iGaming Business magazine Sports Betting Focus 2017 - Page 19

Sports Betting Focus 2017 WHAT’S THE NEXT BIG INNOVATION? Real innovation is rarely seen in sports betting, with paradigm shifts such as in-play and cash-out few and far between. Bernard Marantelli of Colossus Bets explains what is holding the vertical back and predicts crowdbetting will provide the next big change in the ecosystem. When cash-out emerged a few years ago, it was seen as one of the rare and few ‘true’ innovations in an industry that is generally perceived to be innovation-starved. Now that cash-out is established as a mainstream feature, I am often asked what is next and why it is that sports betting does not produce such innovations more often. Starting with the ‘why’, I partly dismiss this perception as unfair. We tend to think of innovation as a binary choice between ground-breaking change or no change at all, whereas in reality, there is a spectrum — even minor innovations can prepare the ground for what is to come. On the other hand, it is true that in recent years operators have not focused on product innovation. Industry heavyweights have come under increasing pressure to defend their market share from a seemingly endless line-up of startups, which has escalated into a marketing war of attrition. What used to be odds of 5/4 for Arsenal has become 11/8, with massive margin pressure on ‘me too’ bet types. This focus has inevitably had a knock- on effect on innovation capacity and depth. Brand innovation is important but with no product differentiation underpinning it, the long-term prospects of the business are compromised. Nowadays, many of “Crowdbetting is to sports betting what Uber is to hired driving and Airbnb is to the hospitality market” We also forget that innovation is in some respects circumstantial. Let’s refl ect on the three most frequently cited innovations of the past 20 years. First, exchange betting could not have existed until the change from UK betting duty based on turnover to one based on gross profi ts (and the widespread adoption of the Internet), thus its rise in the early noughties; second, in-play betting could not have existed until we had wall-to-wall TV coverage of soccer, thus its rise in the late noughties. And fi nally, the expectation that these earlier innovations built among players for a new level of engagement and control propelled cash-out into dominance. Ultimately, there is no single reason why innovation occurs but there is defi nitely a strong element of timing and momentum 1 . 1 the operators I speak with acknowledge that they are struggling with product development resource, as well as having diffi culty instilling an innovation mindset in their organisations. In fact, the bigger the operator, the harder it is to innovate, which culminates into a vicious cycle of defending market share rather than embracing innovation. This is the aftermath of a long period of ‘marketing fi rst’ and there is no quick remedy to it. So what is next? Ultimately, innovation needs to serve both operators and players to succeed and I believe there are a few products, albeit still niche, that deliver this ‘win-win’. One of my favourite examples is BetVictor’s ‘Lengthen The Odds’, which gives a higher margin to the operator and a fl exible bet to the player. There are several good reasons to believe that crowdbetting could be the key to the next era of innovation and growth. First, it appeals to a broader, non-expert audience, less familiar with traditional sports betting but keen on exploring new forms of engagement with the sports they love, as well as sharing the experience in a community setting. Second, it ‘fi nds’ this audience where they already are — on their preferred social media or other communication platforms. Third, it constitutes a paradigm shift in the product-marketing continuum. Typically, marketing is sequential to product and the players are on the receiving end of the marketing message. With crowdbetting, marketing is embedded in the product in the form of social sharing and the players are equally receivers and transmitters of the marketing message, becoming de facto affi liates. This dynamic has so far surpassed my expectations and I believe that within the next two to fi ve years, it will diminish formal affi liate ecosystems. After all, the most commercially successful innovators of our times — companies like Uber and Airbnb — are businesses that did not just invent a new product but also changed the underlying ecosystem of that product. I believe that crowdbetting is to sports betting what V&W 2F&VBG&frB&&"2FFP7FƗG&WBBG2FRFVFF&VFVfRFR7'G2&WGFr&6F@VV6FRvW"bW'2BFf&0&WBW&F'>( 7W'&VB&V6&W&&B&FVƒ24TBfVFW"b677W2&WG2&W&&B2&fW76v&W GW&VBW&F"v&VƖWfW0GF6VB7'G26G2&RFPgWGW&Rb&WGFrR2FRVW"`66WBB'F66WB6WfW&v֖pfW'F62BG2VW&W2FVG2F2आRG266V6RFVw&VRB$FR'F6RbF֖r6VRDTB6ӢFR6vR&vvW7B&V6v7F'GW27V66VVBঔv֖t'W6W7277VRRVǒVwW7B#rs