The next level: How Evolution is embracing new tech to tap into slots and esports

Evolution has carved out a path for itself as the most popular and innovative live casino supplier in the online gambling industry, making shareholders very rich in the process. The supplier is now striving to replicate that ethos in companies it has acquired including NetEnt and Big Time Gaming after using some of its vast capital to diversify via M&A. Below, Evolution CPO Todd Haushalter talks about the technology trends inspiring innovation at the company and riding the digital crest of a wave as consumers seek out online entertainment during lockdowns. EGR Intel: What sets Evolution apart from the live casino competition? Todd Haushalter (TH): Firstly, everything just works, a bit like your iPhone. When we look at other live providers, often the games don’t load or the video cuts off, or human mistakes aren’t managed properly like if a card goes on the floor. We have a team of a dozen people who play our games on the top 75 devices, just to be sure that every device is fully functional. The second would be our total focus and dedication on the player for each game. The way we look at baccarat is very much curated for actual baccarat players, who we believe are transitioning from land-based to online. Our game shows, for example, are geared very specifically towards slot players and people that don’t play table games. We think very deeply about what those players want in live casino, which inherently is much slower. It’s our full focus on any given subset of players. EGR Intel: How do you see live casino developing over the next few years? TH: It’ll evolve in different ways for different player sets and you’re going to see more regional games. In places like India, they play a very different style of game. In America, they play craps. We will do market-specific innovation, then we will continue down the game show path. The trick is to expand on that category. This coming year, we’ll be releasing strategy game shows. Historically, we’ve done game shows where you effectively just decide what you bet on and then you watch, but now we’re introducing a couple of new game shows where the player has a lot of control. We also think there’s an intersection between esports and live casino. Video games and gaming is here to stay. Some people grew up watching football, this generation is growing up watching esports and betting on esports has found its way into sportsbooks. I think the fusion of that with live is an opportunity for some really fun games, whether you’d be betting on player-versus-player or player-versus-AI. EGR Intel: Which technological advancements are you monitoring? TH: In the next few months, we will release our first full virtual reality live casino game show. This is a technology everybody has been aware of for quite some time, but nothing has really stuck. Companies have done it more as a showpiece for industry trade shows to indicate they’re on the cutting edge. We’re doing the opposite. This isn’t about showing the industry anything. We think we’ve got a really fun game that lends itself well to VR. Not all games do, but this one does. We’ve had to beef up our systems to support that by making sure we can have a consistent 4K video stream. EGR Intel: Will virtual reality ever be adopted by the masses? TH: I think we’re many years away from it being a challenger to desktop. Phone gets the most revenue, then desktop, and I think VR will be more like iPad-level revenue in a couple of years from now. You can’t carry around a VR headset with you everywhere you go, whereas your phone is pretty convenient. Even if there’s other people physically near you, you probably don’t want to have VR on. Add to that the fact VR doesn’t really add a lot of value to most games. Sure, you could do blackjack in VR, but I’m just not sure how much value it’s really going to add, sort of like 3D television. You can maybe show your friends when they come over, but you don’t actually sit down to watch 3D television. The novelty wears off quickly but, over time, smart companies will make games where the VR experience is superior to mobile and desktop. Then people will have fun playing a new type of game. EGR Intel: How did Evolution capitalise on the rise of online entertainment during the Covid-19 pandemic? TH: All things digital took off and we were just part of that wave. I would love to tell you some story about how we repositioned the whole company to satisfy players, but the truth is we were just in the right place at the right time. In my last job, I worked for MGM Resorts and they were in the wrong place at the wrong time. The most unique thing for us, relative to our industry, is that we have 8,000 employees, and some 6,000 of them are direct operational staff required to shuffle and deal the cards, often within one foot of another person, and all of a sudden that came against local regulations. Operating in that environment across all the different jurisdictions between New Jersey and Pennsylvania while still operating in Georgia, Malta, Riga, Spain and Italy has been a challenge, but one we’ve navigated quite well. We’ve had to adopt a bunch of new procedures and one that you see every day on our tables is that the dealers shuffle the cards now, and so the games unfortunately are slower as a result. When you have a dedicated team of a few hundred people that do nothing but shuffle cards, you get pretty good at running great shuffles. But when you basically have to ask a whole new group of people to suddenly start shuffling cards, it becomes a challenge. EGR Intel: Are you worried about a dip in participation rates when life eventually returns to normal? TH: I’m not worried but this is Evolution’s first pandemic. Anybody who says they know how it’s going to look post-pandemic is guessing. Certainly, everybody going back to normal life isn’t going to be a boost to all things digital. But a lot of people are going to have seen live for the first time and many of them are going to have had an enjoyable experience, so we should continue to benefit from that. We have always been a fast grower, and every time a new state is added in the US, that adds a lot but it’ll be very interesting to see how things play out. But however many people are on their phone at any given time, we sure will be there to serve them.

EGR Intel: You will be competing for leisure spend with other sectors so how do you make the product more engaging? TH: With or without that, all we think about is how do we make this game more rich, more fun or more engaging? How do we make it easier to consume on your phone by making the video twice as big as it is? For example, four years ago when we were making a game, we wanted an intentionally simple background that did not have a lot of moving elements because it would be harder to process the video. But as we transition into a 5G world and phones have more processing power, we can do more visually rich live studios or even push the VR boundaries, which wouldn’t have been possible without 4K. It would have been possible but it would have been a miserable experience. It’s not necessarily Covid-specific, it’s more just in the DNA of Evolution to continue to expand and push the boundaries. EGR Intel: How do you balance making a game more engaging with responsible gambling? TH: When we have design meetings about games and concepts, we never talk about trying to get players to play more frequently or anything like that. That is always just the by-product of a fun game. Evidence of that is that our biggest, most expensive game takes 55 seconds a round. We’ve got the slowest games in the industry. In addition to that, we have the highest RTP levels. And you could say, well that’s because you guys are in the tables business but if you look at the new stuff we’re releasing, we’re pushing the RTP up and making the games more favourable. I talk about an Amazon-style approach and say what do our players want from us? Either they want a higher RTP or a lower RTP, and I understand that at 100% there is no business left. I’m well aware of that. But in a world where we’re trying to entertain players more than Netflix, or Robinhood online trading or other live casino providers or slots, offering a better bargain is a pretty interesting way to approach it. On the problem gambling stuff, we’re doing the opposite of all the things that you would do if you were trying to misbehave. Our success has proved that that’s the right path. There’s a lot of things that go on in the industry that I don’t like, cash-out policies and wagering requirements that are unclear to players and I don’t think it serves any company well. In the end, the Amazons and the companies that are good to players get to win. EGR Intel: Evolution has made a huge success of going public – the stock has risen around 7,000% since the float in 2015. Does management keep a close eye on the share price? TH: No. When we report a good quarter, all of that work was done a year ago. How the stock performs in the following months is based on the work we were doing during Covid. Obviously, we’re delighted with the stock price and people across the company are sharing in the incentive programme so I’m sure people look at their phones once or twice a day. I don’t want to suggest that nobody pays attention. But when I say we’re not that concerned, what I mean is that we make all of our decisions for the long term. We’re going to go into new markets in America that are not wildly profitable, where you have to build very expensive studios but we want to be a complete provider. And that is the right long-term solution to signal to the industry that we’re with them, wherever gaming is legal. Long term, we want a nice high stock price but short term, it does what it does. EGR Intel: US expansion is proving costly for operators and suppliers. How do you think the gaming landscape will play out? TH: It’s going to be expensive. It’s a big company game that is going to be played in America. It is legislatively heavy, technologically heavy and it seems the way the landscape is playing out is that you will have to have servers in each state or, in our case studios, with management structures in each state as well. And that means being early is important. Now, in our case, we have Red Tiger plus NetEnt plus Evolution, and that used to be three separate compliance certifications and management structures, and so these are some of the benefits of being one company as we come to market. The US is going to come in fits and starts. Everybody for a decade has been trying to predict how the US will legalise and it seems to have some wind in its back now. Our strategy is to basically be in any state that will have us.