What Game Is Business Playing?

The UFO speculation of the past week did prompt a few random thoughts. First, there was the faint hope ET’s mates were coming to take Donald, Jacob, Vlad and Enoch away but no such luck. Then there were childhood memories of playing Space Invaders in amusement arcades and on ancient TV gaming consoles. And finally, I thought of Pachinko. What??? Lansdowne Road on Saturday and the Super Bowl on Sunday were the triggers, but I was thinking more broadly about the role of games in different societies east and west. Games may differ across the generations or individual countries but engagement and community-build are a constant. So, is money. Back to Pachinko and the Super Bowl…..

The Super Bowl finale of America’s NFL football season is more familiar to most readers so we’ll start there with the numbers. NFL is the richest and most powerful sporting organisation on the planet. Annual revenues for the NFL in 2022 almost touched $18 billion and, for context, are three times bigger than the $6 billion earned by England’s Premier League(EPL) and its global audience. The Super Bowl itself was watched by 113 million people on Sunday and ranked as the 3rd most watched US TV show ever. Ever heard of Pachinko? If not, this game’s annual revenues might surprise.

Estimated annual revenues of $200 billion are more than ten times those of the NFL! Pachinko is a ball game too but it’s a vertical pinball game played in Japanese gaming arcades. Players twist wheels to steer descending small steel balls into cups which trigger a prize-winning payout of more balls which, in turn, can be exchanged for cash or small prizes. Gambling for cash is illegal in Japan but this low-stakes, low-strategy game exploits a legal loophole and is 30 times bigger than the annual gambling revenue of Las Vegas, as well as twice the size of Japan’s export car industry. Arguably, this is an apples and oranges type comparison with NFL but perhaps the sheer size of the gap between sport and gaming/gambling is worth exploring. Three stories struck me this week….

  • Remember those Generation Z traders who got burnt on meme-stocks, crypto currencies, the Nasdaq tech implosion and NFTs? These retail (non-professional) traders have not retired hurt, but rather have stayed in the game. In fact, JP Morgan data this week shows that retail market orders as a percentage of market value reached an all-time-high of 23% in recent months.
  • Nobody needs reminding 2022 was a tough trading year. However, check out trading platform, Plus500, who released their annual results for 2022. They actually grew revenues by 16% and average revenue per user was in the region of $3,000. For wealth managers hoping for a 1% management fee this equates to the AVERAGE customer giving you $300,000 to manage. Oh, and now think about the estimated 450 million retail trading accounts globally.
  • The gaming or gambling spend is not just confined to financial instruments. Sport as a magnet for speculation and bragging rights is huge. So, it was intriguing to read reports this week about Paddy Power’s(Flutter entertainment) potential listing of its shares on one of the US stock exchanges. Of course, the US has recently legalised sports betting in many states so the commercial logic is strong. For illustration, and back to the Super Bowl, an estimated 50 million people bet up to $16 billion on anything from the colour of Rihanna’s dress to the number of mis-spells in the Orange Toddler’s tweets for Sunday night attention. Also, check out New York state who recently legalised sports betting and reported just the $1.8 billion of mobile sports bets in January alone.

One might not be comfortable about the younger generations speculating on anything from doggy coins to dodgy tech but the older generations’ moral and wellness high-ground is on tricky foundations. Or…. should we say no foundations, or no homes. On these pages previously we have described the younger generations as the most asset-poor since before World War 2. So, it is not really surprising to see younger consumers speculate or just consume/enjoy the thrill of gaming rather than save for house deposits. However, there’s potentially a bigger point being missed. Games, whatever their costs or outcomes, have a community aspect in many cases. A shared experience of fun, loss, competition, fantasy and success is a core behavioural trait of human society. As the digital economy and Artificial Intelligence (AI) grows in complexity, business needs to think more deeply about how to engage consumers, and how gamification could be a huge assist. One final story this week caught the eye on that thought….

Canadian tech giant, Shopify, provides a platform for retail businesses who want an e-commerce channel. In 2022 Shopify engaged 450 million users and processed $80 billion of sales but it sees the future shopping experience changing. Last week it launched a suite of blockchain-based tools to help retailers engage customers with crypto-wallet sign in facilities and loyalty discounts/benefits embedded in digital tokens. Those tokens are actually NFTs, but that word gets bad press these days. So, get used to word like ‘tokenomics’ and ‘tokengating’. Before that, maybe take a look at businesses like Shein and TikTok who are using task-completion/gamification strategies to drive world-beating engagement with young consumers. Whether it is steel balls or digital tokens, human beings are programmed to engage with fun, competition, community, experience and rewards. And businesses should be driven by the following number: the marketing/martech gurus, LXA, reckon companies using gamification see up to a 700% increase in customer conversion rates.

Like our opening paragraph, the mingling of sport, games, tokens, space and the metaverse may seem random but the direction of engagement is very clear. Even an Arsenal fan knows there’s something up when a $3.75 billion bid for Tottenham Hotspurs’ empty trophy cabinet appears! Game on.



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