Welcome to our weekly CEO interview where each Wednesday we interview the chief executive of a FTSE 350-listed company, providing you with an insight into how their company is faring the economic downturn, their hopes for the future, and a glimpse into life outside the office. This week's guest is Gigi Levy, chief executive of online gaming group 888 Holdings.
1. How effectively has your company coped with the recession, and why?
We have coped well with the recession for several reasons. Firstly, it
has been well documented that consumers have been increasingly attracted
to ‘staying in’ which has a natural upside for companies such as 888 who
provide an exciting entertainment experience in the home.
Secondly, we have diversified our business model, and developed our industry-leading B2B offering, which has made our earnings less reliant on direct consumer expenditure. As such, we have grown the business even during these challenging economic times.
We have also introduced various ‘recession friendly’ products and promotions which allow people to get the same ‘entertainment value’ for less money.
2. How do you think your industry will change in the next 12 months,
and what are your plans to take advantage of those changes?
Our two key goals are customer attraction and retention and maximising
888’s share of consumers’ disposable income related to gaming. In other
words, we don’t want our customers to play games on other sites (unless
they are powered by 888!) and we want them to spend as much time as
possible on our sites.
There are two ways to do this; via B2C and B2B methods. The B2C method is to focus on product innovation, producing compelling content, providing superb customer service which all leads to high levels of customer retention. Add to this geographical expansion and diversification and an excellent marketing programme and the overall effect is most rewarding for the business. Our B2B method takes advantage of 888’s unique product and operational capabilities to deliver value to B2B partners who want to become online gaming operators.
We believe that the combined B2C/B2B model is an essential key to growing the business successfully in 2009 and beyond. Therefore, we intend to continue focusing on both these lines of business. This paradigm shift from a B2C model to a B2C plus a B2B offering is already underway and will continue to separate good companies from bad ones. As we are leading the industry’s B2B adoption, we are well placed to take advantage of the trend.
3. What are your immediate priorities for dealing with the downturn?
The immediate priorities are to ensure we continue to acquire new
customers and retain existing ones. Even if households’ disposable
incomes are under pressure we aim to remain the destination of choice
for online gamers even if they spend less.
To do that, we are developing new games and new promotions which are aimed to be attractive to customers. This also includes new social networking features which make the playing environment more customer friendly such as chat rooms and daily blogs.
On the B2B side we are keen to acquire new corporate partners, which allow us to grow even in a downturn.
4. Can you describe in a nutshell what your long-term strategy is?
Our long term strategy is to both grow our player base and maximise
customers' Life Time Value - for both us and our B2B partners - by
offering new and innovative products. Our B2B business, which saw the
first full year of operation in 2008, is already showing further growth
in 2009.
Our sustained performance in B2C will be achieved by a continued focus on customer needs and the growing attractiveness of our offering. Specifically, opening up our platform to integration with games created by other vendors, will continue delivering customers with ongoing innovation in 2009. The combination of our leading B2C business and our fast growing B2B business gives us a very good base for growth in 2009 and beyond.
5. Are acquisitions or divestments likely to play a part in your
strategy and if so what area(s) would you be interested in?
Acquisitions definitely play a part in our strategy, both at macro and
micro levels. Our B2B business will expand organically but will also
seek to acquire B2B technology enablers to accelerate growth.
We expect to announce more deals in the future. At a macro level our strong balance sheet allows the company to benefit from other suitable acquisition opportunities in what is a consolidating market.
Gigi Levy, CEO of 888 Holdings.
6. What aspect of your company’s current activities really excites you?
Three aspects chiefly; B2C growth, especially in regulated markets; the
opportunity to leverage social networks and media in the gaming world
and to improve the experience for customers; and finally, B2B expansion.
7. Executive compensation is increasingly in the spotlight these days. What’s your philosophy on rewarding your senior-level employees?
I believe all employees should share in the company’s success. This is
key to a happy workforce, performing to its optimum. Prior to our 2005
flotation, 888 adopted two equity-settled employee share incentive
plans--the 888 All-Employee Share Plan and the Long Term Incentive Plan.
The 888 All-Employee Share Plan is open to all employees and Executive
Directors of the Group who are not within six months of their normal
retirement age at the discretion of the Remuneration Committee.
Awards are also granted to certain executive directors and members of senior management. These awards are subject to performance conditions imposed by the Remuneration Committee at the dates of grant. Remuneration for top performing executives is above average for the market, however they are worth a lot more in terms of the profit they generate.
8. What’s been the high and low point of your time as CEO?
The low point was the closing of the US market and having to make great
people redundant. Recovering the lost revenues in just two years (after
losing 57% of the business) has definitely been the high point!
9. If you lost your job tomorrow and decided to change career, what
would you do instead?
I have always been writing, and will continue to do so, so that would be
an avenue I would pursue. That said, seeing the life of professional
poker players, that seems like a good option by itself…!
10. How do you relax and what are your non-work interests?
I relax by being with my children. With a two and a half year old
daughter and a just-born baby boy, that’s almost a full-time job in
itself, but it definitely relaxes me. I also read a lot, try to see a
lot of movies and listen to music. Last but not least, I am involved in
an amazing non-for-profit charitable organization called Latet which I
truly believe in.
