Q&A: A new spin on social casino

Akamon CEO Vicenç Martí on selling his business to Imperus Technologies, and why virtual reality will take the social casino sector by storm

Social casino developer Akamon Entertainment was founded by Vicenç Martí back in 2011, and at a time when the industry was starting to mature. Realizing he was late to the party with a number of developers already showing dominance in the North American market while others fell by the wayside, Martí took Akamon elsewhere. Identifying huge growth potential in Latin America and Southern Europe, Akamon bet heavily on launching localized content into these untapped regions. [private]

Five years later and the decision has proved to be a lucrative one, with Imperus Technologies completing its $24m acquisition of the Barcelona-based firm last month. Despite the takeover, Martí and Akamon’s senior management team will remain in place, and have been tasked with keeping the developer on its current growth trajectory. And with a pipeline of new products and one eye on innovative tech such as virtual reality, the takeover marks the start of the next chapter for the company.

Below, Martí talks candidly about his decision to shun lucrative markets such as the US, UK, Australia and Canada in favour of riskier regions, and why now was the right time to sell Akamon.

eGR North America (eGR NA): In hindsight, was it wise to focus on Southern Europe and LatAm? 

Vicenç Martí (VM):  In retrospect it was a good idea. Some of the companies that focused on North America and other traditional social casino markets – such as Playtika and DoubleDown – became very big in the process. But some of them failed. At Akamon we took an alternative route and we have made a name for ourselves as the go-to company for social casino in Southern Europe and Latin America. This had its advantages, including being almost alone in those markets. But it also had its disadvantages, such as monetization which is much harder than in traditional markets because of lower GDP and limited access to payment systems.

eGR NA: Why was now the right time to sell Akamon? 

VM: We became very profitable in 2014 and established a profit level of around 30% of EBITDA margin this year. We looked for an exit for one very simple reason; 90% of my core shareholders were not involved in the day to day running of the business. They consisted of two funds based out of Madrid – Axon and Bonsai – and the other co-founders who were at the operating level at the beginning of the Akamon story but have since stepped back from the running of the company. I had to bring in other professionals to lead in the areas where the co-founders had departed or asked to leave.

So the co-founders were in a situation where they had equity in the company but were not involved in its day to day running. The only founder that was heavily involved was myself as CEO. We sat down during a board meeting and I decided I would look for an exit for them, which I did through Imperus. I have materialized around one third of my consideration price, and the other two thirds I rolled into Imperus stock because I believe there is still a lot of opportunity going forward in social casino.

eGR NA: Was there a point when you thought the deal wouldn’t complete? 

VM: Look, there are two main ways to do an acquisition. The European way and the American way. In Europe we tend to buy based on a company’s own resources. You have your cash and finances on your balance sheet before you target an acquisition. In the US, however, you target an acquisition and then raise the money. In the UK, it tends to be a little bit of both. So people had to adapt to the fact that Imperus is basically a vehicle that is built to do acquisitions – they successfully completed the acquisition of diwip at the start of the year. It took them a few tries to do Akamon, but it wasn’t something we became hysterical over, at least not me. It just happens. It took a bit longer than expected but we got there in the end.

Some of the shareholders may have worried a little bit more than I did, but as CEO you have so much more visibility on the deal than anyone else. You know the buyer, you have way more contact with their management team, and you understand their credibility. And the board is not as involved as the rest of the company and that may lead to more doubts when you do a deal. It’s normal.

eGR NA: Will there be a management shakeup post acquisition? 

VM: The management structure of Akamon will remain the same. There are five key guys – Alex Cohen on product, Oscar Fonrodona on marketing, Joan Valduvieco on technical and Montse Puig our CFO, as well as myself. And all five of us will stay. The original founders of Akamon, other than myself, have not played a hands-on role in the company for the past two years, so the recent success of the company has been down to this team. I was very keen on having everyone continue because at the moment Akamon is growing faster than the industry, which means we can acquire more market share than the others.

eGR NA: Will there be any major operational changes? 

VM: We already have a very exciting pipeline of products to be launched and improvements to the platform. One of the reasons Imperus decided to move forward on the transaction was precisely that. So the pipeline remains unchanged by the takeover. There is also an interesting synergy component going forward with diwip. Diwip has an amazing product line for social slots, which I would eventually like to incorporate into the product we offer our Southern Europe and LatAm audience, and we may also be able to help our diwip colleagues integrate a few of our games and innovations.

eGR NA: How will the Akamon and diwip brands coexist? 

VM: There is a nice coincidence in that Akamon already has a small office in Tel Aviv, so it’s highly likely we will put Akamon’s Israeli team and diwip under the same roof. Right now they operate as independent businesses under the Imperus umbrella. But it is true that in the mid-term there are a lot of corporate brands. Imperus is a corporate brand that is not recognized by the consumer, as is diwip and Akamon. Obviously under diwip and Akamon you have all of the games and apps, which are recognized by the player. So yes, further down the line it makes sense to consolidate under a simpler brand structure, but is it a priority right now? No, there are other things that are more important.

eGR NA: You mentioned your product pipeline. What innovations can we expect from Akamon in the coming months? 

VM: About a year ago we took the decision to heavily compete in the video bingo space. Video bingo is a category that is very popular in LatAm, and is basically a slots mechanic with a bingo front end. We will be continuing with that strategy, and will look to improve on the mobile side of things. We will continue to roll out high quality slots themes, and we won’t be forgetting about our approach to local games and localization. So developing games specific to our core geographies that give us lower acquisition costs and that we can cross-sell to casino games.

eGR NA: Will localization be a key trend in 2016? 

VM: At Akamon we bet on localization from the start. I continue to think this is a global industry and that the majority of value has been created inside a specific core area in North America and English speaking countries. That said, a lot of value can be created outside of core areas, but that’s not to imply those markets are not the most important. For the time being, the US will remain the largest social casino market in the world, but there is a lot of growth outside of that.

The other thing that is happening is the boundaries of the games will be extended in the next few months. If you take social casino today from a revenue perspective, it’s mostly slots with a little bit of bingo. That will change and developers will start to innovate around the edges and will put the social casino dynamic into games that have a different appearance. If we just churn out slots games that are indistinguishable from each other, it’s going to be a very boring industry from a consumer point of view.

eGR NA: Is it easy to innovate in social casino? 

VM: In this industry it’s very easy to try new things. You don’t need a license or a compliance department and you don’t need to obtain regulatory approvals that may take six months to receive. You just try something and see if it sticks. So I think you are going to see a lot of people take cues from social casino – using the freemium model with some sort of random number generator but changing the appearance on the face of it. We are starting to see some innovation there and I would like to see Akamon, and possibly diwip, leading the charge.

eGR NA: What technology trends do you see emerging? 

VM: The new Apple TV platform with playable apps fits very well with social gaming. I also have high expectations for Oculus Rift and virtual reality in general. Social casino is very engaging. We have users that have been with us since the beginning, and they are invested emotionally in the leaderboards, rankings, their balance of chips and so on. If we give them a new platform, such as virtual reality, it will allow them to continue to develop their career as a social casino player with Akamon. This, in turn, will extend their lifetime.

So we are exploring the space, but it is no secret that any company that goes through an acquisition gets a little distracted, particularly at the senior management level. But now the takeover has completed I am looking forward to getting back to operations.