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July/August 2016 // PUBLIC GAMING INTERNATIONAL //
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The Path to Game Innovation
Nikki Orcutt,
Director of Marketing & Game Development at IGT
Innovation can be defined in many ways, but simply stated, innovation
is widely accepted as something “new.” The term has surfaced as one
of the most important drivers of future business growth in just about
every consumer industry and serves as an ongoing topic for lotteries
today – primarily because the execution of how we innovate is often
new, but not always different.
Since 1964, when the first official U.S. state lottery was established
in New Hampshire, lotteries across the country have based their
business model on carrying two dominant product lines through the
retail sales channel – Instant Scratch-offs and Draw Games. Although
technological advancements have helped propel our industry forward,
we have been fortunate to maintain our profitability by producing many
of the same games in new ways. According to a recent article in
Inc.
magazine, most companies should consider four primary objectives for
new Research & Development (R&D) projects:
1.
Maximize the long-term return on investment.
2.
Make optimum use of the available human and physical resources.
3.
Maintain a balanced R&D portfolio and control risk.
4.
Foster a favorable climate for creativity and innovation.
Based on these four objectives, the lottery industry has been very
successful. This success could leave many questioning if doing
something different from the textbook style of growth even makes
sense. While most could arguably agree that the lottery industry has
masterfully accomplished three of these objectives, the fourth objective
provides an open door of opportunity.
In recent years, the U.S. lottery industry has effectively changed the
matrix of the most popular multi-state jackpot games, added multipliers
and bonus features to draw-based games, improved prize structures,
increased the appeal and modernized the print technology of instant
tickets, introduced many fresh concepts, opened new sales channels,
and tip-toed our way into the interactive world – all yielding profitable
results. While these innovations serve as impressive milestones,
the issues we face have not drastically changed. Lotteries are still
experiencing stagnant portfolios, the lottery player base continues to
age, the challenge of attracting new players increases, jackpots are
unpredictable (and growing at a much slower pace), and the rate of
innovation remains conservative. As consumer expectations, attitudes,
and ultimately buying behaviors change, there is one thing for sure –
the next generation consumer will likely define the future of how we do
business, forcing the industry down a more unstable path of innovation.
Future
Game
™
Engineering the Next Generation of Lottery Experiences