The Expansion of Casino Amenities Can Open Untapped Markets
In the past, expanding casino amenities was usually for two primary reasons:
1. To attract players from a competitive property.
2. To retain and increase the satisfaction of existing players, generate more trips or hold players on property longer.
But today, we should consider a third reason:
3. To attract entertainment-seekers and non-players to the casino and open new markets.
In the past, attracting entertainment-seekers and non-players was always a low priority as it was too expensive to do, it took too long to nurture them and they provided low economic returns. The argument was that we could never get them to play on the casino floor; understandable given that gambling was our only product. The casino industry is being forced to re-think some of its past assumptions and models. We used to wait for new customers to “age” into our demographic sweet spot and that kept the player pipeline filled but that’s not happening any more. Market share gains came from our competitors based on formulas we knew would incentivise players to switch, but our margins are getting thinner and there aren’t as many of those dollars available any more.
So how do we keep the casino customer pipeline filled? Well we might have to re-think our definition of a casino customer.
Consider this statement published in the Harvard Business Review in 2004: “Industries and business change when they are threatened, until that happens very little changes”. The threat to the casino industry is the shift away from terrestrial gaming by younger population segments and the tracking suggests they have little future interest in casino gaming. Additional threats come from increased competition (there are over 1000 casino in North America) plus competition from the proliferation of online casinos and lastly, player attrition due to changing age demographics. But there’s also a macro change occurring across ALL consumer sectors, gaming included, and it has to do with the overall purchasing behaviour of consumers.
Trends indicate consumers are rationalizing the “value” for almost everything they consume and this isn’t just concentrated among millennials and Gen Y’s. It doesn’t mean that consumers are demanding more stuff (although sometimes it feels that way) but rather that they are researching and thinking more about what they spend their money on and applying some measure of value to their spending. Non-players don’t see casino gaming as providing sufficient entertainment value for the money, but the new suite of amenities being built at casinos could change that.
In a recent 2016 IPSOS research study (an article appeared in CGB titled Not Your Grandpa’s Casino) some of the top barriers to visiting a casino by Non-Casino Players and Millennials were:
• “Playing casino games is not good use of money”.
• “I would rather take part in other forms of entertainment”.
Clearly these groups have low interest in casino games, but IPSOS posed the question whether amenities could be used to attract non-player casino customers and even Millennials to a casino? If marketed as “value for their entertainment dollar,” there is reason to believe in revenue potential here. IPSOS noted the effect that a lack of marketing and advertising has on customer awareness of amenities. When non-players were surveyed for their awareness of casino amenities, one casino with 12 amenities saw 66% of non-player respondents indicate they were not aware of any amenities at the casino and at another casino with 19 amenities, 51% of respondents had zero awareness.
But simple awareness isn’t the answer either. It’s going to take some time for people to shift their perceptions of what a casino is. To many people casinos are all about gambling and they don’t link gambling to entertainment. But with the abundance of restaurant choices, spas, hotels and entertainment centres casinos can offer a diverse entertainment experience and make that link. Using these assets to connect to new audiences in the form of small events like cooking classes, scotch tastings, wine education, wellness seminars or other small events can attract non-players and Millennial’s and provide “value for money.” It’s marketing’s job to change perceptions of what a casino is and how it fits into a customer’s entertainment portfolio by focusing on value and entertainment options. A refined definition of what a casino is.
And yes, I recognize we are not only talking about a marketing shift but also a business shift. We aren’t just competing with other casinos for our share of the gaming customer, this is an opportunity to compete for our share of any customer’s entertainment wallet. Businesses pivot and shift all the time when threatened. When Starbucks first started its business it only sold espresso makers and coffee beans. They did well but Howard Shultz realized this business model wouldn’t scale well. So after a trip to Italy, he became inspired to shift Starbucks to a coffee brewer and café-style company. That worked out nicely. Even Wrigley didn’t always sell gum. In fact when William Wrigley Jr. moved to Chicago and worked as a soap and baking powder salesman, he got the idea of offering free chewing gum with his household products. Eventually the gum proved to be more popular than his products. Of course Wrigley went on to manufacture his own chewing gum brands and today the company grosses billions in revenue and is one of the most recognizable brands in American history.
Building and designing new amenities is an opportunity for the casino industry to address a market it has historically avoided. It’s an opportunity to change perceptions among an important new audience part of their entertainment portfolio. It will require a shift in marketing, not away from gaming but “in addition” to gaming and it will take patience, because behavioural change doesn’t happen overnight.