Where is the Money? Part 11 of 36: Finding the Millennials

Millennials—the largest demographic bubble, bigger even than the baby boomers—are coming of age. This dynamic, socially active group has grown up using mobile devices and social media, and they consider the Internet old technology. When we look at our customers today, the numbers show that the money is in the 50-plus player. However, as we look to grow our business and to build for the future, it is the millennials we need to consider, in hopes that this group, like others before it, will take to gaming later in life. But, who are they? And what do they want?

The Millennial Generation is identified as having a link to the millennial year 2000, born in or growing up during a period in the U.S. when the birth rate peaked (1990s). This group follows Generation X and is sometimes called Generation We, the Global Generation, Generation Next or even the Echo Boomers. They are important for two reasons: First, understanding this group allows us to understand long-term demographic trends and gain some insight into the mega demographic forces that are altering the world we live in. Second, this group is a very small part of the revenue of most gaming facilities, and as such, finding a product that meets the entertainment needs of this group will allow savvy operators to snatch significant market share from operators that choose to ignore all but their “core” business.

A quote from ancient times can help us understand the challenge in understanding the millennial milieu—or really any of a subsequent generation:

“The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers.”1 — attributed to Socrates, 400 B.C.

Along with breaking the mold set by their parents, as every new generation has since ancient times, millennials are also shaped by greater forces. Washington Post writer Catherine Rampell sums up one of the major influences on the millennial outlook as such: “Economists have known for a while that the damage from downturns can endure long after the economy has turned, especially among those whose greatest sin was bad timing.”

Millennials grew up in the Great Recession, and because of this, it has been hard for them to find work, hard for them to imagine a future and in general hard for them to find their way in adulthood. This generation is likely to long remember the hardships of their early adult years, when they were burdened with debt and jobs were nearly impossible to find.

While these insights give us a basic idea of the millennial experience, we authors argue that rather than exploring the stereotypes of the millennials, we should first look at the data and become informed on what is actually happening to this important demographic group. With this thought in mind, let’s look at the demographics and scientifically studied behaviors of the millennials.

Boomers vs. Millennials
To best understand a new consumer group, we need to compare it to another existing group that we understand very well. It is the comparison itself that is important, as it allows us to use our strong understanding of the current market (and marketing) to describe how this new group might be different. As we have discussed in previous articles, the gaming industry is driven by the baby boomers, so we have chosen this as our baseline for comparison.

The Pew Research Center data for demographics is a great starting place for our comparison. Looking at the numbers, compared to the baby boomers, we can see that the percentage of white millennials has dropped from 72 percent to 57 percent, mainly due to an increase in the percentage of Hispanics, which grew from 10 percent to 21 percent. In short, we can say that the main shift is a growth in the Hispanic population. Table 1 shows the change in demographics by generation, from the baby boomers to the millennials.

Table 1: Generational Change in Demographics2

Age Generation White% Hispanic% Black% Asian% Other%
18-33 Millennials 57 21 13 6 3
34-49 GenXers 61 18 12 7 2
50-68 Boomers 72 10 11 5 2
69-84 Silents 78 8 8 4 1

Figure 1: Demographics of millennials compared to baby boomers3
Figure 1: Demographics of millennials compared to baby boomers3
Figure 1 shows a line graph comparing the demographics of baby boomers and millennials. We can see that the red line showing the Hispanic population is the main upward change, and the dark blue line showing the white population is the main downward change.

Gambling in Latin America4
With this massive shift in the population demographics from white to Hispanic, one of the first questions raised is: Do Hispanic people gamble? A quick look at gambling in Latin American shows it is growing at approximately 8 percent over the last four years, compared to an approximately 3 percent growth rate in the U.S.5 Without digging into the fine details, we can say that Hispanic people living in Latin America are driving substantial growth in the industry. This is relevant to the U.S., as it is an indicator that Hispanics in the U.S. are a potential market.

Figure 2 shows gaming revenue in Latin America over the past decade. It appears to be a straight line graph, but it also includes the regression line and R2. The R2 of 0.9925 indicates that a straight line captures 99 percent of the information about the trend. Note that there is a slight uptick in the 2013, 2014 and 2015 years. This is worth watching, as it may be the beginning of a larger consumer adoption curve movement.

Figure 2: Gambling in Latin America
Figure 2: Gambling in Latin America
Millennials and Gaming
Millennials, however, are much more than their demographics. According the Pew Research Center, “The Millennial generation is forging a distinctive path into adulthood. Now ranging in age from 18 to 33, they are relatively unattached to organized politics and religion, linked by social media, burdened by debt, distrustful of people, in no rush to marry—and optimistic about the future.”6

Millennials are forming alternative families and culturally approaching housing and finances differently than generations past. Likewise, millennials are not the mainstream entertainment consumers of the past, as they are used to interacting with many entertainment avenues at one time. They might sit on the couch watching TV, for example, but it is a much different experience: streaming the latest web-based television series on the flat screen while interacting with the program on a tablet, smartphone or laptop, browsing the web in another tab and also texting their friends or updating social media on the side. The millennials are a generation of multi-tasking individuals that expect high entertainment value in shorter periods of time and in many formats. Thus, it appears at first glance that entertainment options for this generation need to fit this bill. Many believe that slot and table gaming products will need to be innovative in design and exclusivity, and that entertainment over gambling is the key to capturing the millennial market. To be sure, our manufacturers believe this, as we see trends in this direction with more slot machines being duel screened and with video game-styled graphics.

But are the manufacturers correct? Are these new innovations actually appealing to millennials, or are they simply stealing baby boomer business from one type of slot machine and moving the boomers to these newer games?

Figure 3: Manufacturer Comparison
Figure 3: Manufacturer Comparison
Game Preference Analysis
As we discussed in our April 2015 article, player preference is critical to tease out the comparison between different groups of customers. This is exactly what we did, using player preference and some data that is representative of a property in on the West Coast of the U.S. [Note: This data is indicative only, and you should do this analysis on your own data if you want to understand this trend correctly for your property.]

In our data setup, the millennials are 20- to 34-year-old players, and the numbers have been normalized to sum to 100 to show the distribution of play. The boomers are the 50- to 68-year-old players, and again the numbers a have been normalized to show the distribution of play.

Figure 4: Preference Ratio
Figure 4: Preference Ratio
We first wanted to compare the different manufacturers to see if there is a difference in preference by manufacturers. (See Figures 3 and 4.)

The preference ratio is a little dangerous, as the denominator is quite small in some cases. It does, however, tell a strong story. In essence, it shows that there are some games (such as Atronic games) where the majority of the play comes from the millennials group.

Deeper analysis is needed. Casino operators need to query their data and investigate the following questions:
1) What drives millennials to show such a strong preference to (in this example) Atronic?
2) Is it game innovation or something else that categorizes their attention?
3) Is it the state of being a millennial that drives this preference, or is there a stronger underlying preference (found via the Market Basket Analysis that has often appeared in this column in past articles)?

We present a brief example of such an analysis, using Market Basket Analysis to measure game preference for millennials vs. baby boomers. As before, the data has been anonymized and is indicative only. In addition, we have anonymized the names of the slot machines themes (see Figure 5).

Figure 5
Millennial Top 5 Machine Themes Preferred
SIZZZLER 777S 1L/3C
DRAGON DOA 243W/500C
WILD BEAT 100L/250C (1CR/2L)
ZOMBIE DEAD 4096W/300C PROGRESSIVE
HOT SHOT PROGRESSIVE

Figure 6: Millennial Game Location Preference
Figure 6: Millennial Game Location Preference
In the preference report in Figure 5, we see that millennials surprisingly prefer a 1-line, 3-coin game. This belies our assumption that “innovation” is the key to millennials. However, the next four games fit within our expectations: video touch screens with multiple ways to win and extended bonus rounds. Looking at game location, we see that millennials prefer smaller banks where every game is an end cap (see Figure 6).

Now let’s contrast this to boomers. Figure 7 shows their preferences.

Figure 7
Baby Boomer Top 5
Machine Themes Preferred
CRAZY PANDA
WHALE OF MONEY
CHINA SANDS
AZTEC TREASURE
WILD WOLF

Figure 8: Baby Boomer Game Location Preference
Figure 8: Baby Boomer Game Location Preference
In this case, we see that the older demographic prefers 0.01 denom and multidenom video reel games. In addition, boomers are less focused on the configuration of the bank, but are very driven by the location of their game on the bank, with a clear preference for end caps (see Figure 8).

Bringing It All Together
The millennials are a very different group of potential casino customers. They have a very different demographic profile than our traditional customer base, and data analytics show they have quite different product preferences as well. This fascinating study shows that when you take the time to tease out the player preference and look deep into game choice, the volume hides the opportunity. The opportunity in this case is to build a product for the future…a future where we hope that the millennials, like the generations before them, find gaming entertainment exciting and worthwhile.

Note: Not analyzed in this article is the impact of regional differences on the analysis of millennials vs. boomers. As with many aspects of gaming, different regions can often lead to different results. Consider, for example, the simple act of determining the most popular video slot machine at a given casino. In many parts of the country, Buffalo reigns supreme. However, anyone who has visited Florida can tell you that Stinkin Rich and Bombay are far more popular than Buffalo. So it is with millennials—if you want to truly understand your millennials you must look to your data.

Footnotes
1 This quote from Socrates is from http://www.bartleby.com/73/195.html. According to the quote investigator (http://quoteinvestigator.com/2010/05/01/misbehaving-children-in-ancient-…) this entertaining quote despite its common use was created by Kenneth John Freeman in 1907 as a collection of statements attributed to ancient times.
2 www.pewsocialtrends.org/2015/03/19/comparing-millennials-to-other-genera…, Data extracted on April 2015.
3 www.pewsocialtrends.org/2015/03/19/comparing-millennials-to-other-genera…, Data extracted April 2015.
4 www.statista.com/statistics/271587/casino-gaming-market-in-latin-america/, Data extracted April 2015# Growth in gaming.
5 www.casinoenterprisemanagement.com/articles/august-2014/where-money-part…, Data Extracted April 2015.
6 www.pewsocialtrends.org/2014/03/07/millennials-in-adulthood/, extracted April 2015.

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