Pushing the benchmark for quality: Kambi and Shape outline international ambitions
Yesterday, Kambi undertook a transformative expansion of its front-end capabilities, as the sportsbook technology supplier finalsisd an initial €36.5m acquisition of Shape Games, pursuing a strategic upgrade of its existing capabilities.
Sitting down with SBC News following the takeover, Kambi CEO and Co-Founder Kristian Nylén was joined by Shape CEO Christian Risom to discuss their shared vision as dealmakers for the combined company.
Catching the modern customer
As Kambi detailed as its primary focus, the key objective of the acquisition was to bolster its front-end capabilities. This was something that Nylén said had lacked the ‘important native element’ for differentiation, localisation, personalisation and empowerment.
“We have been served very well for a long time, but in more and more deals we are involved in we are seeing greater demand for native apps, and so we have been collaborating with Shape on this,” he elaborated.
Expanding on Nylén’s remarks, Risom added that as a developer of front-end products, this is a ‘naturally important’ area to Shape, but is also one which has taken on greater significance for the wider industry.
From Shape’s experience across multiple markets – but especially in the US – there is a general trend which has seen a shift from a focus on transactions to a focus on entertainment.
“You have to try and attract the attention of the modern consumer. You can’t just benchmark with the other guy. You have to provide an entertainment product in line with the big tech companies out of Silicon Valley.
“That puts a higher demand on the front end, as it’s not just making a selection and betting, it’s giving that entire experience and entertainment value throughout the product.
“This pushes the benchmark for what is considered good higher and higher. We’re going to see this more in the US market, where there is a huge focus on entertainment, and so this benchmark is going to move up as time progresses.
A multinational acquisition
It was clear from the outset that North America is a key target of both firms. As the emerging betting scene in the US and Canada continues to grow at an exponential rate, North America is very quickly becoming the bedrock of industry growth.
Nylén observed: “The focus on North America is quite obvious at the moment. It’s still an emerging betting market, as more than half of states have not yet opened up.
“There are a lot of big companies entering online gaming for the first time. They need to outsource everything. The bigger piece we can supply together, the easier it is to choose us as a supplier.”
North America is not the sole focal point for the new partners, far from it – as further south, major opportunities continue to emerge across Latin American markets.
Nylén noted the heightened discussion on the development of Brazil’s sports betting regime, especially when considering the nation’s vast population, economic growth and a strong sports/football culture.
Meanwhile, the doors to regulated sports betting have opened across Argentine provinces in the past 12 months, with Buenos Aires in particular becoming a new LatAm battleground for tier 1 operators.
Looking to the established markets of Europe, Risom explained that development in the US will also benefit, and optimise, Kambi and Shape’s operations on the other side of the Atlantic.
He explained: “The focus on the US also includes a focus on product development and innovation, and hopefully we can learn a lot of things from this market and take back to more traditional European sectors where people know what to expect from a sportsbook. We can then push forward and build on the standard of what makes a great sportsbook experience.”
Shared history, culture and clients
As well as maintaining a common objective with regards to both market expansion as well as front-end development, Kambi and Shape also have a long-running commercial history.
The two first partnered in 2019, gaining a shared customer in BetWarrior in Latin America , and since then has secured another client in US operator BetJack.
This has helped foster a shared culture among both companies, something which Nylén noted has disseminated to all levels of the business. Upon breaking the news to their respective teams, the development was received ‘very positively, which is not always the case in M&A’.
He added: “It’s much easier to find a way to combine companies if you feel there is a great culture fit. Having worked with Shape, from Kambi’s point of view they are very similar to us in that they strive for super high quality. It felt very good from our point of view.”
For Shape, Risom asserted that there have ‘always been good interactions’ between the two firms throughout their three year cooperation, both with regards to problem solving and pushing for a ‘high benchmark for quality’.
“It has been a pleasure to work with Kambi, which made everything from everyday operations to strategic developments much easier, as you automatically have backup from the entire organisation,” he concluded.
Of note, Kambi’s deal carries significant earnout incentives, which could see Shape rewarded with a further €39m cash, doubling Shape’s to €78m.
Nylén explained: “In Shape we see a company is at the forefront of industry developments and with an interesting existing customer base. If you look at the numbers, there is a 100% predicted increase in revenue, and so in our opinion this is a deal we are quite pleased with.
From Risom’s perspective, the main advantage is gaining access to Kambi’s knowledge base, its talent as well as the ‘muscle’ of its distribution network.
“It’s a big world – you have to get out everywhere and win the right clients. We both believe we can excel technically much easier, and have the reach we want to have.
“Kambi and Shape both have the same type of clients and so we’re fully signed on to our customers, and we believe this will make a big difference over the coming years.”