Ready to rock: Inside the Hard Rock's grand egaming plans

The Trump Taj Mahal casino in Atlantic City has a long and chequered history. It was originally commissioned in the late 80’s, but the under-construction casino was bought by the Donald himself before its opening in 1990. At the time it was the tallest, most expensive casino in Atlantic City, and dubbed by the press as the eighth wonder of the world. However it quickly went bankrupt and, after a period of recovery, went bankrupt again in 2004. It was eventually sold to billionaire Carl Icahn, who also decided it was more trouble than it was worth, and offloaded it to its current owner, Hard Rock International.

The Hard Rock Hotel and Casino, Atlantic City is currently undergoing a $375m renovation, a hefty figure in itself, to go alongside the rumored $300m cost of the property. It’s an investment that has raised some eyebrows given the property’ previous troubles, and the general stagnant trend of Atlantic City land-based gaming revenues, which were almost exactly flat year-on-year, at $1.6bn in the first eight months of 2017.

Of course Hard Rock sees a more positive picture. The firm outlined a ‘seven-day a week’ strategy, with a focus on being family friendly to lift it above rivals, but of course the company also has its sights set on the booming egaming market, where revenues grew 27% in the same period that land-based revenues didn’t budge.

To that end, early last year the group announced the appointment of Kresimir Spajic to the newly-create position of SVP, online gaming. Spajic, who has previously helped drive real-money gaming launches for SugarHouse and Borgata in New Jersey, was tasked with developing an egaming division with genuinely global ambitions.

Multi-pronged attack

Indeed real-money gaming in New Jersey is just one pillar of the Hard Rock’s gaming plan. When announcing the appointment of Spajic, the company spoke of becoming “a global leader in the international and online gaming spaces,” extending to the $40bn mobile games market, the $4.4bn social casino market, and even the $340m DFS market. To that end, Spajic is currently recruiting department heads for those three divisions as well as the real-money segment, and expects to have a team of 40 by the middle of next year.

“We plan to build a big company and not only an egaming division, but we hope it will one day be a standalone company with a significant place in the sector,” he says. The driving force behind these extravagant plans, according to the Hard Rock, is the need to adapt to a mobile-first society.

An artist’s rendering of the Hard Rock Atlantic City lobby

The firm recently launched its first mobile games venture, a match 3 game, explaining: “To meet the opportunity presented by mobile devices, Hard Rock must equip itself with tools that will provide additional touchpoints to connect with its fans, beyond the company’s physical locations.”

In other words, Hard Rock wants to interact with its customers more frequently, whether that’s in one of its casinos and restaurants, or on a gaming app. As Spajic tells EGR North America: “We aim to be a music and leisure company and create one of a kind immersive experiences. But we’re currently doing that from land-based locations. So we want to put the same experience in the palm of our customers’ hands.”

The aforementioned match 3 game, launched in late August, takes players though a series of Hard Rock landmarks and locations in the pursuit of rock memorabilia. Spajic says the game has already generated 40 million impressions, with the concept proving the Hard Rock brand “definitely translates to the mobile world.”

“It’s very engaging, it’s very sticky as a brand,” he says. “And we were right in saying that we can be successful in this area.” He also objects to the idea the match 3 game was a kind of trial balloon for the social and real-money casino products to follow.

“This is not just a trial,” he says. “We’re very serious about each of these verticals and their ability to unite our online and offline experiences.  The first project here has been great. We are extremely happy and we definitely plan to continue innovating and launching games in that area. This is just the first step into the market for us.”

Going social

The second step in the plan, expected to be unveiled in the next “couple of months”, will be a social casino product in two iterations. The first part will be the type of app commonly launched by land-based casinos, designed to boost brand awareness, and get players back into the property through a loyalty program and rewards scheme.

But the Hard Rock is also plotting the launch of a full-scale social casino app that will take on the big players like Playtika and Scientific Games, Spajic says. According to the exec this app will be “much more gamified and not so strongly and connected to the land-based world.”

He explains: “Slots are definitely the key driver in social casino but we want go beyond this with some new experiences that blend in the music, the memorabilia and the other Hard Rock elements.”

Spajic declines to go into details, but it’s perhaps fair to expect the standalone app to borrow some of the elements of the match 3 game with players taking a journey through Hard Rock landmarks and venues in cities round the world.

Kresmir Spajic, Hard Rock SVP online gaming

Real life or just a fantasy?

The launch of a DFS product is perhaps the furthest down the line of the four verticals, and perhaps the hardest to envision, given the musical bent of the Hard Rock brand. However Spajic again sees an opportunity given the inherent flaws of the predominant salary cap model where 2% of the players take home more than 90% of the prizes.

“We are open minded to variations of daily fantasy sports which give more opportunities for all players rather than focusing on liquidity,” Spajic says. “Is it fair to have two companies controlling 95% of the market? Is that good for players, does it incentivize innovation? I’m not sure that it does.”

He says he is closely watching the progress of FastPick, which launched in New Jersey in July, and pits players against the house rather than each other.

But providers and partners for the majority of these projects are still unclear. The match 3 game was built by Ilyon Dynamics, but Spajic would not share details about who might be providing the social casino and DFS technology, only saying that talks were ongoing.

The real deal

It’s a similar story for the biggest project of the lot, a real-money gaming site in New Jersey. The site is expected to go live in Q2 2018, depending on the progress of the land-based renovations, and the Hard Rock is currently making its decision on a platform provider for the launch.

For Spajic, the key factor in the decision is agility, and the ability to innovate and adapt on the fly. “If any of our competitors deliver anything unique that’s helping them grab the market share, we need to be able to react quickly,” he says. “We also need to be able to innovate and bring new things to the market, both in terms of the product itself, meaning games, but also the whole user experience.”

He points to SugarHouse and its proprietary platform, which he previously worked on, as a good example of how firms can differentiate themselves on product, but says the investment in a proprietary platform was too great for Hard Rock with only one egaming market currently available in the US.

But the need to stand out from the crowd is indeed heightened, given Hard Rock’s late arrival to a market which now boasts 16 different skins, and has seen growth slow to closer to 20% in recent months.

“We still believe that there is a growth, and the possibility to grow the market,” Spajic insists. “We did lots of comparison of spend per capita in New Jersey in comparison with markets in Europe like the UK and Scandinavia, and we see that there is a growth and we hope that this market could grow up to $400m a year at least.”

He argues that being a late mover may even help the Hard Rock capture its share of these customers, having learned from the mistakes of rivals. “We actually believe that our knowledge and experience gained from everybody else will help us define a better strategy, not only for New Jersey but for any other markets we want to enter in the future” he says.

Pillars of success

Having a stand-out product is one of four pillars to the Hard Rock’s RMG strategy, along with efficiency in live ops, social casino-style gamification, and marketing/brand.

It is the last of these that’s perhaps most worth investigation, given the varying success of big name brands in New Jersey. SugarHouse and Betfair have both enjoyed growth without a particularly well-known name, but the sites with land-based links like the Golden Nugget, Tropicana and the Borgata are still among the largest single sites by revenue, per Eilers and Krejcik estimations.

Spajic believes brand can be a key differentiator for Hard Rock which he claims has “a huge advantage over everybody in the market on this.”

“We have a global awareness of 82% and almost 90% in the United States where we aren’t just a  casino brand but a music, entertainment and lifestyle brand.

He argues Hard Rock even has an edge over another late entrant with a famous brand, MGM, by virtue of having a New Jersey land-based presence.

“They [MGM] have the Borgata, but that’s diluted with the other sites. And they are using the same technology as those sites, so there’s not much innovation in the product. I don’t expect them to disrupt the market leaders and if they do they’ll have to spend tonnes of money. They have invested a lot in the marketing and I don’t know how efficient their investment is, but when it comes to the product and live ops I think they’re missing there.”

“I don’t expect [MGM} to disrupt the market leaders and if they do they’ll have to spend tonnes of money” –  Kresimir Spajic

Spajic again declines to share specifics on Hard Rock’s own marketing plans, suggesting it will be heavily linked to the land-based casino, and may shy away from above-the-line campaigns. “It’s very hard to have realistic CPAs when you’re buying into these expensive media markets so you have to be much more tactical, and see which strategies are working,” he says. It’s worth mentioning at this point that the Hard Rock is also looking at a poker platform as well as casino, although like many Spajic is sceptical the market can support another brand without interstate compacts.

Despite that, poker is being evaluated, along with pretty much every other egaming vertical in an uniquely ambitious global strategy. Should New Jersey be a success, subsequent RMG launches around the world are not out of the question. But with everything happening at once, has the Hard Rock bitten off more than it can chew? Not so, according to Spajic, who has been planning this project since January 2016.

“We have researched and evaluated all online gaming verticals. We have matched the findings with our goals and we have built a comprehensive strategy,” he says. “Remember, this is the Hard Rock. We are used to working in complex business environments across multiple verticals and geographical destinations. Online gaming is new and a very important piece of the puzzle for our company. We are confident that we will achieve great success with it.” Rock on.