Edward Ihre is one of the more familiar names in the online gambling world, particularly in affiliate circles. Having run his own highly successful consulting firm since 2010 he has worked in the intervening years for many of the biggest names in the sector. It puts him in a position to know what works in online casino so it was no surprise that early last year he set about launching his own brand Codeta.
But the product came with a twist. Having worked for 15 years in the industry and knowing what he does about his home market in the Nordics, he felt there was a gap in the market for a live-casino focused operator to capitalise on what he saw as a growing awareness of the form.
It was a brave move given when he knew about the casino market, particularly in Sweden, where he points out the market is extremely slots driven. But following up on a hunch, Ihre set about undertaking in-depth market research – which cost over €300,000 – and found there was a ready audience out there for a quality live-casino product. And it is an audience that is likely more valuable than the average online slots player.
“I had a hunch about the value of live casino players,” Ihre tells GamCrowd. “I knew from Evolution’s (the leading live casino supplier) figures there was an indication that the player value was greater than a regular casino player. But we firmed up that hunch by finding that the live casino player was worth three times as much.”
And the insights kept coming. Not only were they more valuable, they were also younger and they identified themselves much more like poker players, seeing the live-casino games as games of skill, where research into strategies and odds would be rewarded with a better experience.
“When we were putting the puzzle together, we didn’t see anyone taking ownership on the consumer side when it comes to live casino and table games,” he says.
He admits this is a brave move. The brand positioning he is taking up means Codeta is effectively shutting out perhaps 85 percent or 90 percent of the existing casino market. “That takes courage because everyone wants everything and is trying to appeal to everyone,” he says.
Still, if it is a brave move it is clearly viewed as being a potentially exciting opportunity by the investors in Codeta who initially put €2m into the company in early 2016. “It’s a friends and family funded project,” he says. “I love that they have faith in me – but it obviously raises the pressure on this succeeding. But I interpreted it as a vote of confidence.”
Having invested that money almost equally between setting up operations, improving the product and then the marketing, Ihre admits the results haven’t been entirely as was hoped.
“It’s a mixed bag of experience. The response we have had from the industry and the affiliates has been way better than expected. But the response among consumers has been disappointing.”
He says the company perhaps underestimated the degree to which it would be difficult to persuade a slots audience to give a live casino operation more of a chance. “We are relying heavily on an affiliate-based strategy, and even though they were pushing us more than they had ever pushed a new brand, we weren’t getting as much traffic as hoped,” he says. “We were clear in our positioning, but the affiliates get the traffic that is slots orientated. So the uptake was not as hoped.”
Nevertheless, Codeta has launched a second financing round which Ihre hopes will take the company through to profitability. “We went out with an offer just before Christmas – not the best timing – but in early January we really got into it with our existing investors and we have secured €550,00 so far from existing investors and now we are looking for new investors, hopefully larger ones. The original ones won’t be the ones to invest our journey ahead.”
To this end, Codeta has hired a handful of third-party investment firms which are now in the process of attempting to entice more professional investors. “Most people underestimate how much time, energy and emotion goes into raising funds and it takes time away from running the business itself,” Ihre says.
Ihre remains confident that the Codeta story will cut through in the end, and will be suited to an environment where players are harder to recruit and retain. “We need to translate how engaging the product is, how interactive and fun. To present and champion live casino we need to upgrade from our 1.0 version of the site.
“It doesn’t translate the engagement quite yet. Plus we know from our research that they players want recognition, from us and from their peers, so we need to create leaderboards, bragging rights, profiles. That sort of stuff we need to develop for our consumers to ensure they remain loyal and they find things with us that they can’t find anywhere else.”
He concludes by adding that he believes that is Codeta remains truthful to its positioning, then the customers will repay the focus. “In order for us to survive and for us to be unique, we need to build a reputation and brand as being the live casino. Since we have started, our competitors, Mr Green, LeoVegas, have started to take live casino more seriously. But they will never be able to focus purely on that.”