Integrated Resorts
and the ReiwaConsumer
Japan Gaming Congress
16th May 2019

As we hail in a new era inJapan let’s also frame a
new way of thinking about
our consumer for IR:
The ‘Reiwa’ consumer

2
Instragram photo by gkrk_0219

Today’s Agenda

1.
2.
3.
4.

3

Meet the Reiwa Generation
Reiwa’s ‘swing vote’ consumer targets
Creating a receptive audience for IR
A recipe for successJapan’s population and society is under gradual but extreme pressureSlow
The demographic writing has been on the wall since themid 1970s and for a long time the change wasimperceptible

Relentless
Since peaking around 2010 Japan is expected to lose over a
million people a year in the coming decades

Utterly unavoidable
Nothing, including immigration, will stop this trend

4

Japan is meeting the era of Reiwa with unprecedented growth at the elder age
brackets and atrophy in numbers among the young

Gen Y/Z

1989: Heisei Year 1
5*Source: www.populationpyramid.net

2019: Reiwa Year 1

Scarcity of younger people
is changing everything6Dealing with a society with dramatically less people of working age
The four macro trends shaping modern Japan

Changing world ofwork
Japan is facing a major
labor shortage, with noclear solution – robots,increased female
workforce and“imported” labor are all
being engaged

7

Women power
A record number ofworking age women now
hold jobs in Japan, yet
traditional work
structures – such as thetwo-track work system –and attitudes are creating
resistance

Generationaldynamics
Japan is the most aged
country in the world. An
unprecedented problem,with no firm roadmap.
Generations may or may
not have common
interests

Internationalization
The country is alreadyexperiencing a record
tourism boom, even
before hosting both theRugby World Cup 2019and The 2020 Olympic
Games

The Reiwa generation keeps theirhearts and minds close to home
• In times of great change, Reiwa are focused on
those things in life that they can control• Risk averse: look before they leap
• Exposed to new forces, accepting them but alsobuilding defenses• Creating the perfect ‘small’ world• ‘Strangely’ conservative youth• Socially concerned older generation

8

Most Reiwa are conservative
compared to their Asian
counterparts...
But many Reiwa know that thenation needs a path torevitalisation

9One in four* Reiwa across Japanare positively ‘excited’ about theleisure and economic opportunityof IR

One in three in Kansai
Males, 16-29 are most positive
with two in five showing
excitement
Women are a tougher audience

10*Source: Carter Sentiment Study April 2019

Positives of IR cited by supporters
Will generate tax revenue that will benefit society locally and nationally48%

Will bring economic benefits from increased tourism

39%

Will increase the level of entertainment and leisure quality in Japan36%

Enjoy new experiences and facilities not commonly found in Japan

36%

Boost to employment, businesses and the economy during construction

36%

Boost to employment, businesses and the economy after opening

32%

Ability to offer a range of activities/ entertainments in a central location

32%

Will bring leisure standards up to an international level31%

I can enjoy in Japan what until now I had to travel overseas for30%

It will be fun to go the casino to enjoy gambling in moderation

26%

Will renew old, dilapidated areas

25%

Highlight Japan culture and achievement to international audience

18%

Will bring hospitality standards up to an international level

16%0%

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*Source: Carter Sentiment Study April 2019
Base: All respondents enthusiastic about the leisure and economic opportunities of IR, n=244

10%

20%

30%

40%

50%

60%

Those excited and in favour of IR differ quite markedly to those who are not so
enthused

Enthusiasts

12

Detractors•

More likely to be male•More likely to be female•

Skew younger•

Skew older•

Confident and engaged••

Optimistic, social, engaged digitally andopen to new digital entertainment

Cautious and uneasy aboutchange•Seek transparency in society•

More internationally-mindedMales are the key constituency of
gaming in Japan – twice as likely
than women to be engaged insome form of it
Men with some ‘life experience’
represent the sweet spot for
gamingHowever…

13

Understanding and responding
to the changing power
dynamics of Generation and
Gender is critical to making a
relevant and sustainable IR for
the Reiwa Generation

14

Activating young Reiwa is a
key pillar to the success ofIR
15

Gen Y and Z

Younger Reiwa are smaller in number but they do have thespending and behavioural propensity to ensure that they
represent the most vital part of the customer base for IR

Theme parks are already an important part of their leisurebudget so the destination format is not unfamiliar. Being indemand and time poor, they value the ‘special’ outing
Not unrealistic to expect that visitors under 40 will be thecultural and economic drivers of the IR

16

It will be younger people who will drive restaurants
Those under 40 are more willing to spend when it comes to eating out. This dynamic
would be reflective of much entertainment spending

Restaurants - % of respondents
403530252015
1050Teens

20s

30s
Spending More

17

Q: Do you feel that you will be spending more/less in Restaurants and eating out within the next 2 -5 years?
Source: Carter Sentiment Study March 2017
Base: All respondents, n=1000

40s
Spending Less

50+

How do young
Reiwa like to play?

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TEENS – seeking experience• Developing identity depends on relationship tothe peer group• Seek social experiences• Blow off steam from the significant pressures ofstudy and ‘fitting in’• Emblematic activities:• Karaoke• Movies• Theme parks• Game centers• Highly digitally focused in entertainment

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TWENTIES – creating identity• Laying foundations, finding themselves• Creating own style• Balancing work and leisure• Emblematic activities:• Izakaya• Nightclubs and dancing• Watching sport in stadium• Theme parks• Karaoke• Game centers• Highly digital

20

THIRTIES – evolving to take responsibility• Maturing and embracing responsibility• Many are now married and starting families• Hanging on to the activities they enjoy• Emblematic activities:• Eating out• Watching sport in bars and lounges• Theme parks• Movies• Digitally integrated

21Elements of IR Appealing 16-29
Movie theaters

41%

Theme park attractions

37%

Onsen/ spa

36%

Family friendly dining

32%

Aquarium29%

Karaoke

27%

Fountain and fireworks shows

27%

Swimming pools and waterparks

25%

Unique, themed dining experiences

22%

World-class dining

22%

eSports

20%

World class entertainers

20%

Stage shows20%

Art museums: premier collections of Japanese and intl

18%
0%

22

Q: Which elements of the Integrated Resort interest you?
*Source: Carter Sentiment Study April 2019
Base: All 16-29 year olds, n=386 (boosted)

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Elements of IR Appealing 16-29
Casino16%

Luxury international standard hotels

15%

Table games

13%

Live sports events/ stadium

13%Sports bars

12%

Risky adventures

11%

Night Club

11%

Slot machines

8%

Jazz club

8%

Sports betting

6%

Conference/ exhibition spaces

6%

Pachinko

4%
0%

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Q: Which elements of the Integrated Resort interest you?
*Source: Carter Sentiment Study April 2019
Base: All 16-29 year olds, n=386 (boosted)

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Digital experiences will attract younger people

These experiences
may not have evenbeen thought of yet

Image: Mori
Building Digital
Art Museum:Team Lab24

Creating an attractive offer for womenacross the generations is critical

25

WOMEN: A rising force in Japan,
the gatekeepers to success• Increasing female power will be one of the key
themes of Reiwa• Already greater presence in the workplace – arecord 70% of Japan's working-age women held
jobs in August 2018 – spending power is also
set to increase• Not the core casino target but economic
decisions are heavily influenced by women• Men represent an easier ‘sale’ for the gamingside of IR, but women’s strong influencer rolemust be kept positive26

Gender preferences in IR differ
Women show more interest in cultural and experience
factors, e.g.
• Art Museums F 37% vs M 25%• Aquarium

F 40% vs M 27%

But men are much more enthusiastic on gaming, e.g.

27

Q: Which elements of the Integrated Resort interest you?
*Source: Carter Sentiment Study April 2019
Base: All respondents, n=1000• Casino

F 7% vs M 27%• Slots

F 5% vs M 21%• eSports

F 6% vs M 16%

But food is an area of common interest
Women and men show even levels of interest in food

• Themed dining

F 25% vs M 26%• World class dining

F 28% vs M 27%• Family friendly dining

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Q: Which elements of the Integrated Resort interest you?
*Source: Carter Sentiment Study April 2019
Base: All respondents, n=1000

F 34% vs M 30%

An immutable law of marketing in Japan is thatyou must gain trust before people do business withyou

Women lead in awareness of IR, and will likely lead opinions and preferences

31%
I know quite a bit about it12%40%
I know something about it
29%

27%
I have only heard or read about it49%
2%
I know nothing about the topic
10%
0%

10%

20%
Females30

Q: How familiar are you with the plans for several integrated resorts in Japan?
*Source: Carter Sentiment Study April 2019
Base: All respondents, n=1000

30%
Males

40%

50%

60%

Women lead in awareness of IR, and will likely lead opinions and preferences

31%
I know quite a bit about it
12%
40%
I know something about it
29%

27%
I have only heard or read about it49%
2%
I know nothing about the topic10%
0%

10%

20%
Females31

Q: How familiar are you with the plans for several integrated resorts in Japan?
*Source: Carter Sentiment Study April 2019
Base: All respondents, n=1000

30%
Males

40%

50%

60%

That the IR is ’done right’ matters to a lot of people, regardless of gender
Almost 50% agree that it is personally importantthat the IR is designed and executed well

21%
48%

31%
Very or somewhat important
Neither can say

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Q: How important is it to you personally that the IR is designed and executed well?
*Source: Carter Sentiment Study April 2019
Base: All respondents who know something about the topic, n=789

Detractors are most concerned by social problems associated with their perception of IR
Social problems because of problem gambling from the casino

63%

The possible (even if unintended) involvement of anti-social forces

45%

General disturbance of a previously peaceful area

40%

Risks to moral standards around such a facility

38%

Too expensive to visit as often as people like31%

Crowding in general30%

The government becomes too dependent on gambling for tax
revenue28%

Too many tourists getting in the way of ordinary people

26%

Overseas companies make too much profit out of Japan24%

It is irritating to enter the casino for local residents

20%
0%

33

Q: What do you see as the negative points of an Integrated Resort?
*Source: Carter Sentiment Study April 2019
Base: All respondents who are unenthusiastic about the leisure and economic opportunities of IR, n=420

10%

20%

30%

40%

50%

60%

70%

Apart from designing harm limitation protocols that suit Japanese, which is a must,
operators need to be high on detail to get the public onside
Design harm limitation for gambling programs that suit Japanese

34%

Communicate more about how the money raised through taxes
will be used

32%

Provide a detailed explanation of their plans

26%

If international companies, involve Japanese partners

20%

Consult in detail with the community

19%

Involve partners from the community where the IR will be located17%

Carry out surveys of local people to gauge their concerns

16%

Explain about their history and credentials to build the IR

12%Sponsor local events to increase public awareness of company
and brand

11%

Hold information forums

11%0%

345%10%15%

Q. What should the potential operators who will be applying to the government for the opportunity to build and run the integrated resort do to establish or increase your support?
*Source: Carter Sentiment Study April 2019
Base: All respondents, n=1000

20%

25%

30%

35%

40%

But who is in controlof the message on
IR currently?

35Awareness of potential IR operators is modest
I am not aware of any

64%

Las Vegas Sands

19%

MGM Resorts

14%

Hard Rock International

11%

Galaxy Entertainment

10%

Caesars Entertainment

9%

Foxwoods

5%

Bloomberry Resorts

4%

Mohegan Gaming and Entertainment

4%

Genting

3%

Group Lucien Barriere

3%

MelcoResorts
Rssorts
Melco3%Wynn Resorts

3%

Rush Street Gaming

2%0%

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Q: Which of the following Integrated Resort operators are you aware of?
*Source: Carter Sentiment Study April 2019
Base: All respondents, n=1000

10%

20%

30%

40%

50%

60%

70%

80%

A recipe for success37

A recipe for success- The ingredients for the IR
DIGITAL
The entertainment world is going digital and the IR will be no different. It will be key to gaining
the engagement of younger people. New gaming formats and entertainment experiences thathave not even been thought of yet could come to be major draws
CULTURE
Culture is essential to establishing interest and status and driving content that will truly
connect. Culture in all its forms and all its origins – performance, art, food, clothes, sights
and sounds. Everything that takes us out of the everyday and connects us is culture
GLOBAL

Many visitors to the IR will come from outside Japan. Domestic visitors keenly await the ability
to connect with the world in a safe way without leaving Japan. An elevated global
representation of gaming and what surrounds it- the glamorous global image- is key tocreating the escape that people so keenly desire in destination tourism

EMBRACEDBY WOMEN
Having women as supporters and advocates is critical to keeping the appeal of IR broad
as well as sealing the decisions of groups to visit.
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On behalf of the Reiwa generation

Thank you39