The money raining down in Gala Bingo's latest ad campaign is a poor reflection of the reality faced by the brand.
The company's owner, Gala Coral, is facing a battle to remain the majority shareholder, as its £2.5bn debt threatens to cause a banking covenant breach. Gala, which along with its rival, Mecca Bingo, controls more than 40% of bingo halls in Britain, has already held preliminary talks with some of its lenders about potential solutions for restructuring its debt.
A year-on-year fall in the chain's annual profits of between 5% and 10% is expected to be confirmed when it releases its financial results. In addition, Gala has said it will close at least five bingo halls by next June and has already made closures in the Midlands.
The biggest threat to the traditional bingo hall is the rising popularity of online gaming. Gala has a bingo website but faces competition from Sun Bingo, Foxy Bingo and Wink Bingo.
Competition is also mounting from alternative online gaming options that appeal to wider audiences, while the smoking ban in 2007 has pushed more people toward playing bingo at home.
Changes in legislation have also proved a challenge. For example, the number of gambling machines with a £500 payout has been limited to four per site, leading to a big drop in turnover. We asked Lisa Thomas, chief executive of LIDA, who works with gambling brand Sporting Bet, and Jarrod Hollingdrake, senior brand design manager at bookmaker William Hill, whether Gala's luck will turn.
Lisa Thomas chief executive, LIDA
The debt burden around Gala's neck is something that any organisation would struggle with. On top of this, the smoking ban has driven many traditional bingo players away, so it is no surprise Gala is suffering, given its market share.
Its problem is that bingo is predominantly represented as a female pastime; this is a double-edged sword, as you have a loyal audience but immediately lose half your potential market. This is compounded by the general perception that bingo players are elderly.
Everyone has felt the pinch during the recession, but it is the bingo heartland (ladies of a certain age) who are most averse to over-spending. Bingo could be considered part of the luxury category and sacrificed to save money.
For online players, the Gala website reveals much, or should that be too much? It's a mish-mash of information and games, making it difficult to navigate.
It simply lacks the charm of hearing a call of ‘two little ducks' while supping a Harvey's Bristol Cream with your friends.
Remedy
- Emphasise the social lynchpin aspect of bingo that other forms of gambling cannot offer.
- Open the bingo halls to new players for starter sessions.
- Reward loyal punters. The Nectar scheme isn't quite right - divert investment to a bespoke Gala scheme.
- Make the online experience closer to real life: make it easier to play, inject charm, build virtual communities that stay connected.
- Be single-minded about bingo, and strip back the non-core elements.
- Callers are the bingo superstars. Treat them accordingly. Host an X Factor-style contest for charismatic callers, using them as a marketing asset.
Jarrod Hollingdrake senior brand design manager, William Hill
Of all the bricks-and-mortar gambling businesses, bingo halls suffered the most in the aftermath of the smoking ban in July 2007. For Gala it also meant a drop in takings from gaming machines.
The growth of online bingo has seen market share divided among several of its new and old rivals. Bingochecker is a new service from Oddschecker.com, offering users the chance to browse through 11 bingo sites for offers. Gala Bingo is notable by its absence.
Gala's debt issues have led to job losses, which have had an impact on customer perception and experience. In addition, regional control over targets has been removed, meaning margins on the main stage have increased, leading to lower payouts for punters.
To offset the fall in customers Gala has introduced new technology that allows punters to play up to 32 tickets via handheld touchscreen computers. This has disgruntled some traditional ticket players but others have adapted quickly and shown a willingness to raise their spend per game considerably.
Remedy
- Guaranteed prize money is the big draw. Take a hit in the short term with lower margins on the main stage to build up long-term loyalty and success.
- Run branded taxis, minibuses or limousines free of charge from train and bus stations to the bingo halls.
- Viral activity can translate well for a gaming brand. Develop such a campaign and get a buzz about the brand.
- Get in on the email vouchers act by bundling games and drinks into an attractive package and encouraging friends to email it to one another.
- Downsize from big old cinemas and move from the fringes of town right into the high street.