PGIJANFEBMAGAZINE2021a

22 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2021 Some big-picture trends emerged. Perhaps related to the influx of new players to lottery, terminal-generated Fast Play instant win games really took off in the early stages of the pandemic and continue to be hugely successful. Traditional instant game sales increased over 15% year-over-year even in the most recent 12 weeks same period, and it is about the same for the 52-week year- over-year period. Fast Play sales are up over 15%. iLottery sales are up over 100% in most of the jurisdictions that offer the games online. That year-over-year growth rate may soften a little as we go forward, but we expect the influx of new players and the increased online activity of all consumers including core lottery players to continue to drive outsized performance in iLottery. Another important trend is towards the higher price-point games. Twenty dollar and over games saw a 29% year-over-year increase in the last 12 weeks, and 24% increase over the last 52 weeks. Of course, these big- picture trends can be discerned without the application of sophisticated data-analytic tools. It’s not enough, though, to know that there are accelerated shifts in purchasing of higher price-point instant games, Fast Play and growing affinity for instant-reward digital games. What the combination of data in MAP, Game Gallery and Infuse enables us to do is drill down on the detail to evolve and recast the underlying multitude of game attributes for optimal performance. For instance, we are analyzing in quite granular detail the degree to which the increase in Fast Play games is being driven by an evolution in core lottery player preferences, as well as the influx of new players are migrating over from casino style games. The business of generating entertainment value for players is not static. It is always in flux, and the rate of change is increasing dra- matically. Maintaining momentum, creating the games that will excite players in three and six months, is an ongoing challenge that can only be met with the application of effective business intelligence tools that produced advanced data visualization to guide our efforts. This is why we are very bullish going into 2021. Did the pandemic provide an oppor- tunity for operators and retailers to appreciate the effectiveness of tools like SCiQ ® , predictive ordering, and other retail modernization initiatives? P. McHugh: Yes. For example, we saw an increase in our retail cashless payment programs, and lottery customers and retailers relying more on our automated predictive ordering systems. Investing in retail mod- ernization technologies and processes is a top priority for Scientific Games. We think there’s a great opportunity for predictive ordering tools for inventory management, and automating supply chain management lotteries and retailers to transform the business. Tools like our SCiQ intelligent retail ecosystem, single-ticket-activation, enhanced point-of-sale technologies, AI- enhanced self-service vending, and others that may have been optional in the past will become critical going forward. Cashless payments were up 15% May to August 2020. There are many more data-points that conclusively demonstrate how investment in modernization is paying off in a big way for lotteries and retailers. And retail moderniza- tion is delivering a more convenient and entertaining user experience for players. How is the role of loyalty programs and player clubs and cross promotional initiatives going to change to further engage players in this new omni- channel marketplace? P. McHugh: All forms of digital engagement have accelerated during COVID. That’s true for our digital loyalty and promotions programs for players buying at retail, as well as players buying online and via mobile. We believe strongly in beginning the digital engagement for retail players. This was true before the pandemic and is true now and going forward. A sustainable iLottery program depends on digital engagement on multiple levels, including players clubs, effective loyalty programs, and cross-channel and cross-product promotional initiatives that excite the players. In 2020, we launched nearly 500 “achievement challenges” that incent and reward players for trying other games. We issued 1.5 million coupons as part of our digital loyalty programs. The gamification strategies we are applying are producing remarkable results. Will the increasing number and acces- sibility of gaming options cause players to be more likely to migrate across multiple game categories to try new and different games? P. McHugh: Your question speaks to the bigger issue I’m very passionate about: the sustainability of our industry in a world exploding with new gaming and entertain- ment options. Our competition is not just with other wagering game categories. Lottery now operates within the extremely competi- tive environment of recreational and enter- tainment consumer products. This is a highly fluid and dynamic market and consumers are constantly shifting their attention from one product to another. Consumers are migrating across a landscape rich with exciting options, and doing so with much more ease and fluidity than ever before. So, yes, the challenge of getting attention, engaging interest, and staying relevant has become a daily, even an hourly, mission. Our team and our customers rely heavily on our ONE Segmentation™ consumer model which allows us to look across gaming and entertainment options and see how different groups of consumers have different motiva- tions for engaging. Applying this model mitigates some of the guesswork and allows us to develop products and programs that align to consumer expectations. Really, the good news is Scientific Games has been deeply embedded in using consumer motivation for product development for many years now. And when you are tuned into the ‘why’ of the experience consumers are looking for, you are much more effective in creating the ‘what.’ We have demonstrated that in our ability to position products in a way that players recognize there is something for them across multiple categories of gaming. Another industry asset is lotteries’ estab- lished retail distribution network. The lottery sector has the decisive competitive advantage where it counts most: trusted brand power, fabulous product that the consumer knows and loves, and a distribution infrastructure that is next to impossible for other forms of gaming entertainment to replicate. That is why Scientific Games is so focused on continued innovation investment in both lottery retail and digital channels. I would like to once again expressing my appreciation to our customers for their flexibility and genuinely collaborative spirit during these challenging times. We are looking forward to seeing our customers in person again, and visiting with everyone at an industry event – hopefully sooner rather than later. All ® notices signify marks registered in the United States. Q PGRI INTERVIEWS