Fredrik Osterberg podcast transcript
Interview with Fredrik Osterberg of Evolution Gaming
Speaker key:
RT: Ronan Tighe
FO: Fredrik Osterberg
RT: Hi, and welcome to podcast seven in our series, “Innovations in eGaming”. This podcast was recorded on 26th May 2009. I’m Ronan Tighe from Foviance, and today I’m joined by my guest, Frederik Osterberg, Sales and Marketing Director of Evolution Gaming. First of all, can you tell us a little about your background and Evolution Gaming?
FO: Yes, Evoluation Gaming was founded in 2006 by myself, Jens von Bahr, who’s the CEO, and our Executive Chairman, Richard Hadida, and we have a long history in the eGaming space, and particularly in the live gaming field, so we have 30 years of history in the licensing industry, and we joined forces in 2006, when we decided to take the licensing to the next level, where we launched our Riga studio operations within the European Union, and we got our Alderney licence. This gave us basically the excellent video quality that was ready to take it to the next level, and we were able to do that in a regulated environment, and we got our first few licenses at that time, since then we’ve been steadily growing.
RT: What games do you currently offer?
FO: We offer the hardcore table games: roulette, blackjack and baccarat, in live versions of course.
RT: And live gaming first became popular in Asia, it’s only now becoming popular in Europe – why do you think that is?
FO: Mainly two factors actually, the bandwidth giving further quality to the players, and the fact that European high rollers finally have a place where they can feel as confident as they are in a lounge based casino environment, in terms of trust.
RT: And in terms of trust, how do you get across that the live game is more trustworthy than the R and G game?
FO: It’s a very interesting question – I think it’s a combination of how trustworthy the brand is, and since we managed to sign up some of the bigger brand names in the industry, such as PartyGaming and 888 and William Hill, that together with our set of studio environment in Riga helps to build that trust factor.
RT: And what do you think are the main challenges then of live gaming overtaking R and G games in Europe?
FO: I think R and G games will still be the popular games in Europe, but in order to gain more market share, the live casino has to cater for other demographics than high rollers only. For example, just recently we launched a play behind blackjack, which is more of a bingo type of experience where people can shout and compare the result counts of the blackjack game. Do you know what “play behind” is?
RT: No, it might be worth explaining that a little bit more.
FO: You’re basically allowed to place bets behind somebody who’s actually taken the decisions, so if you’re not keen to play yourself, you can always sit behind and let the guy ahead of you play on behalf of you, so to speak.
RT: And how do you currently involve your users in that development process?
FO: Well, in the key account management process, very similar to any other software vendor really, we have a daily or weekly chat with them, and we try to get as much information as we possibly can, and just recently we were part of a RFP for one of the bigger operators, I can’t name it yet because it’s not official, and then for the first time we’ve got extensive feedback, how their users rank Evolution compared to others, and that was of course essential and very interesting feedback for us, but this has taken some time, I mean it’s just now when the licensing becomes an essential part of the revenues, where we get more and more feedback from the users, because we only have our relationship with the licensees, it’s up to them really to make it happen.
RT: And what are the main markets you operate in?
FO: We’re in Europe only today.
RT: And within Europe, is there any particular countries that you find that the users are more engaged with live gaming than others?
FO: It used to be the more southern, eastern Europe, because I think the players are more used to the land based casino environment, but since we’ve been able to sign some of the bigger brands in the UK and in the Nordic region as well, we’re gaining more and more respect in that field as well, but that’s more because of the bandwidth and the bigger brands taking the product up, because I think they will be more reluctant to play within Asia or even in southern Europe, it’s just the trust factor, but up here it’s important to deliver something that has almost TV quality to make it appealing.
RT: And can you tell us a little bit how you work with partners?
FO: Well, business world wise, we’re no different from any other software vendor really, we have a model which is essentially based on the revenue share model, we normally of course share some kind of up front for the integration, we do charge some minimum fees since the operation of the licence is more expensive than in an R and G casino, but almost all revenues come through a prosperous partnership based on revenue share. And then, taking it to the next level, it’s more about being able to continue to develop the relationship with the licensee, and see how we can get scaleability for all the big good ideas that really come through today, because we get so much feedback from them, from new gamers, that we have to build a strong business case around as well, and that is of course a difficult part of it.
RT: When you do come to innovating new products, how do you decide on what features you’re going to develop?
FO: We used to be, we were very very much still an entrepreneurial organisation, but in order not to let our licensees down, we have to focus very much on where the revenues are, and in order to do that we had to build a strong business case where we knew not every new feature possibly, but at least what the new products that are to be developed by Evolution. In terms of features, we considered there were some obvious feedback we get from many big licencees, and then we get that into one release and release it for everyone, so the scaleability of course is essential, but on the other hand, we’re all very entrepreneurial and very opportunity-driven, so if somebody wants to do something specific, we can always try to build a business case around that as well.
RT: Are there some of your clients that are using the service and the product better than others? And if so, can you tell us the kind of things that they are doing?
FO: Such a big difference, I mean just looking at how they put the live casino onto the website, it’s a huge difference, because some people, or some operators rather, they treat like, as its own channel, so they don’t put it within the R and G casino, basically their own tab, and that is of course very very important, because that shows that this product is something unique, is something different, and it’s actually targeting another type of audience, another type of player. And then, of course, you have the basic promotion campaigns as well, where some operators are very generic in their approach, and others understand the value of offering targeted promotions to the high rollers, so I think if it’s important and large casino to have a very specific promotion strategy, so it’s more important in the live environment. The operator can sort of use the live casino and also as a cross-promotion tool in the best possible way, learning live, so as an example that means that you can, for example, the dealer that is dealing the cards can let the players know that there’s five minutes left for placing the last bet on a football match, or entering a free roll poker tournament, and that means that the operator can actually put the large casino as part of the promotional campaign as well, as such. And of course this has to happen in a dedicated table environment, and that involves some cost for the operator, but that could be something that could be part of the promotional campaign as well, not only to the live casino itself, but also the promotional tool that it is.
RT: So currently do some operators have their own designated tables, and then others share tables?
FO: Both, we do offer both, and it’s very important to offer both. The dedicated table is a branded approach for each operator, they simply want to have their own dedicated table because of the branding factor, and we offer generic tables to all our licensees as well, so it’s both.
RT: And are you seeing more and more operators interested in getting their own dedicated tables so they can offer a bigger kind of brand experience? And also use the cross selling opportunities?
FO: Through our new studio in Riga, we can see that the interest is increasing dramatically, because now we can show them how you, for example, can have your own 888 or PartyGaming room, so this is changing very quickly in that direction.
RT: Your operations in Riga have grown quite significantly – can you tell us how many tables you have at the moment?
FO: We have 16 tables in operation today, and we have 185 dealers at the moment. Our estimate is to have around 250 to 300 dealers by the end of the year, and the idea with Riga now is to let our existing and potential licensees come there and really sit down and understand and see how creative we can be, so we considered it as a significant impact on revenues if the licensees come down there, where after all most of them lives out of Riga, they come up there and can have a look at the operation itself.
RT: And do you see in the future that you will have multiple locations across Europe?
FO: It’s very possible, I think Riga will still be our main hub, but we’re definitely looking into new locations as well, for various reasons.
RT: You talked earlier a little bit about the new play behind functionality that you’ve brought in – what other innovations do you see in the live gaming area in the next couple of years?
FO: Talking about the hardcore table games, there’s so much left we can do on the existing baccarat, roulette and blackjack. Looking ahead of that, if I already mention, I think the soft gaming market is something super interesting, we just have to build a strong enough business case to allow us to, it will happen, if it will happen later on this year or early next year, it’s a bit too early to say, but it will be the softer gaming that is the next big thing within live gaming, that’s what we firmly believe.
RT: When you say “softer gaming”, is that bingo?
FO: Like I said, I meant The Price is Right, those kind of gameshows, is something that we’re definitely looking into.
RT: Would you be looking at using brands such as Deal or No Deal and transferring them into live gaming?
FO: I think we would not, as it looks right now, I mean there’s obviously an opportunity to strike a deal with a company like Endemol, but there are so many generic approaches you can do where you let our licensees keep most of the revenue, so I think it would be something similar, rather than identical.
RT: OK, and who do you see as your competitors in the market?
FO: I think in Europe right now, it’s really Playtech – they launched their Riga studio operations just a couple of months ago, we’ve been in Riga for three years and they came there, set it up, so I think Playtech is our main competitor today.
RT: And do you see competitors coming in from Asia, or do you see in the future that it’s more likely that you will go to Asia and compete in that market?
FO: I would be terribly surprised if there were not more entries of competition into this market. It’s difficult to say, the problem for some of the start ups is that it’s a quite complex process, setting up a live casino studio, it’s a heavy investment really, so it’s more likely that one of the bigger software vendors acquires a smaller company and set it up, rather than a start up goes all the way and tries to conquer the European or any other market for that sake, so it’s a mixture of online and offline, that makes it a bit difficult for people to have an easy entry into the market.
RT: And do you think the operators will go for one live gaming partner, or in the future do you see operations having multiple partners for live gaming?
FO: I think that applies for the whole online gaming market, that there will be a portal structure where all the bigger brands need to add as many partners as they possibly can from as many vendors as they possibly can, and then they have to let the player’s choose, and that also gives them an excellent opportunity to of course negotiate with the suppliers, so I think we have to be ready for that, because it will happen, it’s just a matter of time when it will happen.
RT: Do you think the current major gaming portals are currently competing on the basis of how innovative their games and their experience is?
FO: Not really, I think there has been a very lucrative market in the last ten years, I don’t think it’s innovation that has been driving the revenues up, it’s basically just first move advantage for the bigger rooms that were able to monetise on the quick growth. I think the winners tomorrow need to be innovative today, otherwise they will be out of the market.
RT: And apart from the live gaming, is there any other area within gaming that you see there’s going to be innovations that will change the experience for users?
FO: Personally I think the operators need to operate more with the live element in general, not only in the live casino, but also in sports betting. I think one good example is bet365, they have live streaming on football matches and other sporting events. These are the kind of things that – for example, yesterday I was unable to see the Interplay football match, because my TV went to the subscriber, we were not able to broadcast that game, and I just registered on bet365 and I could watch the football match for free. Of course, that is excellent promotion for bet365, and I think this is the future.
RT: Excellent, Frederik, thanks for giving up your time to participate in this interview, it’s really appreciated, and I’m sure your advice and insight will be well received by our listeners.
And thank you to you all for listening, please come back to Foviance.com shortly to download the next podcast in our Innovations series.