Q&A: John O’Reilly on transforming Rank

In this exclusive interview with EGR Intel, Rank CEO John O’Reilly addresses the growth in the group’s digital business, its plans for further expansion in Spain and the group’s three-year transformation strategy as it looks to become a more cost-effective operator.

EGR Intel: Digital revenues grew 15.8% during H1 2018, do you think this represents a major shift amongst consumers towards online?

John O’Reilly (JOR): In the digital business we have not been as strong historically as we should have been, and in light of this we are putting a lot of focus on developing and growing our digital offering. We’ve made some decent progress in the first half of this year, but we’ve got a lot of ground to make up.

We are launching [omni-channel platform] Grosvenor One following a successful trial in the first half of this year, and we are rolling it out in the second half when we formally begin the marketing campaign around that. Having done these sorts of campaigns in the past I’m very excited about the possibilities of omni-channel within the Grosvenor business.

We have a development in the pipeline to allow Mecca customers to register for a Mecca account online which will be launched in the second half of our financial year. To summarise, we have a strong focus on the digital offering, but with a lot of work still to do. We’re not there by any stretch of the imagination.

EGR Intel: Grosvenor has been the standout performer in digital for Rank in last year or so. Why was growth slower in H1 2018?

JOR: Grosvenor net gaming revenues grew by 5.8% in the first half of our financial year. During the first quarter we were down by 6.5% year-on-year and in the second quarter revenues grew by 17.5%, which represents a significant switch quarter-on-quarter. There are several reasons behind that: one is there is a flow through of the impact of EDD (enhanced due diligence) which had less impact because we are now just about through the year-on-year comps, so that’s just about now flowed through the system. We have a stronger focus on risk now in this space, just as every digital and indeed venues business now has, but for very good reasons.

We are adding more science and more sophistication around the use of free bets and bonuses and I would expect that growth to continue for the remainder of the year. High digit H2 growth is what we expect from Grosvenor going forward.

EGR Intel: What accounts for Mecca Bingo’s growth?

JOR: Mecca continues to grow strongly. It wasn’t impacted by EDD, primarily because it caters to a very different customer profile than Grosvenor. Mecca, which is primarily large volumes of small spending customers but at much bigger volumes than Grosvenor, had another good half. We launched our fixed-odds bingo game which gives players more chance of winning, that in tandem with the Macarena advertising campaign were the two biggest drivers of growth within the period. We are working on user experience and customer journey, there is a bunch of stuff in the background, all of which is key to but with an ultimate focus on user experience, which is starting to bear fruit.

EGR Intel: Were you surprised by the performance of YoBingo! during the period?

JOR: I wouldn’t say surprised, but it exceeded our expectations. As a CEO you are always rightly cautious about a business you acquire, and I think it has continued to deliver the growth we hoped for rather than expected. We are up 41% year-on-year, we are now the biggest online bingo operator in Spain with 42% market share. We are launching YoCasino! for the Spanish market and we are hoping to get the YoBingo! brand opening in Portugal soon, so we think there’s opportunity for international growth of the Yo! brand. It’s a good business and we are delighted with it so far.

EGR Intel: What were your impressions of the business when you first joined and was there anything you think you needed to change?

JOR: For me, the best way to judge a business is as a consumer from the outside looking inward. As a consumer I thought there were a lot of things that Rank could be doing better and differently and those things are underpinned within the transformation process. These are the things we are focused on in the Digital and UK business. As a digital consumer, you know what needs to change and what needs to improve/ be done differently.

Almost inevitably we’ve announced that we are taking quite a bit of cost out of the business in H2 and the benefit of that will flow through to next year. There is quite rightly a strong focus on cost within the business right now, but ultimately you only do that once. To be successfully you must grow revenue and at the moment the key area of revenue growth is digital business. We do have to continue to develop the venue’s business, but digital is the key opportunity for the group and that is very much the focus, in the revenue generating initiatives and our effectiveness in the digital space.