Disruptions and User Experience

By Gambling Insider
Yggdrasil CEO Fredrik Elmqvist speaks to Tim Poole about the evolution of gaming, the importance of user experience and how key disruptions have impacted the industry

You’ve been at the helm of Yggdrasil for almost 10 years. How do you reflect on this?

Coming towards 10 years exactly, it’s been an interesting adventure in that sense. I think it is fair to say that the industry has evolved a lot since then. We believe it’s a better user experience to let the players select from various types of games instead of just having a smaller, limited range.

And I think that disruption has been pretty big because it led to more innovation, and this was allowed because we had taken down the barriers around manual fund transfers, which enabled a slow evolution of more providers.

At Yggdrasil, we see third-party partnerships coming and joining our development cycle, they are licensing our intellectual properties to get their content into our big network. I think that is the next disruptor; we are kind of in the middle of it, we see our top line growing pretty well due to that; we never wanted to be a hub. Aggregation has been there all the time, we wanted to disrupt the aggregation by developing this piece of tech called GATI (Game Adaptation Tools & Interface) in the regulatory landscape, allowing each part of a chain to do what they do best. So we are kind of in the ideals of that and sailing through it at the moment, which is very exciting.

 

Given these disruptions, on a scale from 'slightly different' to 'unrecognisable,' just how much would you say the industry has changed during this time?

Well, for me, a lot. I can only look at the casino side and slot side of this mainly. There I see a lot of disruptions, but it all started with seamless wallet and free spins. Seamless wallet broke down the barriers; and that led to branching to new innovations that led to new disruptions. Everything is driven by the user experience. What I see now if I compare the casino with sports betting is that it’s been pretty big with tech and software. I think there will be a lot of innovation coming from the US in sport. I do think casinos still do have disruptions to come, based on what we are doing with GATI, opening up third parties, enabling people undertaking R&D (research and development) based on being convinced on a strategy or user experience. So do I see a change? I’ve seen a lot more sports involvement in the last year. 

 

You mentioned as well how Yggdrasil has adapted and, as you say, perhaps caused some disruption. In the next 6-12 months, given the Masters Programme and your aim to be seen as a global publisher, what is on Yggdrasil's roadmap?

We focused a lot on the B2B technology side; we are a provider to the operators but also to the studios. You see a lot of focus on the tech to make it scalable, which is very important. Today we are actually doing a lot more with a lot less resources, which is a huge difference from two and a half years ago. What we are working on now is to be seen as not only a B2B company, but as a B2B company working on consumer and gambling B2C products. So, you will see more of this, and will see new types of games coming out, games like Vikings Go Berzerk Reloaded.

A different focus from the beginning, on the R&D front, is focusing on the gambling user experience. We are taking back the B2C experience, focusing a lot more on our own intellectual property. We are also focusing a lot around monetising on the “GEMs,” the Game Engagement Mechanics that we licence to our partners. Because we see that when the players recognise the mechanics, it’s a win-win for the studio. You’ll see more known and working mechanisms but with permutations from us and our partners. We are going to be much tighter with the B2C experience of the products. It’s been implemented since August, but it will continue – it’s part of a strategy.

 

You touched on GEMs and GATI earlier, and I know these are big products for you. In terms of distribution and change, obviously something that impacts the industry as a whole is M&A. This year we have had several examples, Evolution– Lightning Box, 888 – William Hill,  Aristocrat – Playtech, to name a few...What a list! How do you review 2021 in terms of industry consolidation, and the deals and trends that are driving the sector at the moment?

I think it is very interesting. You see a lot of interest between the UK and US, a lot of shareholder value is also created in Evolution deriving from the US and continuing for several years, even NetEnt had a lot of shareholders coming in from the US. I see gaming moving into a new phase and I find it so interesting. That is why there is never a dull moment or quarter in this industry; new innovations, new deals, global macro trends, they all have an impact. SPACs are coming in and changing things around again. There’s a lot of money involved, in the US regulating sports, in casinos following after. Then there is, of course, a very tough regulated landscape in Europe that is struggling, probably the lowest it’s ever been before in the regulated markets. You need to keep an eye on the global macro and the local macro – again, never a dull moment.

 

Absolutely, never a dull moment and no two days are the same. Do you have any thoughts on the operator-supplier merger trend, while not too common we are seeing a lot of it. As time goes on, do you think we will see more?

It’s usually driven by the operator who wants to have production from a strategic point of view; they think it’s going to differentiate themselves with new content and be easier to market. I think it is just a strategy but this is nothing new, it’s been like this for a very long time; several B2Cs have it, Paddy Power had it, it’s really nothing new.

I don’t think that online game providers really understand the complete quality in user experience, until guys like Megaways came about and really turned this upside down and focused completely on user experience targeting the players; that was the disruption itself. I think you are going to see a much more fragmented landscape between B2Bs and B2Cs in terms of collaboration and flexibility. Work with your frenemies – have a collaborative and flexible approach.

 

When it comes to M&A and being acquired by another company, what is Yggdrasil’s stance and approach to this? And what about perhaps going public?

Well, I would say there is a big barrier today in the public market. I think given how the banks are treating gaming today and especially in Sweden, I think it makes it tougher to have an IPO there. I would say that back in the day, having an IPO was almost a preferred way forward for the shareholders to exit the business or continue rolling forward. Today we work with a private equity company, Bridgepoint. If I would bet, I would bet more about looking at the option to potentially sell the company or merge the company. When it comes to Bridgepoint’s strategy – you’d need to ask them how they are philosophizing around this; but for me personally, I can say there is an interest in continuing the journey one way or another. It depends on who we talk to and who wants to do a deal. We are open to discussion but it depends who and how, and so forth. There are currently no ongoing activities.

 

So, looking ahead (and looking back), how do you sum up 2021 and what is Yggdrasil’s outlook going into 2022?

Looking back, we don’t rate 2021 as a bad year, we see it as a good year; we have delivered our promises and KPIs, we managed to sell some Gems to partners and we built a top line. I think we have had a pretty decent year, with a very strong Q4. 2022 will be more focused on the B2C and user experience. This means a lot of motivation, less games coming out; but more games proportionally will have our own intellectual property, in-house games and licensing intellectual property. We are going to declare some kind of strategy towards the West, and we will most probably announce something on that over the next few weeks. For us, 2022 is a year of exciting, tighter accumulated strategies.

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