Opinion: Egaming affiliates - a year in review
The events of the last 12 months, in particular Black Friday, have had a huge effect on affiliates. Michaela McNamara (pictured) looks back at 2011and examines a sector of the industry that has, once again, been forced to diversify.
To say that the last year has been a roller coaster ride for the gaming industry is something of an understatement. In North America, the US Department of Justice (DoJ) all but shut down the online poker industry last April, only to change its position in December stating that illegal internet gambling only applies to sports betting. Meanwhile, in the Eurozone, governments in Spain, Denmark and Germany have fought desperately to protect their own gaming monopolies from online competition.
There’s no question that the global economic slump is softening views towards online gambling in most parts of the world. A desperate need for revenue is trumping moral objections against gambling in country after country. One major exception to this trend is the burgeoning Asia-Pacific market where many governments are still exercising rigid control over egaming.
Black Friday and its aftermath
On April 18, 2011 the DoJ stunned the gaming community by seizing some of the biggest online poker domains such as Full Tilt Poker and Absolute Poker. This move effectively shut down the American gaming market. Even sites that weren’t shuttered felt the impact as American players quickly withdrew from the market.
The impact on affiliates was immediate and profound. American players spent as much as $4bn on gaming in 2010 and affiliates who relied on American players took a major hit. Even though the event occurred in the US, Black Friday created an equally large ripple effect across the world.
Industry-wide, poker revenues stabilised as US players found sites that would still work with them. Overall, the online poker industry grew by around 4% in 2011 “ despite Black Friday. Still, that number was originally expected to be more like 10%, according to some industry analysts.
The events of April last year did, however have one very positive impact on affiliates. Those affiliates who once relied entirely on gaming have been forced to diversify their portfolios. This has led to an explosion of interest in complementary affiliate programs such as Forex trading and binary options. Binary options trading in particular is generating a lot of excitement among casino affiliates.
While the re-opening of the American market will surely be a boom for affiliates, it does raise questions about what happens to American players’ accounts. Will affiliates be credited for accounts that are re-activated? Will they get credit for bringing an American player back to a site? There hasn’t been much talk about these issues, but they could loom large in the months ahead.
The Euro Zone
In countries like Spain, Germany, Denmark and Portugal, governments interested in protecting their own gaming and lottery monopolies threw serious roadblocks in front of gaming companies in the form of sky-high taxes.
Regulatory inconsistency in Europe has caused some gaming companies to pull back or close down sites in places like Spain while bureaucrats work out new legislation. An unsteady European market has made retaining players, and creating long-term marketing strategies, difficult for affiliate marketers.
In online forums, affiliates are taking the European situation in their stride. Most serve a global audience and are nimble enough to withstand the fits and starts of a particular market. Generally, they seem to realise that the liberalisation of European gaming laws is inevitable and focusing on markets such as France, where gaming laws are somewhat friendly, is the best strategy.
What’s next?
If current trends in the United States and Europe hold, 2012 should be a very good year for gaming companies and their affiliate partners. The next battleground for online gaming will almost certainly be the Asia-Pacific market.
Governments in that part of the world are not bound by the kinds of trade agreements that forced regulation in Europe and they are in no hurry to open gaming markets.
While there’s plenty of demand for online gambling in Asia, many affiliate partners have reported difficulties making headway with Asian gamblers. Some of this is likely due to cultural gaps but, because the stakes are so high, affiliates are working very hard to overcome them.
For the full rundown of this year’s Power affiliates 2012 make sure you read the forthcoming March issue of eGaming Review.