As the coronavirus pandemic changes the landscape of the gaming industry for the foreseeable future, Gambling Insider catches up with EveryMatrix CEO Ebbe Groes for his views on the current situation.
First of all, what measures has EveryMatrix implemented due to the coronavirus pandemic and how has the company adapted?
As a company, it’s been remarkably easy. We benefit from the fact we normally do a lot of our work with online calls anyway. We have offices in nine different countries. This means we very often have calls conducted online, unlike single-location companies which have everything face to face. So this part went as I expected; we had the VPNs ready and everything you need to work from home. We had a bit of a rush to get a few extra laptops but, apart from that, everything’s going well. My biggest worry was how productivity and discipline would be once we got started but I must say it’s been really good to see people working well. If anything, our productivity is slightly higher; we get things done and our meetings are shorter and more to the point. This sense of crisis seems to motivate people. I also get more involved in the day-to-day things than maybe I would normally, because of the structure of our company.
We have one office in China so we had a bit of an early warning and experience with this. We’ve had that office since 2006/07 and the location is only 200km from Wuhan, so we were following this quite closely. We had that staff working from home well before it hit Europe, so we had a sense of what was coming our way. Now, of course, since China has got things more under control, our office there has actually been up and running for four weeks. It’s only a small part of the workforce but it still helped us prepare; it’s also nice to sit on the side where things are after the worst has happened, as it is in China. A sense of order has returned there, where people can actually go to the office; they check their temperatures there and are very vigilant. It’s working and gives you some comfort that, if things are handled well, we will get back to that in the European countries where we are all located.
Due to that increased productivity, do you think remote working will become more of a trend for companies in the future?
I think we would be more open in future to allowing people to work from home on a more regular basis than we would have been. Seeing such good discipline helps us say okay, let’s see if we have a mum who wants to work one or two days a week at home, then why not? If it’s proven already and works okay, you can then get a better work-life balance. We’ve maybe been more reticent in the past and would be more open to this.
But I don’t see behaviour changing too drastically otherwise. We already conduct a lot of meetings online and travel to different offices, so I don’t think we would change that much. I personally travel between offices, which is good as it gives you a better background to work remotely. If you’ve met sometimes 10 times, it’s much easier to have the 11th meeting online.
Where it impacts us right now is in recruitment. It’s harder to recruit and we have some recruits already arriving, and it’s hard for them to work from home straight away, getting your introductions and training from someone who doesn’t sit next to you. It’s not a big thing but I can see how this is something you would really have to tune if you do this on a more consistent basis. So I don’t think we would change behaviour that much but definitely we would be a little more open to working from home.
With sports betting falling, which vertical has seen the most activity for EveryMatrix?
That is, of course, online casino. We have some very large clients for casino – casino has been booming not dropping. This is in particular an effect of some of the companies who normally have large revenue from sports; a key example is Tipico, the largest bookmaker in Germany. We’ve been providing casino for them for two years. When they started, casino was like the icing on the cake. Together with us, they grew it a lot over two years, so we’ve become quite a large part of their revenue. When sports got this massive hit – don’t forget Tipico also has retail, which is hit even harder – they put a lot of effort into what they can do short-term to grow online revenue. While I can’t go into numbers when it comes to clients, I can definitely say that has paid off. Particularly clients where we provide casino and they run a separate sportsbook, we don’t suffer the sportsbook loss but we gain on the extra focus the casino gets.
Then we have the pure casino companies who are today in the position where they can grab market share. They’re normally competing with sportsbooks for players, so buy TV time and online advertising etc. They now have the ability to win market share as pure casino companies. Overall, March was a great month when it comes to casino, but April is so far a record one in the company's history. It is a bit more than 40% above our previous best, despite April not normally being a peak month for online casino. As a result, casino revenue has grown – it’s not enough to make up for the losses on sports, which is a significant revenue source for us. But it reduces the pain and shows the benefits of being multi-product for suppliers and operators. Having some diversification in your revenue stream is a good thing. Other suppliers and operators have been harder hit than us, while online casino is a key area that has benefited the most.
We have two new launches soon for online casino. One is the launch of our casino in Spain, where we’ll be providing casino for Betfair; that’s a deal we signed last year and we’ve been working hard on it for five months. The virus effect here is, of course, that a company such as Betfair has an added interest in making the launch happen earlier. We also have one more client I can’t disclose yet but it’s another large company where we see the exact same effect. The nature of it is these things take a lot of time. Here, however, the management level will be pushing harder to get the casino solutions ready on time or even faster than on time, so the situation has benefited us. For us as a supplier, this is where we are competitive compared to an in-house solution, in terms of quickly turning around a casino solution; this is our job, it’s what we do.
Even if online casino is the biggest winner, how much has esports grown year-on-year?
In relative numbers, it’s been crazy. It’s up my more than factor 10 in terms of turnover. The relative share has then grown even more. Esports turnover is now 40% of total sports turnover even when limiting to only clients who have both sports and esports. It’s really taken hold and it’s not just that the share has grown because everything else is dropping. The volumes have grown massively and, for us, that means two things. One, it’s good for our clients as a revenue source. And then the other thing is we can maybe open a new revenue stream long term; this is more exciting as it’s a permanent revenue stream for us. We are blessed by the fact we have these casino revenues and we’re not in danger or becoming loss-making.
So we can take a step back and look to win market share on esports, which is an effect that will be there for the long haul. Once the pandemic is over and the Premier League is back, with everything back to normal, I do not expect the esports volumes we have today to then drop. This is a positive permanent effect us and our clients will have. Currently, we have more time to say we are going absolutely all in on esports. We look at the data, the odds, the markets we offer; normally, we would never focus our entire sportsbook division on one area like this but the fact there is no other major sports has allowed us to do this.
Normally we work on two-month cycles but, at the moment, I see the effects in our revenue numbers of what we do on a week-to-week basis. We are throwing everything at our product. So the fact the investment in the product immediately starts paying off within one or two weeks, it makes it fun and exciting and attracts new clients for us. In the last couple of weeks, we have signed numerous deals with new esports clients – normally we would do not that many in such a short space of time.
Do you see esports challenging traditional sports betting revenue in the future?
Yes, I do. The reason is the immediacy of esports. For example, I like to watch football but it’s a two-hour thing. The appetite in the last 10 years has gone dramatically towards immediacy. You used to bet on coupons and the pools, betting on a Thursday and waiting until Saturday afternoon when all the matches are over. Then it changed to online, then live. But when you look at esports, you ramp it up even further. I watch a game of FIFA that will be played over eight minutes; it’s still sports and something I’m passionate about, and have an opinion about. But the speed is more like casino. It’s more like me placing a bet and knowing 30 or 60 seconds later if I won or not.
What is missing, of course, it that I have familiarised myself with players and have an opinion on the odds. But once that develops more, you can see why it would be just as fun to watch games like NBA 2K, where the graphics are stunning and it’s very lifelike. Soon, you forget these are not actual NBA players. It becomes a very attractive game to watch and bet on. So will it challenge? Yes, I think it will: it will take time but, if you look at the casino industry, you would have had the same discussion 10 years ago. We were asking will people ever want to go online and bet on roulette that is just spun with an RNG. People said “no you’d want to sit and feel the smoke from the cigars!” So it’s worth taking a step back and seeing other parts of the industry that underwent a similar change.