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viting the player to choose the game that
appeals to him or her is the best way to lift
all the games.
How does portfolio management differ from
keeping the games that sell best and dropping
the games that sell poorly?
G. Gurney:
Portfolio management is
definitely a best business practice on the
Instants side. We always have a pipeline
of good games to come in behind games
that are running out of steam
or stock in the market place.
We work constantly with
our vendors to consider price
points, proven game features,
play styles and new ideas.
Each combination of factors
results in varied products to
fulfill different needs in the
market place. A game may
have lower sales but pulling
in a new demographic. An-
other game may have higher
sales but is overlapping with other games
and so not contributing as much to the
overall results.
We have a limited amount of counter
space so it’s important that we are offer-
ing the right product mix. Other CPG
brands actually pay for premium space. So
it is vital that our product offering is opti-
mized for the benefit of the retailer as well
as our own sales objectives. And so we are
constantly going in and out of games on
the Instants side to make sure that every
product is serving its purpose.
The draw games require a longer term
strategy—they can’t be switched as fluidly
as the Instants. And all the games have
to be managed as a category to optimize
overall results. The draw game product
mix and presentation has to complement
the Instant side, and vice-versa. One key
metric, of course, is the impact of product
mix on net funds to good causes. Since we
are tasked with hitting a number in the
net funds column, and since margins vary,
we need to track changes in product mix
as well as sales. The shift to higher price
points in the Instants, and the challenge
of meeting consumer and media expecta-
tions in the big jackpot games, is putting
pressure on margins which means we pro-
mote, market and freshen the higher mar-
gin draw based games to hold their strong
position in the product mix.
So that is a good reason for launching the
Cash4Life regional draw-game.
G. Gurney:
We think of Cash4Life as
a much needed addition to the portfolio
of draw games. Powerball and Mega Mil-
lions will continue to be fabulous prod-
ucts with huge demand. But we need to
smooth out the sales volatility that occurs
when those jackpots slump. The impact
of a sales slump of the jackpot games on
profitability is heightened by the fact of
the high margins that those games drive.
In addition to Cash4Life, we are focus-
ing on our daily numbers games. Those
games have a dedicated player base, and
consumer awareness of the games is very
significant. The players all know that the
drawings are twice a day, so they can jump
into the game with their favorite num-
bers and quickly see if they won. A few
years ago our daily three and daily four
sales were flat to negative so we put some
promotional emphasis on them and sales
increased 2%. This past year, we ran game
specific and general draw based game ad-
vertising in support of the product line,
and the consumer response was exactly
what we were hoping for. We went from
2% growth to 4% on Numbers, and 7%
on our Win4 draw game.
The portfolio of draw-games can never be
quite as diverse as it is in Instants. Do you
feel good about the number of draw-games
you have or are you constantly searching for
a new draw-game concept like Cash4Life?
G. Gurney:
I don’t see Cash4Life as
being a 20-30 year game like Mega and
Powerball. We are seeing some degrada-
tion in Cash4Life year-over-year, so we
need to be thinking about how to evolve
the category. We are researching this now
to develop a new marketing campaign for
the fall. Maybe it needs a change in the
messaging or product positioning or how
we are representing the game to the play-
ers. We think there needs to be
a change, maybe just change
the day or time of the drawing,
include an add-on feature or
some other tweak to invigorate
consumer interest. We’re not
afraid to swap out games here
in New York just like we did
when Cash4Life replaced an-
other draw game. But ultimate-
ly the decision to make changes
or not is based on consumer de-
mand and how we can address
their perceived needs. We might always
have a “For Life” draw based product but
refresh it periodically.
I would have thought that it takes a longer
time for draw-games to gain traction, take
a longer time to recoup the cost of launch-
ing and building the player base for draw-
games, and therefore uneconomic to switch
them out.
G. Gurney:
That’s true. The eco-
nomics of launching and switching out
Instants are certainly much lower than
draw games.
Most of our discussions about products
involve the entire product line. Decisions
about how to evolve the portfolio of prod-
ucts rarely focus on the performance of
a single product, or even a single group
of products. In fact, the discussions typi-
cally involve a diverse range of opinions
because they almost always involve an el-
ement of strategic planning. That colors
the economic assessment because the suc-
cess of a single game is never as important
as the overall business plan. We are always
willing to change, but we are keenly aware
22
// PUBLIC GAMING INTERNATIONAL // July/August 2016
Continued on page 57We saw very substantial
increases in web-based
purchases on the day of launch
of the e-newsletter, and for the
days following the launch.