Products and pricing: finding the right balance

Great content is no longer enough by itself, according to Relax Gaming CEO Daniel Eskola, the margin pressure under which operators now find themselves means that supplier commissions are unsustainable at current levels

Ask most game suppliers about pricing and margin pressure and the standard response is something along the lines that their games are so good that price isn’t an issue. Operators get so much value from them they’re happy to pay more for good games is a regularly trotted out line.

Ask the incoming chief executive of Relax Games Daniel Eskola, however, and he takes a more commercial – and probably more realistic – view. Having been Kindred’s chief product officer for several years he certainly believes the games produced by his new employer to be great – after all the two companies have been working closely together for about six years.

But greatness isn’t everything, according to Eskola. “You need to be creating great games but they also need to be at a good price point for our B2B customers,” he says.

He says regulation of European markets is just one of a number of factors driving margin pressure across the industry. “Re-regulation across different markets and changing terms and conditions with regard to bonuses are adding a lot of pressure on operators.

“For operators in Sweden and Holland re-regulation is coming with quite high percentage gaming taxes as well. I think pricing will start to matter more for operators so I have a viewpoint where I think that over time – it is not going to happen overnight – the commissions that operators will be paying to suppliers will gradually start going down.”

Planning for changing conditions
Eskola says platform provider and game supplier Relax is already working on positioning itself to weather the changing market conditions with its newly launched casino games range – so far consisting of only table games but with slots on the way.

“One of the keys things we are selling at the moment is table games at an extreme price point to our new customers. We believe that table games are a commodity and that operators shouldn’t be paying the prices they are paying today,” he says.

“Even though our slots are not going to be ready until the end of September, we are already out there making the relationships and selling table games extremely cheap just to show a bit of the mentality that we want to bring in those kind of partnerships that share the burden with operators.”

Pricing attractively is one thing, but the company still needs to make money presumably? Going forward it can, says Eskola, if the balance is right. “On slot games of course we are not going to go extremely cheap but we are going to go for a reasonable, fair pricing point where operators will feel that we are attractive but they are still at a price point where we can make money on the scale of business if we get enough customers.”

Part of Eskola’s brief is to get more customers and having started his career on the B2B side at Entraction before moving to Kindred, he hopes his experience on both sides of the fence will help him do so.

“Up until now Relax has been a technology company that has been focusing on having the best technology, the best platform and what I hope to contribute to it is to take it more to the commercial side. I will leverage the great work that the guys have been doing at Relax but create more relationships across the business with operators. Definitely I want to accelerate to the next level.”

It all started with poker
The development of Relax’s business is in some ways similar to Eskola’s own career. Both began in the business with poker, before branching out into more profitable – and sustainable verticals.

A keen poker player, Eskola’s first role in the industry in 2006 was in the poker team at Entraction, which he later headed up. He moved to Kindred in 2010 as head of poker, before rising through the ranks to end up as chief product officer/chief operations officer.

Relax, meanwhile, began life in 2010 with poker before moving into bingo and just recently, casino. Kindred was integral to its success and the partnership between the two companies began back in 2012 when Relax licensed Unibet, along with Betsson and iGame – to its Fast Poker product.

Developed on the heels of Full Tilt’s Rush Poker, Fast Poker was a high-speed poker variant that automatically moved a player to another table once their hand was complete.

Although ultimately the product didn’t take off, it launched a partnership between Kindred and Relax that enabled the latter to grow. “Even though that product never really made it, it never did any money, the relationship and the way we worked with Relax was very good,” says Eskola. “My head of poker back then said ‘OK let’s rebuild poker from scratch with Relax’.”

On poker generally, despite still having a love of the game Eskola isn’t overly optimistic. “I don’t think we are going to see a period like we did in the past like the golden days. People love to play poker and I think we are always going to see that but I don’t think we are going to see similar growth levels as in the past. I think it is going to be much more mature product.”

He sees a much brighter future for casino, however. “Casino growth is looking very strong. It is one of those things where I think you get the most entertainment for the deposited money. So when players spend money they feel that they get an entertainment value that is high.”

Regulated focus
For Relax, the focus for now is firmly on expanding its casino offering in Europe and regulated markets, and Eskola says the company’s next step is to add a Gibraltar licence to its current licences — Malta, UK Denmark, Romania and Alderney — to allow it to target more Tier 1 UK operators.

He also sees other areas of interest, but is realistic about the speed of the company’s expansion. “Looking at how big the market is in Italy that is of course very interesting so I would say both Gibraltar and Italy are front of mind when it comes to expansion on the regulatory side,” he says. “We are a small company so countries like

Spain and Portugal are things that will have to take a backseat for awhile but it is a good thing that there are always additional ones to focus on.”

One of the biggest challenges he sees to his “grand plan” for Relax is that of recruitment. “At the moment we are 92 people and we have plans to expand quite seriously now in 2018 to try and expand and develop more products for our customers. I would say my biggest worry is getting the right people at that kind of pace.”

The recent appointments of two other seasoned industry execs – in January Relax announced that it had hired former NetEnt chief product officer Simon Hammon as its CPO and poached Andrew Crosby from Mr Green to be its head of account management – should help, says Eskola.

“One of the benefits is that through the years myself, Simon and Andrew have built up a good network although I think it will still be a big challenge getting as many people as we need on board and getting them productive as well.”

But although Eskola worries about future hires, he’s convinced he has a good base to build on. “Of course I am going to be biased here but I think we have the best team to build games so if we can come with an attractive proposal – if we have top notch games and a good pricing point — I hope that Relax will stand out even though there are so many casino suppliers these days.”