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How to succeed in the mobile game space by Lloyd Melnick

Day: April 15, 2020

Finding Blue Ocean opportunities in gaming in the post-Covid19 world

Finding Blue Ocean opportunities in gaming in the post-Covid19 world

Rather than trying to predict when the pandemic will end or the final impact, which is impossible, now is the time to start planning for business opportunities in the aftermath of Coronavirus. I have never been a big fan of predictions, if anyone could predict the future or even trends their income would dwarf Warren Buffet’s, rather it is often an exercise in confirmation bias (remembering our correct predictions) or vanity. A recurring theme, however, of this blog has been the benefits of pursuing Blue Ocean strategy, an approach that has a higher expected return than traditional strategy. While not predicting when the current crisis will end or what the world will look like after it, it is smart to begin planning your economic future.

If you are fortunate enough to experience growth or even stability during the current crisis or are one of the many unfortunate to be furloughed or made redundant during this time, in both scenarios it is important to start preparing your next steps as the world exits the Covid19 situation. A recent article on Forbes, There Will Be Blue Ocean’s Everywhere Post Pandemic by Bob Zukis, reminded me how you should juxtapose Blue Ocean strategy with planning for the aftermath of Covid19. After the pandemic, the often-rare Blue Oceans will be abundant. Anticipating these Blue Oceans and building a strategy to leverage them could result in not only financial stability but big future successes.

Key principles of Blue Ocean Strategy

Before determining how to apply Blue Ocean strategy, it is important to understand the key fundamentals of this approach. First, Blue Ocean is all about turning non-customers into customers, rather than competing for the same customer. By pursuing a Blue Ocean strategy, you create an uncontested market space and make the competition irrelevant. Rather than taking market share, you are creating markets.

Second, developing and implementing a blue ocean strategy involves four crucial actions: eliminate, raise, reduce and create. These are changes to your existing product or a way a market segment is approached. To pursue a Blue Ocean strategy targeting the real money online casino space, for example:

  • the first step would be to eliminate. As online players are generally more focused on the underlying gaming mechanic, you might eliminate dealers.
  • The next step is raise, that is increase something in the product so it appeals more to this segment. Since casino players are looking for slots, you may launch with 500 different slot machines, more than any land-based casino.
  • The third step is to reduce. In this example, since you have a lower cost base, you can probably reduce the amount of each players bet (hold or RTP) that you keep.
  • Finally, you need to create, that is add in new functionality for the target audience. If you are creating products for online casino players, maybe you would add in social features that would replace some of the tertiary benefits they get from going to a land-based casino, like a chat function.

If you try to build a Blue Ocean strategy and fail to include these four steps, you will not end up with a true Blue Ocean plan and competitors will quickly eat into any success you experience.

Blue Ocean, gaming and Coronavirus

Covid19 will create an unprecedented plethora of Blue Ocean opportunities, including in the gaming space. Zukis wrote, “rarely do blue oceans appear out of nowhere in business. But they’ll be splashing up everywhere post-pandemic…. When they’ve appeared lately, they can often be more like blue lakes than oceans, and extreme competition from other fishers can quickly turn the lake red.”

You need to understand how the ecosystem will evolve after the pandemic, particularly online. Zukis says, “[the] digital operating system is what will help them find these oceans and navigate the journey safely.” That is, the way people consume and companies deliver content will change. The competitive landscape will also evolve due to the pandemic. While it is impossible to predict the post-pandemic situation, there are several variables to consider and questions to ask when anticipating where the new Blue Oceans will be both for iGaming and social casino (but this can be extended to virtually any space):

  1. Competition. Many companies may not survive the pandemic. If land based casinos contract significantly, not only would that create land-based opportunities but also may open up other areas that these casinos dominated.
  2. Regulatory. Will governments, particularly in US states, loosen online gaming regulations to create jobs or generate tax revenue to help pay the huge debt they are building.
  3. Online collaboration. Will people be more likely to replace business meetings and social get togethers with their virtual equivalents, continuing to use products like Zoom and Houseparty.
  4. Advertising. With the economic disruption caused by Covid19, the cost of advertising should change (potentially long-term if certain industries do not rebound), new channels will emerge while other channels will disappear.
  5. Openness to digital Will people, especially older people, be more likely to replace land-based activities with digital content. In the gaming space, will people who previously only would gamble on a physical machine now be open to or even prefer playing digitally.
  6. Economic situation. Will the world or individual countries rebound quickly or suffer a prolonged downturn. Will the economic shift the importance of certain markets.
  7. Spend patterns. Will people be more conservative in their spend after the huge economic disruption; as Depression era people always felt a need to keep a strong cash reserve. Conversely, will people spend more easily because they had not spent for months.
  8. WFH. Companies may decide it is more efficient to let employees continue to work from home or people may decide they prefer WFH than going into an office.
  9. Investment. Will it be easier to raise funds from VC or Angels, will new investment sources appear or will funds dry up.
  10. New digital platforms. Will crowd-sourced apps and services like TikTok and HouseParty evolve to become dominant platforms and new ways to reach customers or will new providers like Disney+ and Quibi become the path to reach players.
  11. Conferences. Rather than visiting conferences, people may prefer to attend virtual conferences. This can lead to fewer conferences or more virtual ones.
  12. Travel. Will people revert to past travel patterns, travel more to make up for time spent at home or travel less because fears have increased.
  13. International trade. Will it become easier or harder to operate across borders.
  14. Commercial real estate. Rents may plummet if retailers are unable to reopen or more companies move to working from home.

By looking at the above variables and then integrating them with the eliminate/raise/reduce/create framework, not only will Blue Ocean opportunities appear but you will appreciate how to pursue them.

Anticipate the competition and move forward

One consideration that is often neglected when building a Blue Ocean Strategy is anticipating the competition and this issue is particularly relevant now. In the post-Covid19 environment, this factor will be even more important as you are not looking for new opportunities in a vacuum; there are hundreds, if not thousands, of other people also thinking about what to do next. They may be forced into the situation because their company has gone out of business or they lost their job or may be looking to accelerate momentum they gained from being in the right place at the right time.

When evaluating your Blue Ocean options, realize that the most obvious ones are likely to be pursued by others. Thus, that beautiful Blue Ocean on your screen may be full of blood before you even get there. That is why it is critical to follow the Blue Ocean framework painstakingly, truly focus on what you can eliminate/raise/reduce/create, and ensure you reach the optimal option. While any new initiative may fail, if you follow this strategy you have the best chance of seeing an outsized return.

Key takeaways

  • Blue Ocean strategy historically has a much higher ROI than pursing a Red Ocean approach and Covid19 will create an plethora of Blue Ocean opportunities.
  • A Blue Ocean strategy is one where you avoid the competition rather than trying to beat them; you do this by eliminating/raising/reducing/creating features.
  • You also need to anticipate what others will do, avoid the obvious as it won’t be a Blue Ocean if five others get there first.

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Author Lloyd MelnickPosted on April 15, 2020April 12, 2020Categories blue ocean strategy, General Social Games Business, General Tech Business, Social CasinoTags blue ocean, blue ocean strategy, Coronavirus, Covid191 Comment on Finding Blue Ocean opportunities in gaming in the post-Covid19 world

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Lloyd Melnick

This is Lloyd Melnick’s personal blog.  All views and opinions expressed on this website are mine alone and do not represent those of people, institutions or organizations that I may or may not be associated with in professional or personal capacity.

I am a serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big (Disney, Stars Group/PokerStars, Zynga) and small companies (Merscom, Spooky Cool Labs) with over 20 years experience in the gaming and casino space.  Currently, I am on the Board of Directors of Murka and GM of VGW’s Chumba Casino

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