eSports, millennials and the casino

https://www.flickr.com/photos/jakobwells/14516251507/in/set-72157645379601078

The Next Big Thing in Marketing

The headline read, Why eSports Is The Next Big Thing In Marketing. The source: Forbes Magazine. The article was by Baldwin Cunningham from February of this year.

Yes, it was in that Forbes Magazine.

Are you still not getting it? Apparently it took has taken a while to sink in. In the casino and gaming sector, I’m not convinced it has yet to fully sink in. eSports is the next big thing, in fact, it is the major big thing in casinos for the foreseeable future.

So why is it the next big thing for the casino industry?

Here are some facts:

  1. Millennials are now the casino’s most important customer. The millennial cohort group is the now the largest demographic group in the United States surpassing both the baby boomers like me and the Gen X in between.[i] How obvious can this be to the casino operators. The millennial is the primary customer segment now and for the next 20 years. There are more of them than any other customer segment a casino has and as nature dictates the number of other demographic group customers will continue to shrink. So much so that within a short period the rate of decline will increase dramatically.

We (millennials) see slot machines, no matter the skin they’ve draped on it, as nails on chalkboard. With the lack of interactivity, the shallowness of the game and the lack of social reward it doesn’t hold our attention.

Levi Larkin, eSports expert & millenial.

  1. eSports and its media are disruptive to the current casino model. In my innovation class at UNLV, we discuss the concept of disruptive innovation in great detail. One of the elements of disruptive innovation postulated by famed Harvard Innovator Dr. Clayton Christensen in his monumental book on innovation, The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business, was that the incumbent enterprise has little motivation to disrupt their business for several reasons. First, for most successful businesses sustained growth comes from a sustained improvement for your most profitable customer. In the casino, the evolution of the slot machine validates this very theory. Slot machines are enormously profitable from the silent generation and baby boomer customer. Innovation in slot machines is what Dr. Christensen describes as sustained innovation, it provides incremental improvements targeted at the most the profitable customer. Second, in actuality there is little immediate financial incentive or return for investing in disruptive innovation for the enterprise. What is the current profit from the millennial in the casino of today? It is negligible. So why would a casino focus resources away from their most profitable customer (baby boomer and silent generation) toward far less profitable one, the millennial? Answer: that would be very difficult to rationalize and contrary to most business logic. However, as Dr Christensen explains the failure to do so will eventually lead to disruption of the industry. I believe we have a hint to that in the Daily Fantasy Sports situation of the last year. Putting aside the many controversial issues about DFS, one fact is indisputable: The DFS enterprises were able to motivate millions of millennials to play their game. Virtually none of that happened in a casino. Whether it will ultimately return or in what form is not the point. The point is that it was disruptive innovation. It focused on a customer perceived to be unprofitable by the casino. There is a lesson in that example that can be applied to eSports.

One of the most important lessons in disruptive innovation is that attempting to pursue this with internal teams usually leads to failure. In a Harvard Business Review article Christensen and Michael Overdorf stated,

The reason that innovation often seems to be so difficult for established companies is that they employ highly capable people and then set them to work within organizational structures whose processes and values weren’t designed for the task at hand.[v]

They assert that attempting to innovate with eSports within the existing organizational structure of the casino company is a high risk bet. Imagine the operating executives at Exxon/Mobile with a strategic initiative to build a Tesla.

Disruptive innovation and eSports will succeed if it is built on the values, processes and resources of experts in the field and most importantly, with and by millennials.

So what exactly is an eSports experience in a casino?

Fundamentally that is probably one of the first questions to answer. With all due credit to the first iterations by experts like Sam McMullen V, Levi Larkin and Joseph Bennecke at locations like the Downtown Grand in Las Vegas and with Gameworks, the question remains largely unanswered. But these millennials are among the brilliant minds considering it. In today’s casino model, does it make sense to change the highly profitable slot floor and table games to eSports? From a financial perspective for the next quarter, the next year, the answer is probably no. From an experience perspective, what would you actually put there? An Xbox One in a kiosk? An Alienware gaming computer in a fast food setting? A giant LED screen to watch Twitch streams like a sportsbook?

But alas danger also lurks in these murky waters of innovation. The flood of eSports discussions has inundated the industry. Suddenly the market has begun to become filled with so-called experts on the millennials and eSports.

Fortunately, part of the knowledge will come from the place it should, UNLV. And the second will come from the gamers, the developers and other millennials themselves.

Today at the International Gaming Institute we are beginning to explore ideas around curricula and research specifically tailored towards eSports in the integrated resort. While we may not find all of the answers, one thing is for certain: we will be exploring the right questions. And with the assistance, guidance and expertise of the millennial experts, we may in fact help guide the discussion.

As an industry the casino industry is hardly at timeline zero. But in terms of eSports, it is just getting started. I’ll close with a couple of quotes.

For eSports to thrive three key aspects must be addressed social experience, authenticity, and inclusion. I believe developing an ultimate social experience for all, from competitive gamers to spectators, to enjoy together is vital for success. Millennials are looking for authenticity in their experiences and when they find that they become one of the most loyal communities. Gamers are the most inclusive in their culture and giving them the ability to get together & share their passion is such an awarding experience for all to reap the benefits.

Professional Gamer, eSports expert and millennial, Joseph Bennecke.

Millennials and Gamers are all about the experience. Experience is defined by our presence, and augmented by our perception. If our perception is focused on the past or the future, then we aren’t in the present and we usually escape into our phones to create our own experience. Casinos of the future will need to cultivate a powerful presence in the experiences they provide so that engagement isn’t lost by a similar shift in perception.

Futurist, technologist, eSports expert and millennial Sam McMullen V.

The answer to eSports for the casino begins and ends…. with a millennial, the next big thing

Endnotes:

[i] Retrieved from http://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtake-baby-boomers/

[ii] The term digital native is claimed by Marc Prensky in an article from 20015. Retrieved from http://marcprensky.com/digital-native/

[iii] Levy, Mark; Sven Windahl (1985). “The concept of audience activity”. Media gratifications research: Current perspectives: 109–122.

[iv] West, Richard; Turner, Lynn (2007). Introducing Communication Theory. McGraw Hill. pp. 392–409.

[v] Retrieved from https://hbr.org/2000/03/meeting-the-challenge-of-disruptive-change

Digital Marketing: Social Media, Online, Internet Business, SEO

News articles about Social Media, Online, SEO, Content and…

Digital Marketing: Social Media, Online, Internet Business, SEO

News articles about Social Media, Online, SEO, Content and Digital Marketing.

Robert Rippee, MBA, Ph.D. Candidate

Written by

Grounded academic.

Digital Marketing: Social Media, Online, Internet Business, SEO

News articles about Social Media, Online, SEO, Content and Digital Marketing.