Interactive CHERRY GROUP
Online Gaming - with a Cherry on top
Cherry has a 50+ year gaming history stretching back to 1963, having built its business in the restaurant gaming sector in Sweden. Rapid diversification in the last 15 years has seen the business continue growing in the land-based sector, while dramatically expanding online. G3 interviews CEO Emil Sunvisson about Cherry’s future growth.
Emil Sunvisson was appointed CEO of Cherry in 2011, the same year that the company launched Europe’s biggest daily lottery draw,
EuroLotto.com. Since then Cherry has launched
EuroSlots.com,
CherryAffiliates.com and
CherryCasino.com, and with its new Klubblo Swedish sports lottery about to launch before the end of the year, Mr. Sunvisson has overseen a transformational period in the history of the com- pany.
G3 spoke to Mr. Sunvisson on a recent visit to the UK in relation to the latest Interim Report show- ing Group turnover increasing by 24 per cent, with online up 38 per cent and restaurant casino turnover rising by nine per cent. The company also acquired rival JPC Casino in 2014 and seeks to build on its investment in games developer, Yggdrasil Gaming, as its portfolio of games expands from lottery products into slots games.
Why has Cherry’s online business grown so strongly over the last six months? What are the contributing factors?
Last year, we launched three new products along- side a very aggressive marketing campaign that was aimed at building the brands in the Scandinavian markets. In Sweden, everyone knows Cherry. We are represented in every night club and bar - providing games for one million fis- cal players every year. We have a big head start with the Cherry name, which automatically con- nects us with 50 years of credibility and trust. There have been so many newcomers to the mar- ket, but none have the trustworthy image of the Cherry brand.
Our success has been a combination of new prod- ucts and heavy marketing. You have to also understand a little of our history. Previously, we operated on a white label platform, which gener- ated low fixed costs, but very high variable costs. Now that we have built our brands on our own platforms the situation is reversed. We have grown through economies of scale, which has pro-
7 2 portionately increased our marketing budgets.
When you look at the costs imposed on the busi- ness, the minimum starting point is the provision of the highest quality gaming experience for the customer. You have to provide certain functional- ities in terms of the technology and provide sup- port for affiliates - this is the minimum require- ment of a standalone operator with their own platform. Beyond that, as long as we’re seeing acquisition cost lowers than customer lifetime values, we know that we’re getting the balance right. We know that the marketing of our brand is attracting new customers and is effectively reac- tivating existing customers too.
Online, in terms of revenue,
passed land-based in 2014. We will continue to operate the restaurant business as it
generates positive cash-flow, but our big ambitions are
focused online, which is where we plan our investments.
In your report you mention that new payment solutions in Restaurant Casinos with faster trans- actions and greater reliability have contributed to growth - could you elaborate on the systems that were introduced and specifically what impact this has had on the business?
We installed new payment terminals at all 350 tables within the group. The payment terminals are much, much quicker than before. We’ve reduced the transaction time as a result from 30 seconds to 10 seconds. We can even take pay- ments offline if there’s no Internet connection. The reason for the change is that we are operating
in the low stake blackjack sector, in which we depend on volume of low value bets. We operate 11 boxes on every table, which means that during our peak hours on Friday and Saturday nights the switch from 30 to 10 seconds to process transac- tions has really helped to both improve the player experience and contributed to our growth.
Why has the land-based restaurant business in Sweden continued to grow when we’ve seen fig- ures from across Europe of stagnating visitation levels and falls in income levels?
The trend is declining, but we have been able to grow in a declining market, taking players from competitors and through acquisitions. There is a big overlap when you consider that we have one million annual fiscal players, primarily young male players, where there’s a very big spillover to online casinos. You have to recognise that land- based and online are very different. You need to understand the player - our business is all about the excitement of gambling and respect for the player. Our restaurant casino business is part of our Swedish land-based licence and we’re not allowed to promote the online business to Swedish players. The strength of the Cherry brand helps, of course, but we look forward to the regu- lation of online licensing in Sweden and the potential of online and land-based synergies.
Is volume a key factor in the success of the Restaurants business - with 67 per cent of the market, is the experience the same from location to location - and how important was the acquisi- tion of JPC Casino this year?
We acquired JPC Casino in Spring, a business that currently accounts for five per cent of revenues. When you are operating profitably and managing overheads, incorporating other businesses into the Group brings economies of scale. We current- ly have 350 tables in 270 venues in Sweden, mov- ing from 50 per cent marketshare to 67 per cent in just a few years. Our nearest competitor currently operates 18 venues as a comparison.
Has Cherry’s online business completely eclipsed its land-based operations? Which is the most important in terms of future growth and do you see a time whereby the group is solely an online operator?
Online, in terms of revenue, passed land-based in 2014. We will continue to operate the restaurant business as it generates positive cash-flow, but our big ambitions are focused online, which is where we plan our investments. Cherry will be more and more depending on online in the future. Our DNA, however, will remain Swedish, despite operating the business in Malta.
Why did Cherry invest in Yggdrasil Gaming - what’s unique about its games and what are the long-term aims for the business?
Our interest in the business began with founder Fredrik Elmqvist. He has a track record in the igaming sector and when we were looking to migrate EuroLotto to our own platform, lotteries
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