Why profits aren't always sanity
Gaming Realms revenues are up as it chases growth in an area many operators are not yet focused on. Can the Foxy Bingo founders repeat history?
Revenue is vanity and profit is sanity, or so the cliche goes, but despite an expected loss of £4m in 2015 Gaming Realms is making a lot of sense right now. The gaming group led by the founders of Foxy Bingo has recovered well from a rocky start and recent revenue growth is a guide to some big opportunities in the sector.
Revenue grew 48% in Q3 to a relatively modest £6.2m, with real-money gaming increasing by 18% to £2.8m, but this belies the real changes at Gaming Realms. This is a business transformed from a social gaming and bingo operator to a firm focused on the very large growth potential in the softer end of the mobile slots market.
That it has managed to pivot so succesfully within a tight time-frame is testament to management and shows the value of an executive team who understand the sector. Betfair’s revival under Breon Corcoran is the most obvious example of this, but the swift and smart transition at Gaming Realms is another to admire.
Getting the band back together
It would be wrong to say Gaming Realms 2015 model is completely different from its initial incarnation, but there are some significant differences from the business that was admitted to the London Stock Exchange in the summer of 2013. Its flagship product at the time was Bingo Godz, a social casino inspired real-money bingo site that was due to be backed by a major TV marketing campaign.
In many ways this was the executive team ‘getting the band back together’ to try and reinvent the UK online bingo market through the new opportunities mobile and social gaming represented. But after a disasterous year beset with issues over its platform and ambitious gamification features it quietly sidelined the project and sold off the site and its associcated casino brand Castle Jackpots for £500,000.
Its other key asset on listing, social gaming arm Bejig, generated £1.2m in the 2014 financial year, but its social gaming assets have been shuttered as the firm realised its real value was its technology platform. This has been transformed into its in-house real-money gaming platform it used to launch the brand that would spearhead the new direction for Gaming Realms: Spin Genie.
A new market for slots
The female-friendly slots site Spin Genie is aimed squarely at a similar demographic to the old Foxy brand with its TV campaigns using cartoon characters, and radically softer touch points to the traditional look and feel for gaming ads. It’s a bold move and one that more closely resembles bingo advertising than the adrenaline and excitement fuelled ads from its competitors.
The brands also have a distinctly mobile focus with 68% of revenues coming through mobile and tablet in Q3, making it arguably market leading in that respect. Mobile is at the heart of Gaming Realms operations as both its key platform and acquisition channel. One of the earliest investements it made was acquiring mobile operator Alchemy Bet, which runs the Pocket Fruity brand, and this has now been ported over to the Bejig platform.
It’s not placing all its eggs in one basket, however with one more desktop-oriented Dragonfish skin already active in Total Gold, as well as its third-party Iceland Bingo site also on Dragonfish, and another gaming brand on the way. These brands are driven by its in-house marketing teams, which themselves are the biggesst material change in the past 12 months.
The acquistion of performance and digital marketing firms Quick Think Media and Blueberra Holdings saw the two providing £7.4m of Gaming Realms’ £11.2m revenues in 2014. This gives the operator a huge amount of digital marketing expertise and more control of its own destiny than some rivals more reliant on their affiliate partners. Both Blueberra and QTM were predominately bingo-focused firm, but its clear this focus is shifting towards slots along with the wider market.
As online bingo itsself increasingly becomes just an acquisition channel for a different type of slots gamer so Gaming Realms has shifted likewise. And it’s biggest success is likely a curious hybrid of the two. Gaming Realms acquired social casino brand Slingo from RealNetworks in December 2014 and has already begun the process of making it into a key part of its RMG portfolio.
The value of Slingo
The acquisition of Slingo, a hugely succesful bingo slots hybrid social casino game, could prove to be a decisive one. Here again they are very much on-trend by focusing on a core casino gaming proposition but offering it in a differentiated and propriertary way. In-house product is crucial and the Slingo Riches game is suprsingly compelling and perfectly pitched for its target audience of lower stakes bingo style gamers.
Slingo Riches, the real-money gaming offshoot of the social gaming Slingo app, was responsible for 16% of gross gaming revenues on Gaming Realms’ in-house platform in Q3. “We believe that this new product, targeted at our key mobile based demographic, will enable us to continue our revenue and player growth into 2016 and beyond,” Patrick Southon, Gaming Realms CEO, said.
What they believe the key advantage will be is a differentiated product set focused on the softer, more casual end of the casino market. The use of mobile and social gaming features are vital enablers for this as will be cost efficient acquisition methods, which its in-house teams should be able to provide.
It’s not a market or an area many of the major UK players are focused on right now and only the likes of mFortune, Leo Vegas and Casumo are legitimate competitors. It’s a bold play for a new market, just as Foxy Bingo was all these years ago, but you wouldn’t bet against a team prepared to move so quickly and decisively to have made a great call once more. The question is will anyone else follow?