Finding Growth in a Mature Market

lottery game on cell phone

IGT’s Lottomatica continues to grow the highly competitive Italian lottery and gaming market through a unique understanding of its consumers and relentless innovation.

Like many countries, Italy is a land of contrasts.  At once both traditional and innovative—pasta and Prada, family and Ferrari—Italy hovers somewhere in the middle by most measures of industrialized sophistication.  It ranks 24th of the 50 most innovative economies, just behind Poland and Malaysia1.  Digital competence is low, ranking 23rd out of 28 EU countries, with only 19 percent of 16- to 74-year-olds identified as having a “high digital competence level” compared to an EU average of 28 percent2.  Yet, while Italians have low web penetration, they have an extraordinary mobile presence.  

Mobile subscription rates are 128 percent compared to the overall population, with many people having two or more phones.  Compared to the US, with a 108 percent subscription rate, and France, with 101 percent, Italians are tied to their mobile devices more than most industrialized countries, with more web traffic flowing through mobile phones and tablets (46 percent) than in the U.S. (37 percent) and France (31 percent).  And while the reputation Italians have for socializing extends to the web too, with 79 percent of Italian web users being active in social media compared to the U.S. (74 percent) and France (63 percent)3, Italians lag behind in e-commerce.

Concerned with fraud and government tracking, Italians are reluctant to purchase online.  Only four percent of retail sales are online in Italy, compared to 15 percent in the UK and 10 percent in France and Germany4.   But one other factor makes Italy unique.  Due to both tradition and innovation, it has one of the most developed and regulated gaming markets in the world, with 44 percent of adults playing regularly and one of the highest per-capita spending of any country in the world, totaling €19 billion in 20165.  

Given this unique mix of opportunities and challenges, IGT’s Lottomatica team has found ways to continue to grow the overall market year over year, while increasing its market share to 34 percent6.  How?  IGT understands there is not a “one size fits all” solution to growth.  Each market has its peculiarities and nuances, and its team of professionals share successes from around the globe, while assessing and adapting to each market’s specific situation.  Further, IGT is able to harness and leverage its vast resources to create games, products and services that benefit its customers around the globe.  In Italy, one of the most competitive gaming markets, Lottomatica has parlayed that experience and innovation into becoming the largest lottery supplier, the largest gaming machine supplier, the second-largest interactive supplier and the fifth-largest betting supplier, and utilizes this unique understanding of the Italian marketplace to ensure continued growth.

While a focus on online sales growth makes sense in other markets that IGT services, it isn’t the primary focus for Lottomatica.  Despite double-digit percentage annual growth and a percent of online sales (for games offered both online and at retail) that exceeds the average for all online sales in Italy, the Lottomatica team realized that, given Italian’s attitudes and behavior, the real growth opportunity remained at retail.  Rather than trying to change attitudes, Lottomatica settled on a strategy that embraces its vast network of 96,000 retailers—one for every 650 Italians—and utilizes digital to create true channel convergence by enhancing players’ in-store experiences while improving long-term retailer relationships and efficiency.  The Lottomatica team coined this the “phigital” approach, utilizing the best of digital technology and the extraordinary asset of all those physical retail locations.

Through their unique understanding of both the player and retailer journey, Lottomatica crafted an approach that understood that Italy is both traditional and innovative, and players are in different stages of technological sophistication and preference.  By focusing on investments that enrich the player experience through retail excellence, they leveraged their consumer insights and harnessed IGT’s innovation.

While those players who want to continue playing lottery games and purchasing via methods that have been in place for half a century, in what Lottomatica refers to as the “take away method” (wherein they buy a game and enjoy it immediately or take it with them for later), they are now encouraging those players to linger in the retail location and take the playing experience to a new level.

By incorporating smartphone technology into the retail experience and providing WIFI access, players can now prepare their bet slip, use QR codes to place bets, research win probability, experience augmented reality enhancements to games, choose from among a variety of second chance games, and enjoy many other functions—all with their smartphones in-store.  While some of these benefits were possible before, Lottomatica’s new lotto app, launching in phases beginning in June 2017, provides many more features and is designed to be a fully integrated experience while in retail.  

Creating inviting retail environments where players enjoyed spending time was another goal.  Reimagining the sports betting experience through “SMART” design, Lottomatica began refurbishing sports betting shops in collaboration with retailers in 2016.  Likewise, they brought the excitement and sophistication of Las Vegas to Video Lottery Terminal gaming halls, in a country with only four casinos, establishing a new standard of retail excellence.  

Last, Lottomatica recognized that this same technology could be utilized to improve relationships with retailers—their key partner.  While the call centers supporting retailers were doing a good job of satisfying retailer needs, the new Retail Portal provided a new level of service and support to retailers, allowing them to do everything from downloading display materials to e-learning and managing their accounting.  The improved user experience and new features of the Retail Portal launched in 2016 have increased the number of average monthly users by 47 percent and the usage rate is now 63 percent.  

By introducing sleek retail designs, exciting new products, and sophisticated CRM solutions, Lottomatica has continued to grow the market by incorporating the right innovations that are tailored to the unique Italian market, growing 12.2 percent last year and representing 43 percent of the total market growth in Italy.

 1 Source:  Bloomberg
 2 Source: Eurostat 2015
 3 Source:  Hootsuite
 4 Source: Forrester 2018 Forecast
 5 Source: Lottomatica estimate.  Official figures from AAMS expected in May.
 6 Source: 2016 AAMS for Market Wagers and LTO Market Share; Internal estimates for Competitive Market Share

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