Inside Asian Gaming

inside asian gaming October 2015 38 to more users. According to Globalwebindex, 80% of internet users use Facebook and on average spend two hours on social networks per day. Time spent may be diversified with increased options in social gaming via these popular platforms. A smartphone world: According to Ericsson, smartphone subscriptions in 2010 were 0.5 billion and are estimated to increase 12x to 6 billion by 2016. Similar to the social network distribution channel, game operators have developed casino platforms on mobile applications that enable streamlined user gaming. Ease of access to mobile devices increases the potential market of consumers for online gaming. Online gaming is heavily influenced by external regulation and controls. Monitoring, predicting, and understanding legislation and the impact of regulation changes can be a key to success and has been a significant driver of change in this market. Regulation of real money gaming varies by jurisdiction around the world. Countries are becoming more aware of real money gaming and have established regulation to capture tax revenue. Approximately 60 countries license online casino gambling in some form, while 17% of countries have bans in place, and a further 41% are unregulated. Asia and the U.S. remain two of the larger untapped real money gaming markets due to unfavorable regulation while Europe has a more mature online game market, according to a report from keycasino.com. Regulations can be beneficial in providing certainty and structure to risk adverse competitors, but increases operating costs to maintain appropriate compliance controls. Companies that take advantage of the unregulated social market, to establish high market share in restricted real money gaming markets such as Asia, may be best positioned to upsell and win real money game opportunities when and if more favorable legislation passes. A look at the U.S. landscape: Starting in 2013, online casino gaming in the United States became legal in New Jersey, Delaware, and Nevada after a high profile Department of Justice crackdown on poker sites in 2011. While favorable domestic legislation shifts have garnered the attention of major international casino gaming operators, they continue to be hesitant in committing too much capital given the perceived risks. The bounce back in legislation is positive news to the online gaming market. According to the National Conference of State Legislatures, seven other states have introduced online casino gaming bills this year to continue to expand the U.S. market. Entrance of just one new state can result in access to thousands of new customers. M&A OPPORTUNITIES The online casino gaming market growth prospects have resulted in an increased appetite for new and existing gaming companies to enter and increase market share using M&A as a vehicle. As seen in the chart on page 40, in select M&A online gaming related transactions, convergence across the sub-sectors has been a common trend over Online Gaming Online casino game operators have developed casino platforms on high- traffic social networks such as Facebook to ride the momentum of social network user adoption and gain access to more users. Deals involving multiple brand purchases can cause confusion to the market if not positioned correctly. Market analysis and stakeholder buy-in is a critical first step to ensuring “NewCo” has the right brand strategy.