Industry predictions: The shift of power to the US and VC funding in gambling

Karolina Pelc, founder and CEO, BeyondPlay

Game studio acquisitions

I believe that we’ll see a continued trend of acquisitions of smaller game studios by the big aggregation platforms and operators. I have no doubt there are still a few big studios that will be bought up shortly, but the interest has now shifted to the smaller players. In other words, what’s left on the market and is semi-affordable as not everyone has the pockets of Evolution or DraftKings. First-party content opens excellent opportunities for innovation, serves as a point of differentiation in a very saturated market and allows for more cost-efficient operation, so everyone wants in on that. There is not a week that goes by when I am not asked whether I know of any game studios for sale or majority investment, with a particularly strong interest originating from the US, which makes me quite confident the prediction is entirely on point. And it’s not all about slots as live dealer has picked up an immense interest resulting in the launch of a new product from Microgaming and the acquisition of Authentic Gaming by SG Digital, with a few more parties exploring their options of build versus buy on both sides of the pond.

The shift of power to the US

It is becoming increasingly visible that the power has shifted to the US this year and as the market opens further. As state revenues keep breaking records; this will become even more evident. From the NJ-based events that have seen broad participation from European delegates to the M&As, where it’s the US players dominating the space and flexing their muscles. Another field that can be seen is strategic moves from content studios and impact on game design. The US is an entirely different beast in preferred content where land-based IP is hugely valued while distribution is a key challenge for most studios. What we can see is partnerships and acquisitions directed at winning one or the other USP with a clear goal of winning the US race. I feel, during 2021, the US’s perception has shifted from a “one day maybe opportunity” to now becoming the centre of attention and a must-have element expansion strategy if you want to gain or retain a global reach. And it seems especially interesting if you are a business with heavy dependency on regulated and restrictive markets like Sweden, the UK or Germany.

The year of multiplayer

As I am running a start-up with its core vision wrapped around redefining how people play and changing the solitary gameplay into an engaging multiplayer experience, I naturally believe this is a significant trend, not just for 2022 but also for years to come. We see quite a few different solutions coming to the market, ranging from betting behind streamer play, competitive community tournaments, and collaborative social tools, like the product we are building at BeyondPlay. With streaming audiences growing in strength while Twitch is growing into an increasingly hostile environment for our industry, I think this type of innovation might turn into a “lifesaver” at some point in a not-so-distant future. There is also strong interest in the area from both operators and game studios so the trend is gaining solid validation. Hence, I am excited to see how this will develop and which products will genuinely revolutionise this space.

Julian Buhagiar, co-founder of RB Capital

Web3-centric gaming

Bear with me here. We’re not talking about exploiting the outcomes of cute little axies in battle, or selling rare +36 combo Malt Ogre cards (keep up), but possibly the future of crossover gambling. What if you could take home digital memorabilia of your betting wins? Better still, what if you could actually sell on those wins as tokens, for a profit?

Similar to the rise of crypto-casinos about five years ago, expect to see NFT casinos coming your way soon (and if you’re reading this in certain parts of the world, they’ve already arrived). Sporting well-worn cliches such as ‘provably fair’ and ‘anonymous plays’, most of them will arguably be clones of their crypto-brethren.

However, the real NFT novelties won’t be found in casino, but in sportsbook. DraftKings’ recent deal with the NFL, alongside with Sorare and NBA TopShop’s inroads into digitising sports assets or “moments”, are paving the way for something more lucrative; a proper crossover opportunity for casino and sportsbook.  Think of allowing holders who have just earned some rare memorabilia to go double or nothing on a game for an NFT they own – and pay in crypto – and a whole new metaverse has just been unlocked…

VC funding in gambling

All of this magic wouldn’t be possible without capital, specifically strategic capital. And 2021 has broken records across so many categories for VCs, they should consider giving momentum awards for VCs; ie: for the rate of breaking new records in the industry. Specifically: pre-seed raises, volume of capital raised, number of IPOs, early-stage (and mid-stage) valuation multiples; all these statistics have been shattered in 2021 and next year already promises to break records even before we go into half-time.

The main difference this year? A significant amount of new Good Venture Capital ™ money is now flowing into the gambling industry. New players such as the excellent Yolo Investments and GrowthBox Ventures, but also existing heavyweights such as Valhalla Investments, have sunk a record amount of capital this year into new gaming tech, and promise to up the ante even more next year. New capital paves the way to ever more disruptive innovation in gaming which, in an era of rapid industry consolidation, is a Great Thing ™.

The media barbarians at the gate

There’s this great scene right in the middle of this season of Succession. where the board members of the ruling media corporation are evaluating the takeover of a new tech start-up (Swedish company, replete with eccentric founder): “It’s got everything, great tech, great streaming…they’re even going into sports betting now”. And that, in a nutshell, represents the appetite of the US media landscape in 2022. Viacom, MGM, News Corp, Warner Media, even Disney now, are all circling around new, proprietary, but especially gambling, technology.

So, while 2022 will be even more exciting in terms of the acquisitions (and subsequent valuations) of the tech companies these media giants will acquire, before not too long there will be just a handful of full-stack media giants with gambling products. And then, guess what will happen with the ever-more exorbitant costs in acquiring new players?