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Over the past two years Light & Wonder was reshaped, divesting lottery and betting arms to become a gaming-focused business. But to make this work, CEO Matt Wilson had to oversee a cultural shift that went beyond a change in brand.
Scientific Games’ decision to offload its lottery and sports betting divisions in 2021 felt like the end of an era, and Matt Wilson is responsible for leading what is now Light & Wonder into a new one.
The sale of the lottery operations in particular marked a major break from the past. Scientific Games, after all, began as a scratchcard manufacturer.
But by selling off this arm, along with the sports betting business, debt was slashed. The remaining gaming business also had a clear strategic focus – something many would say was missing for years.
Adding to that feeling of an era coming to an end is the corporate rebrand. The Scientific Games name has left with the lottery business, and the gaming operations sit under the Light & Wonder banner. There’s also a new man in charge, after Matt Wilson replaced Barry Cottle as CEO in October 2022.
Wilson, an Aristocrat veteran who previously served as CEO of gaming for Light & Wonder, has a simple vision for the business. He wants to make it the best slot, table, digital and social games provider, or as Wilson calls it, “the leading cross-platform, global games company.” And he’ll do it by creating the best games on the market.
“That’s the mission, that’s the north star,” he said shortly after his appointment. “That’s where we’re headed. And it’s time for us to get on and keep executing against that.”
So how has he gone about driving the business towards that goal?
What’s in a name?
It all starts with the name above the door. Light & Wonder, with the tagline ‘new worlds of play’, certainly suggests a significant break from Scientific Games.
It’s more than just a rebrand, he explains. “It is a complete change of the ethos.”
“We wanted to reach into the businesses that are left in the portfolio and pull up the things that really matter. It all comes back to the content and games.”
There’s three stakeholders that care about a company name, Wilson says. First, the investors, though share performance is going to be more of interest. The customers care, but great content is probably more interesting than the name of the company producing it.
“The third cohort is the most important: employees. They’re the ones that actually make the magic happen, the ones that design the games, that bring the content to market.”
As a name Light & Wonder has more in common with George Lucas’ Industrial Light & Magic than it does with Scientific Games. That’s now owned by Disney and responsible for special effects in franchises such as Star Wars, Marvel and Jurassic Park.
Wilson wants to tap into that same pool of talent. “We’re trying to call out to that next generation of creators,” he says. “If you think about the core of our businesses, games and content, and that’s mathematicians, that’s animators, that’s software engineers. These are creative people.
“For the next generation coming out of college, do they want to work for Scientific Games or do they want to work for Light & Wonder? We’re trying to build this brand that has levity to it, that centres things around making games for a living.”
Cultural change across Light & Wonder’s business
To attract new talent there’s a new, creative ethos. For the current staff, there’s a new, collaborative and coherent – and less isolated – way of working.
Prior to the betting and lottery sales, Light & Wonder was more of a conglomerate than a business, Wilson says.
“The teams didn’t talk,” he says. “They were just very independent, there was a huge moat around each of the businesses.
“Now they’re working together. The igaming team work side by side with the gaming teams to discuss, ‘We spend more than $200m on R&D a year. What games should we be making? How do we make sure those games are relevant for the igaming, social casino and land-based channels?’”
The business is in the process of acquiring SciPlay outright and Wilson believes social plays a key role in Light & Wonder games development. “You can A/B test games, and do rapid asset testing with millions of eyeballs.”
This free-to-play feedback is used by the studios creating the land-based slots, which then migrate online. “There’s a flywheel effect from these businesses being part of the same portfolio.”
Joined up thinking
Initiatives such as the Best Games Workshop keeps the flywheel spinning. This brings together Light & Wonder’s igaming, social casino and land-based slot developers, usually in a casino.
“They go out and play games together, ideate and they riff off each other’s ideas,” Wilson explains. “It’s such a simple thing, but so powerful because you’re bringing together perspectives from all these different channels.”
‘A faster horse’
Wilson’s enthusiasm for slots and casino comes from a lifetime in the sector. He started as a graduate trainee at Aristocrat and worked his way up corporate ladder.
“I started working around these games when I was 22 and I’m still excited about the next batch of games coming out. There’s always this sense that the next game could be the next big thing that changes the industry. That’s always exciting.”
There’s a lot of new tools and data sources to aid the development process, but he always returns to creativity as the key driver of slot performance.
“I think as an industry we have to be mindful of continuing to innovate,” Wilson says. “If we’re all making the same kinds of games that’s a road to nowhere. You need to be building what players want play.
“You also have to remember the old Ford adage: ‘If you ask consumers what they want, they’d say a faster horse, not a car’.”
It’s a case of “looking around corners”, and essentially looking to guess what the end user could want in future. It’s incumbent upon suppliers such as Light & Wonder to seek out new formats and game types, in his eyes. Playing it safe is easy, but it’s hardly going to set new benchmarks for slots and table games.
“Light & Wonder and our competitors need to continue to push the boundaries, because we have the big budgets that should allow us to lead the industry in terms of innovation,” he argues.
“It’s a combination of taking the right shots on goal but also innovating to lead the industry forward.”
Studios that slot into the roadmap
In a sector as broad, diverse and crowded as the games development, there’s always the risk of a smaller, more agile competitor outflanking the industry leaders. Thanks to its aggregation platform Open Gaming System (OGS), Light & Wonder has a way of spotting those innovators, at an early stage.
The mega deals of the Scientific Games era, for Bally Technologies, SHFL, WMS and OpenBet, are in the past. Since 2021, acquisitions are smaller and OGS is proving to be “a beautiful M&A tool”.
“We’re able to see early stage success on the OGS and spot companies building unique content that’s resonating with players,” Wilson explains.
“Then we can come in and take a position in their business to infuse that R&D investment, help them make more and even step in to acquire them.
“We did that with Elk Studios, we did that with Lightning Box. It’s a really fortuitous part of the value chain for us to own.
“We can see up and coming studios on the platform and say, ‘Hey, you guys are making great stuff. If we gave you $10m, could you build 30 more games, and make this a symbiotic relationship?’”
M&A is now very simple. Light & Wonder wants to be the best games developer in the world, and any deal has to align to that mission.
“We went from a world of huge complexity with lots of different businesses trying to be a Swiss Army knife for all these different markets,” Wilson says. “In that scenario it’s very hard to be a world leader at anything, let alone everything.”
Light & Wonder’s Q1 performance vindicates big calls
For Wilson, it was Light & Wonder’s first quarter performance that really vindicated the big strategic decisions of 2021. Revenue was up across all divisions, including record contributions from digital and social gaming.
“I think it validates a lot of things internally,” Wilson says. “We have nearly 7,000 employees that have been on that transformation journey with us. And we’ve asked a lot of them, but it’s showing up in the numbers and that’s just so encouraging.”
It’s the quality of the results that impresses him the most. Revenue was up 17.1%, EBITDA grew faster than revenue, and free cash flow is growing faster than EBITDA.
“That’s exactly what you want. It’s driving great outcomes, and it does vindicate the strategy of the three businesses belonging in the same portfolio, built around the idea of creating great content and great platforms.
“It shows it’s more than a sum of its parts, and that there’s amplification by having these three businesses working closely together.”
‘There’s something beautiful about simplicity’
When Scientific Games began the process to sell off OpenBet and the lottery business, it may have marked the end of an era. There’s a new name, a new leader and a renewed focus.
It may also mark the start of a trend across the industry. Other suppliers see the benefit of having a similar, single-vertical focus, going by recent announcements.
“There’s something beautiful about simplicity in a business,” Wilson says. As Light & Wonder’s Q1 performance shows, that focus on creating great games is certainly a way to generate decent returns.
“Everyone is in service to that – all our jobs are in service of that,” he adds. “We can’t sell anything, we can’t pay the pay checks without great games.
“We make sure everyone [in the business understands] that games are the reason we exist.”
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