Sky High Margins on Video Games, Gaming: Scheurer

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Aug. 12 (Bloomberg) -- TIGA Board Member and Sarassin Chief Executive Officer Vincent Scheurer discusses Ladbrokes’ earnings and the how technology is impacting gambling. He speaks with Jonathan Ferro on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

Learn from the videogame industry?

It is hard not to have a sense of deja vu from a videogame's background.

These big layers have big shots i'm a big industry or big revenues german by hard-core consumers, not necessarily mass-market, but a strong recurring group of consumers.

Every thinks it is great and there will be more of a news.

Let's -- more revenues.

But somehow, the revenue is not coming in from digital.

And then you have regulations coming on top.

That is how the gaming industry was a few years ago.

The prognosis for the established players is brilliance.

You see what happened with videogames.

The high street players have all gone bust and the industry changed.

Digital is the business.

We've got smartphones now and tablets.

These things are as powerful as a playstation 1 or a playstation 2. 90 quit for a tablet these days.

They are spreading everywhere and the business has changed totally.

The question is whether labrokes is enough to handle it.

Now they are left with a huge legacy issue, 2000 shops in the likes of labrokes.

What do you do?

Do you shut them down?

Any kind of business are moving out of high street retail and to digital.

It means more millions -- it means millions more people worldwide.

Generally, that is positive.

But in terms of the business is raced around that, the terminal had almost the exact same background in the retail business.

Secondhand sales have cannibalized the market.

For a short time, they did very well.

But they were more on the retail and they masked the decline overall of retail.

And i would not want to be in these businesses in what is happening with the retail.

What are you doing to use existing new technologies to drive new people to come in, not just people in the u.k., but also people who gamble on lotteries but not necessarily on sports coming in to gambling with labrokes.

When i look at labrokes and william hill, the labrokes brand would translate to online well.

So what is it doing wrong and what should they do to get me to go on their website?

I think it is very difficult.

Labrokes is not worried about william hill.

In games, it was not established players who did well.

They ended up eating their lunch overnight.

I am worried about those rather than william hill.

William hill has a brand that people trust.

Trust in gambling is probably more relevant than trust in videogames.

What they need to do is build on that and go beyond that core audience.

The core audience is only good for any certain amount of money in any place.

You have to expand to the people who gamble on the lottery.

How to use networks to drive more engagement.

They communicate with each other by facebook.

How do you do that with gaming?

It is very hard to do that.

It is -- it requires a very new mindset to do that.

The beauty of candy crushes you can play it for free.

If you want me to go online and play games, you want me to spend money.

This is exactly the point.

Digital distribution allows an entirely new business model.

Give the game boy for free -- give the game for free.

It drives millions of dollars of revenue each.

They are unbelievably successful financially.

People only pay if they want to play.

The digital distribution platform means you can get it to every single person almost on the planet instant to honestly -- instantaneously at no cost.

But you could not do them before hand because there was a cost to establish it.

Some don't make profit.

Some have to make the profit as well as the revenue.

Both gambling and videogames ought to be extremely profitable.

The minute you go successful, your margins are sky high.

The margins of your games are sky high.

You have no in between the player and the seller.

You don't have high street taking 50% margins.

So your margins are astronomical for digital.

It is 70%. that is the challenge.

Thank you very much for joining us.

Up next, the tech giant is set to begin production of a new generation of ipad amid two quarters of sales declined.

What are they doing?


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