Q & A: Pierre Gagnon, OddsON

The woes experienced by the interactive gambling industry in the last year haven't stopped software supplier OddsON Inc. from experiencing success.

IGN spoke with Pierre Gagnon, the president of OddsON about what the company has done in the last year to maintain its position and what it has in store for the upcoming year. Gagnon touched on how the company has seen declining interest from investors and operators wanting to get into the industry, but a more solid crop has risen from existing operators. OddsON continues to look for new clients, but their focus is still on building stronger ties with moneymaking partners.

IGN: OddsON is one of those companies that just quietly goes about its business without much fanfare, yet still manages to corner a good portion of the industry. It is no secret that the last six to eight months have been a trying time for online gaming operators. What sort of trends have you seen during this time?

Pierre Gagnon: What we are seeing lately is a reduction in the number of people that are looking at getting in the business because of the difficulties these days. It is hard to grab market share and have the ability to finance growth, so we are seeing a slow down in the number of inquirers. However, we are seeing an emergence of stronger players in the industry and the strong are getting stronger.

One of our licensees just acquired the name and customer list of one of its competitors and then ported their client list to their software. They have retained the name but what they are doing is eliminating all the back-end cost and doing a true consolidation of the business.

I don't see anywhere for that trend to go but up. The issues that have been prevalent with the credit cards make it that out of the 2,700 or so online casinos that are out there right now it is doubtful that more than 600-700 of them are making money, if at all. The ones that will survive are the ones that have better technology, more money or a natural advantage with either their name or product line. There are the ones that may survive.

IGN: Companies that don't have those resources or strong brands are going to have to do something to stay competitive then, right?

PG: We have one of our licensees that is now getting into the white label business, if you want. They will operate a casino for someone else on a profit-sharing basis.

IGN: You mentioned a decrease in prospective operators, but it sounds like those that have managed to weather this storm are of a little better quality than maybe what you had a couple of years ago.

PG: Give me one good licensee as opposed to 50 small ones and I will make more money. A lot of your costs don't go down with the number of your licensees. It takes the same amount of time to maintain a Web site that is looked at by 10 people as one that is looked at by 10,000 people.

It makes more sense for us to look for fewer customers, but stronger ones, and that is exactly what we are doing. That is not to say that we won't work with a totally new client, but we want to make sure that the client brings something to the table that is going to be creative to the industry and to us.

IGN: As a leading software supplier, what kind of demands are you seeing from your customers for the next generation of software?

PG: We aren't seeing a lot of requests for what you would call the "next generation of games." What we are seeing a lot of, though, is a demand from our clients for a product that is very stable and gives them a continual high-quality experience. People don't want a system that will fail and be down. People don't want to wonder where their checks are. People want comfort gaming. They want things to be made easy and simple and enjoyable.

I think a lot of times people in this industry forget what we are selling. Let's not forget that we are just selling entertainment. If it is entertainment, then we have to make sure that the entertainment works when the client expects it to work.

IGN: You kind of touched on this earlier, but do you see the land-based operators shaping this industry sooner rather than later?

PG: I am not sure. They are defiantly a force to be reckoned with. It is a totally different business in the land-based world though, and the online business isn't as easy as people may think it is.

For them to come in, they are going to have to change their mindsets as to how they are going to operate. They are going to have to become nimbler and realize that this isn't a place where you can comp a player with a free room or tickets to a really hot show. You can't give them free drinks while they gamble at the table. People have to really market and find what makes the player tick, and I am not sure that is really obvious.

I am not saying that it can't be done, and if anybody can do it, those guys certainly have the pockets to do it. But it won't be easy, it won't be a cakewalk.

IGN: And that is where some of those smaller online companies can bring a lot to the table in a partnership because they know what works with that different type of a player.

PG: That is correct. What I do expect is that you will see land-based guys really get into this business by acquiring some of the bigger online operators. I think most people can figure out who some of them are and I don't want to give anybody ideas. You have two choices here, they can build or buy. They can go and build it on their own, and the land-based guys have enough money to do that. But if you look at the value-time of money, it may be easier to just acquire an existing operator. I think that is where some of the bigger and medium-sized operators can use their leverage.

They can buy an existing operator and then build on their land-based brand that way. They can throw their marketing muscle and budgets behind it that way instead of in the operational side and build it that way.

IGN: So having said all this, where do you see OddsON going in the next six months to a year?

PG: We are going to continue to grow and be strong. We will continue to develop technology that will make our clients and their plays happy. We are looking at becoming a larger solution provider to our customers. Although we aren't doing it in a formal way, yet we do offer that option. If people call us today and tell us that they have a technology that may be of interest to us, we listen to what they have to offer us. Where it makes sense we will acquire it and integrate it into our platforms rather than trying to develop it ourselves.