Today’s casinos face myriad challenges: a vast and competitive market, the rising costs of slot products and technology, and the industry’s uncertainty about millennial gamblers.
Many in the industry are working to combat these challenges with fancy marketing campaigns and guest-service initiatives to wrest players from local competitors. They’re integrating newfangled technologies to optimize capex spending, and experimenting with social- and skill-based gaming to modernize their operations. When executed properly at the right property and targeted to the right players, these initiatives can help operators reap dividends in the short term. For sustained benefit, however, consider a niche gaming strategy that operators can use to enhance their gaming operations and drive new revenue in the long term.
Before we start, let’s define niche games as games that are extremely appealing to a small, yet highly loyal subset of players. In this sense, niche gaming is not new, and it occurs naturally when players gravitate toward the games they prefer. Developing a niche gaming strategy simply means that the casino explores its player database to identify its most valuable niche players as well as the types of niche games they prefer and that drive incremental revenue.
Niche games are not popular. They’re not played by hundreds of players and don’t top the win-per-unit list each month. Niche games appeal to very specific groups of players and are effective at driving those players to visit your property.
In the last two years at VizExplorer, we’ve supported more than 70 casinos with between 300 and 4,000 slot games each. Across properties of all sizes, niche gaming is thriving, but in some cases, operators are unaware of its existence or impact.
Let’s start with the most obvious and universally accepted forms of niche gaming: video poker, electronic table games (ETGs) and high-limit rooms.
Each gaming experience appeals to specific players who seek a certain experience. With video poker games, the average diehard player plays no other games and typically goes paytable shopping to find the best machine.
ETGs have similarly loyal players, with the average game getting 60-80 percent of its win from players who exclusively play ETGs.
The appeal of high-limit rooms stems from how they are built. Operators place a mix of expensive games into a room designed to deliver optimal guest service (think dedicated cashier or bar service). Over time, both the amenities and the games become even more niche as operators work to customize their high-limit rooms to meet the exacting demands of their high-end clientele.
The success of these niche gaming styles prompts the question: Why haven’t casinos put more effort into identifying additional niche gaming opportunities? The answer is simple: lack of time and resource constraints.
The three niches we describe above are fairly high-level, and while niches by definition, they represent a huge chunk of casino wins. Going deeper to identify smaller niches requires analysis of player-level data matched to game performance and to player loyalty metrics. For the average casino, this level of analysis isn’t feasible because they lack the staff with the right skills or the time. However, as competition increases, it’s becoming more necessary to explore these opportunities to gain an advantage.
Let’s review a real-world example of the potential value of doing that deep-dive analysis. A casino in the Midwest has a direct competitor one hour away. The competitor is about 30 minutes closer to the population center from which both casinos pull. The competitor is also newer, and populated its gaming floor with brand-new games for its opening, meaning it didn’t have some of the classic themes in classic boxes.
The older casino ran analysis to understand the players who drove the extra 30 minutes past the new competitor to play, and found that by a margin of 3-to-1, those players were playing the older classic games. Financially speaking, these classic games are just under house average as a group, but these loyal players were making up almost 60 percent of those games’ value.
Current industry trends would indicate the need to consolidate older cabinets and encourage these players to try newer boxes. The property took a different approach and moved those boxes into a classic section to provide a space especially for these loyal players. As a group, those players were worth the effort to protect the classic games from potential removal as well as to re-bank them into a small niche.
Most slot operators will agree that every casino’s players are different, and that what works at one casino won’t necessarily work at the other. This can benefit individual casinos that have slot operators willing to do the work to understand players and find the niche games to drive incremental revenue. The Midwest casino example makes it clear how identifying and supporting niche gaming can be a highly effective and profitable way for properties to cater to player desires and keep players from defecting to competitor properties.
Originally published in December 2018 issue of GGB Magazine as part of the Crystal Ball: Top 10 Trends for 2018 series
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