THE IMPORTANCE OF SCALABILITY AND EFFICIENCY IN THE GAMING INDUSTRY
– STEFAN NELSON, CFO
Let’s begin by describing what scalability is: the ability to expand without seriously hampering performance. Quite simply, adapting capacity for shifting needs. This can be applied for all parts of LeoVegas – in everything from marketing and technology to personnel and ways of working.
GROWING VERSUS SCALING UP
Growing involves increasing sales and the workforce; scaling up means much more than this. It entails improving the business model and organisational structure in pace with growth. Of course, this is a challenge in a growth company where everything is happening very quickly. In LeoVegas’ case – apart from rapid organic growth – the company has grown through acquisitions, which initially have increased the level of complexity. One of the keys to reducing this complexity and increasing efficiency is to use technology and automate work flows.
Digitalisation has revolutionised opportunities to create global and scalable business models. Prime models of this are Uber, Airbnb and Facebook, all of which have grown exponentially in a short period of time. The key is their use of technology, which makes them more efficient the more users who subscribe. Technological development also brings opportunities to increase efficiency by applying new solutions to old problems, at a lower cost. LeoVegas is engaged in a number of technology and efficiency improvement projects that do not involve the end customer. Now the company is updating and improving its internal tools to increase the Group’s productivity. Two concrete examples are improvements of customer service tools and responsible gaming.
REGULATED MARKETS – SIZE IS SIGNIFICANT
Being successful in regulated markets requires that we as a company take advantage of the scalability afforded by our business model. During 2018 we made major investments in compliance, which has given us long-term competitive advantages. Our customer base is larger than ever, which gives us opportunities to achieve a greater effect from our customers’ loyalty in retention work. We also know that loyalty is stronger in regulated markets. LeoVegas has strong brands and a world-class product, so we are in a good position to grow further.
I have already noted that a company’s size is of importance, and as more and more markets become locally regulated, with higher regulatory requirements and higher tax pressure, it is important to be a company that is both agile and of a size that allows for economies of scale. Our size gives us opportunities to negotiate better terms with our suppliers, and we will also be more efficient in our marketing, to name a couple of areas and examples.
While we already have many good initiatives in the scalability area, our ambition is to be even sharper. This is one of my and LeoVegas’ biggest goals for 2019.
"Companies that work actively from a scalability perspective have a 65% higher success rate than companies that focus only on growing."