Rank: A new bingo brand for new bingo audience

Rank: A new bingo brand for new bingo audience

Friday, August 26, 2016 Posted by Andy McCarron
Mecca Bingo MD talks about the new format easy bingo

Among the coverage of Rank’s post-failed William Hill consortium bid annual results this week, it is perhaps understandable the announcement of its intention to launch a new land-based and online bingo brand in the UK was somewhat drowned out.

Surprising all the same, though. As much as Rank chief executive Henry Birch was able to extol the fact that reports of the death of land-based bingo have been much exaggerated – Mecca managed its fifth consecutive quarter of revenue growth in the three months to June – it was still reckoned previously that future expansion plans in bingo would be confined to the now Bede-supported digital offering.

Yet in putting the case for a new high-street bingo concept, the company is aiming at reaching what Birch suggested was a “significant milestone” – a truly multi-channel, single wallet, combined land-based and online brand that would present something different to the current bingo offerings currently available in the UK.

The name is yet to be chosen – searches on Companies House suggest the company has tried out a few names including Kudo Bingo and Luda Bingo – but the actual concept of the brand, particularly in terms of the high-street estate, are much more advanced, according to Martin Pugh, managing director of Mecca.

This will be a different type of bingo. “In the long term, we don’t believe that sustainable and healthy growth in the bingo sector will come exclusively from big box, destination and retail and leisure park outlets” he tells TotallyGaming.com.

“A credible metaphor comes from the recent history of the grocers where drop-in, convenience stores have been the recent focus,” he says. “That applies in our case. A much more casual bingo experience.”

The aim, understandably given what we know about the demographics for the current UK estate of bingo clubs, is to broaden the appeal of the core product to a more gender-neutral, younger demographic. “This is an opportunity to present to new customers something that is uncoloured by any preconceptions,” says Pugh.

The new outlets will be located in busy high streets in big towns and cities. They will, according to Pugh, have the feel of the lounge areas in current Mecca bingo halls, with casual seating, an F&B offering, server-based gaming machines (the new outlets will be classified the same as bingo halls with regard to machine allocations) and an electronic bingo offering of linked games with the Mecca network plus more instant bingo games.

Pugh believes the company has identified a new audience that won’t cannibalise the current Mecca customer base. “We’ve done the testing,” he says. “What we have found is that a whole cohort that is looking for a friendly, accessible, gaming environment. And we think existing Mecca customers will play at both venues.”

The aim is to coordinate the launch of the new brand in both online and high-street formats – Birch said the plans were “locked and loaded” on the analyst conference call – but Pugh said the company was necessarily waiting on planning issues for the right locations.

“Clearly, building bingo clubs is not cheap,” he said. “So, we will start small. We can open up a few attempts without betting our shirts. But if it goes right, if the model works, then it is highly scalable.”

“It’s more important to absolutely nail the right sites for the first attempts,” he added. “We will need to be clear about the proposition and have the flexibility to enhance the site from the off. The key will be flexibility and adaptability for the sites we choose. And you have to be uncompromising on location.”

During the conference call Birch suggested the company would hope to open with an initial three or four outlets. Each initial outlet will cost between £350,000 to £400,000 in terms of capex, with the outlay for subsequent openings falling to circa £200,000. Birch said the company would hope to have its first outlet open by the end of 2016.

Should the format prove successful, Birch suggested there was the potential to move to 100-plus and if it proved unsuccessful the company could “shut up shop” with a minimal potential loss of around £1m to £2m.

Analysis of the potential of the new brand from Morgan Stanley suggested if it was a success and achieved a high-street presence of 100-plus shops, then Rank could hope to add around £8m to EBITDA.

Totally Gaming says: There can be no doubting the bravery of Rank’s move here. Land-based bingo in the UK is possibly the most static of gaming markets. But the potential of combining a new audience with a new retail format, and crucially, wrapped up within a fully multi-channel offering has a lot of appeal.

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