Inside Asian Gaming

inside asian gaming October 2015 40 the past five years and will likely continue as these drivers become more prominent. Buyers varied over a wide range of verticals including traditional casino, real money gaming operators, lotteries, horse racing, land- based suppliers, game developers, and private equity. The market is addressing the fragmentation of the sub-sectors, and acquiring full solutions to cross market segments and enable more efficient operations. The game developers are the most fragmented segment due to low capital requirements to form startups, opening the door for increased M&A opportunities. Caesars acted as one of the few brands to move outside the traditional casino online segment (use of third-party-hosted platforms) through its acquisitions (Playtika, Pacific) to enter social gaming. Real money gaming operators (which host self-owned and third- party branded casino platforms for real money games on websites) merged through large deals (Party Gaming and bwin, 888 and bwin. party) to increase distribution capabilities, pool player networks, and lower operating costs through cost synergies, have found success through M&A. Land-based suppliers (which traditionally manufacture games for brick-and- mortar casinos) may have become the most diverse of the sub-segments across the online providers, through acquisitions of application providers (MacroView Labs), B2B real money platform technology (Jadestone Group), and social (DoubleDown, Product Madness). Layering suppliers’ proven land-based game content that can be converted to real money and social gaming on top of the acquisitions, makes this segment a serious threat. Lottery acquisitions of top suppliers (WMS, IGT) allowed for additional cost and revenue synergies through merging back office and field/ customer service operations. Social gaming developers (which develop social games to host on operator platforms) increased content and user base through tuck in acquisitions of smaller social gaming developers. Cross marketing of games and pushing acquired content through existing distribution channels can provide significant revenue synergy. Zynga, a top social gaming developer, made a push for real money gaming through its acquisition of Spooky Cool Labs. Overall, real-money operators defended top market positions, while social became fragmented with multiple competitors across segments. Real-money outsiders may have to acquire an established operator in order to become a market leader. Online Gaming Online Casino M&A Activity Timing Buyer Company Type Target Company Type Value* 2010 888 Holdings Real Money Operator Mytopia Social game developer $24M 2011 Bally Technologies Systems MacroView Mobile platform developer Undisclosed 2011 Caesars Entertainment Traditional Casino Playtika Social game developer $180M 2011 PartyGaming Real Money Operator Bwin Online game provider $1.8B 2012 IGT Land Based Supplier Double Down Social game developer $500M 2012 WMS Land Based Supplier Jadestone Group B2b platform integration, game publisher Undisclosed 2012 Aristocrat Land Based Supplier Product Madness Social game developer $40M 2013 Zynga Game Developer Spooky Cool Labs Real money social game developer Undisclosed 2013 Scientific Games Lottery WMS Manufacturing, online gaming $1.5B 2013 Apollo Private Equity AGS Manufacturing $240M 2014 Bally Technologies Manufacturing Dragon Play Social game developer $100M 2014 Scientific Games Manufacturing Bally Technologies Manufacturing, systems, online gaming $5.1B 2014 Caesars Entertainment Traditional Casino Pacific Social game developer $90M 2014 Gtech Lottery IGT Manufacturing, systems, online gaming $4.7B 2014 GSN Game Developer Bash Gaming Social game developer $165M 2014 Imperus Social and Real Money Diwip Social game developer $100M 2014 Churchill Downs Horse Racing Big Fish Games Social game developer $885M 2015 AGS Land Based Supplier RocketPlay Social game developer Undisclosed 2015 888 Holdings Real Money Operator Bwin.party Online game provider $1.4B* *Deal announced, but has not closed