Yggdrasil CEO Fredrik Elmqvist talks to iGaming Business about what’s driving the games supplier’s rapid growth and how he thinks the igaming industry could do a much better job of managing public relations
iGaming Business: A recent iGaming Tracker analysis reported recently on how challenger supplier brands, particularly Yggdrasil, are increasing their presence on operators’ main casino pages. What’s driving this and how does the process work for achieving strong positioning on operators’ home pages?
Fredrik Elmqvist: Quality is always the winning strategy, games that players like. Currently operators have algorithms to define positions so popular games end up a bit higher in the ranking.
iGB: So it’s more algorithm based than a matter of negotiation with operators?
FE: It’s both. I think that you get a certain position based on your perceived quality but if you have been delivering great content over a long period of time you will get strong positioning on your next release. But if you are coming in with a new game on the back of a couple of releases which have not performed to expectations, you will not receive the initial boost that operators could provide you with.
iGB: Percentage share deals with operators vary hugely across providers, what challenges do you face in fixing fees with operators at the right level?
FE: Some guys will go 'low cost', which might work for them but it is going to give them less room to manoeuvre in regulated markets and less money to re-invest in their products. We are not the cheapest guy on the block; we are probably asking for a bit more than the average in terms of supply fees, but we also are very aggressive in our investment strategy for the products. We put a lot of money back into the operators by giving it back to players via our marketing strategies — we have a big campaign coming up for Christmas in which we are giving away €500,000. We justify our cost by providing a lot of value back to both the player and the operator. I think this is what the industry needs — the industry needs to put the right stuff into the products in order to keep the players coming back for more, because if you keep on giving them the same old thing again and again they will leave and spend their money elsewhere.
iGB: What sort of feedback and take-up have you had from operators related to the white-label slots development studio you launched last year?
FE: We have two clients at the moment that we are working with in the studio, and we’ve had superb feedback. But at this point in time, this is all we can manage to take on because we don’t want this to infringe on our pretty aggressive roadmap – we are focused on growing both the quality and the quantity of our output on a year-on-year basis and we don’t want to jeopardise that.
iGB: Given Yggdrasil has grown so fast in recent years, recruitment must be a key priority for you. What challenges do you face in hiring enough new talent to keep up with the company’s growth?
FE: I would say it depends on what entity we are talking about, because we currently have 115 people in Poland, while in Sweden there are 15-20 and it’s growing, and in Malta there are about 40-50 people. They all have different challenges and functions, but I would say all of these entities have recently moved to brand new office locations, and they have features that make them quite attractive for prospective employees. At this point, I would say, at the risk of coming across as a bit arrogant, that we don’t have a problem recruiting quality people, but I would add that we also need to be very careful how we handle this process as as we continue to grow quickly. We have been striking a nice balance between growth and profit margin for quite some time now and we want that to continue. Of course, the headcount will continue to grow strongly but we feel very confident in being able to attract the right people as we scale. One of the key things common to all the entities, whether in Sweden or Malta or Poland, is that we have a few rock stars…actually we have a lot of rock stars! The good thing about having these people in the business is that they help us to recruit more rock stars.
iGB: How do you ensure you get the best people but also don’t cross any lines with clients?
FE: We do have a sensitive position being a supplier to some of the leading operators, and of course sometimes we have people from our customers who knock on our door looking for a job. It could be for any reason — relocation, it could be they're seeking a new challenge or any number of other reasons. We are really careful about being dragged into some kind of discussion or negotiation over increasing their salary or any kind of conflict with our customers. There is a thin line there. I am very much pro people being able to migrate between a customer, or a supplier, or affiliate or whatever it might be, but given that we are a supplier to the industry it is more sensitive for us and these processes need to be handled with the utmost care.
iGB: What about ensuring equality in your workforce?
FE: Of the nine people in our senior management team, our CFO, CMO, CXO and CCO are all female, so we have a senior team that is close to a 50-50 gender split. Poland is a purely developmental office, so I think that is very male dominated, because that is how the software development area looks at the moment sadly.
iGB: As an industry, igaming sees many start-ups fail. Why do you think this is?
FE: They fail for a lot of reasons. For the past year, we have been running an initiative called Yggdrasil Dragons and we have probably seen or had talks with 80 or 90 cases, entrepreneurs, early stage ventures and so forth. To succeed as a start-up, you need to be very stubborn but also super honest and self-scrutinising, both of yourself and your business. If you can manage to be those two things in parallel, then you will learn from others’ mistakes as well as your own.
iGB: People frequently describe the slots market as one which lacks differentiation. Would you agree with this and what steps are you taking to make sure Yggdrasil stands out?
FE: I do think there is differentiation coming in on a regular basis in slots. There are new mechanical ideas that come up, but we are still talking about slots, so there is still a given framework that we need to work within. I have seen when someone tries to do something completely innovative and falls flat, because the players couldn't recognise or relate to it. It is about finding that delicate balance between innovation and what’s known and familiar. I actually think we need to look more at what is happening in neighbouring industries, to scout these for some creativity and try to wrap that into your own products.
iGB: What do you mean by neighbouring industries?
FE: It could be social gaming, it could be mobile games, it could be some other form of digital entertainment, something technical, it could be a user interface, a mechanical thing, something where you say, “can we take this and morph it into something that works in an online casino?”
iGB: How do you see the online casino moving forward in future and what developments do you think will be key to continued industry growth?
FE: Given the situation that has unfolded in recent months I would say this industry needs to be much, much better at handling public relations. I think we sometimes feel we need to take the absolute highest moral ground ever because we are dealing with gambling, which means that we should be very quiet and not speak out, but I don’t think we should be ashamed of what we do. I mean, we don’t sell drugs or sell cigarettes to children. We provide exciting and entertaining products where you actually have some chance of winning. I don't think we should be ashamed of that, and should just get much better at handling public relations in general.
iGB: Do you mean by being more proactive or more reactive?
FE: There are various topics that pertain to the area of responsibility, whether it is problem gambling or how we target our advertising, and we need to be able to handle those in the public realm. Currently, CEOs are good at handling quarterly reports and questions about growth and agility and innovation, but since the market is becoming more transparent with all the regulatory stuff that is happening, we need to come out into the limelight a bit more. I think CEOs and chairmen need to be able to talk not only to the trade media where everyone is a fan, but also develop better relationships with the consumer media. I think a lot of gambling companies, whether operators or suppliers, are a bit afraid of the mainstream media at the moment.