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Friday, 7 August 2015

Getting Smarter?

By Scott Longley, Partner, Regulus Partners

The Web as I envisaged it, we have not seen it yet. The future is still so much bigger than the past.Tim Berners-Lee

The latest figures for smartphone usage in the UK from communications regulator Ofcom feature a smattering of numbers and figures that are sure to find their way into presentations at upcoming gambling conferences and presentations, supporting remote positioning and an ‘omni-channel’ future.

A headline finding proclaiming the UK was now a “smartphone society” is likely a signal moment. The Communications Market 2015 report found that 33% of people say their phone is their most important device for accessing the internet compared with 30% that prefer their laptop.

When another 19% that opt for tablets is taken into account, it is clear that a sea-change has taken place. The combined smartphone and tablet percentage has risen from 23% in 2013 to 52% in 2015 while the laptop and desktop share has fallen from 74% to 44% over the same period.

At the same time, UK 4G subscriptions have leapt from 2.7 million to 23.6 million. Ofcom found that, as of May 2015, 55% of these 4G users shop online with their phone; 55% bank online; 57% watch TV and video clips; 49% use their phone to send videos and photos via services like Snapchat; and 63% use instant messaging services such as WhatsApp. Ie, transacting and being entertained through a mobile device is now a mainstream activity that the majority of adults engage in. The participation figures are also sufficiently large to suggest that socio-economic divides are being (or have been) eroded.

According to the report: “Developments in technology, and improvements in availability and affordability have made it easier for people to go online whenever they wish. These enhancements also have the potential to make the online experience more enjoyable for consumers, as internet connection speeds improve, particularly while on the move as the 4G network becomes more widespread.”

This channel switch has already been hailed by many in the gambling industry who have even gone so far as to predict the ‘death of the desktop’. Now that the scale of change has taken on apparently structural proportions, the clamour to proclaim the new gambling world order will likely increase in proportion to the statistics.

But the rise of the smartphone comes with its own pressures, not least for those operators that are struggling to keep up with the pace when it comes to digital innovation. This isn’t just about former land-based operators which are in danger of being left behind by technological leaps and changing consumer behaviour; some original online pioneers have also been caught out by the swift rise to prominence of the mobile gambler.

The figures from Ofcom show how channel shift is likely to pick up pace. The figures for 4G take-up in the UK in the past five quarters give an indication of just how fast subscription levels for that service are growing. (See chart 1)

Source: Ofcom Communications Market Report 2015
This degree of change appears structural and is likely to pile more pressure on operators scared of missing out to ‘do something’, whether that is to embark upon ambitious innovation programmes, or alternatively seek to cut costs, or to rely even more heavily on aggressive marketing and their supply chains.

The pressure will be all the more intense because of what the smartphone offers in terms of the relationship with the consumer. Having an app installed on a customer’s main communication device gives an operator an ‘always on’ ubiquity which is far more intimate and constant than the gambling experience enjoyed via a laptop or desktop, let alone taking the trouble to go to a licensed venue.

At the same time, the possibilities being opened up on the data front are giving an enhanced picture of each individual customer, and in particular their preferences, opening up the opportunity to offer a more personalised gaming experience.

The more forward-thinking operators are exploring what this channel shift means and where the device and data developments are pointing. Others will be playing catch up, not least with the consumer themselves.

But each should be wary of believing this channel shift to be an unalloyed positive. Buried within the report are some other statistics which should give pause. The first is that the average number of apps that smartphone users have downloaded onto their phones is 17. Space for even a couple of gambling apps here is at a premium, so getting onto this privileged list will be an expensive process; dislodging an incumbent will be even trickier. In both cases it will demand ever higher levels of marketing and advertising spend to persuade consumers that your app is deserving of selection. It will also put an increasing premium on product innovation, data-mining and CRM activity if market share is to be maintained.

One further stat from the Ofcom report also offers a clear warning of what ubiquity can mean: based on a scale of one to 10, the report found that 48% of smartphone users gave a score of seven or above to describe how hooked they were on their mobile phones. In the 16-24 age group that rose to 61%. The report notes that this appears to be part of a continuing trend of increased dependency on the device, up from 41% in 2012, and 37% in 2011. As much as that is enticing to the operations side, it should also act as social responsibility flag. 

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