, the pieces look like they will continue to be intertwined by databases and consumer data. How best to monetize that data, including minimizing customer acquisition cost, upselling, and cross-selling, remains an open question.
Growth seen in Millennials and Gen Z, but for how long?
A surprising trend coming out of the pandemic has been considerable industry growth in the Millennial and Gen Z demographics. In Las Vegas, overall revenue from the 18-35 age group is up 200% in the months since the shutdown. This revenue growth even touches the casino segment, despite this demographic not being known for an interest in casino games; MGM reported 25% growth in gaming revenue from the 25-35 age group. This younger demographic has helped operators offset declines in Baby Boomer spending due to travel hesitancy. However, with government assistance payments recently coming to an end, is this growth sustainable or only temporary?
Marketing to the next generation in a digital era
These new customers are digital natives, averaging some four to five hours a day on social media. To this end, marketing through smart phones is proving much more effective. Experience-seeking Millennials and Gen Z’ers seem to prefer non-gaming F&B and entertainment offers over direct gaming comps, so loyalty marketing programs are bolstering their casino play data with a range of purchase and behavioral data, documenting how even their nongaming consumers spend their money and time. As this shift occurs, digital tools appear poised to make more effective, tailored, and customized offers.
Cashless to be the new normal
Few topics dominated discussions at G2E like cashless gaming. The pandemic-driven reluctance to handle cash, together with the emergence of online and mobile gaming, digital wallets, and innovative payment channels, accelerated the development and deployment of cashless gaming. Hot topics in the payments space included policies, support, and products designed to better address the needs of online betting, enhance the rollout of cashless gaming, and support the utilization of cryptocurrencies. The need to ensure that the regulators are provided a reasonable degree of comfort and transparency was front-and-center, and we expect to see a broader cashless footprint - dare we say “the new normal”? - in the coming years.