SBC’s Ted Menmuir looks at the state of the igaming supply chain and notices one name running through it like a stick of rock.
In April Ladbrokes announced that it was on course to fulfil its migration to Playtech’s igaming services. The all-encompassing deal struck with the igaming software provider will see Ladbrokes drop its Microgaming inventory, as the sector witnesses another legacy brand choosing to service its customers with Playtech provisions.
Igaming’s current lay of the land sees Playtech as primary suppliers to William Hill, Gala Coral, Paddy Power and Betfred. Additionally the software supplier has gaming inventory contracts with Bet365, Rank Interactive and Sportech.
The mass exodus to Playtech services has left many igaming networks looking like abandoned factories in some cold ex-soviet state, still of some use but completely neglected. This leaves the igaming sector needing to find a contender or challenger to Playtech in order to change this status quo.
Playtech’s dominance and influence has garnered much debate and polarised the sector, with criticisms being drawn towards the uniformity witnessed at product level. Further criticism points to the software provider’s headstrong business practices which do not sit well with some European sensibilities.
Playtech will likely welcome these criticisms; leaders of the pack always garner ill feelings and animosity. No doubt further debate and opinion will continue on the effects of Playtech’s current stronghold on the igaming sector. However it may be more important to assess what their current dominance reveals about our industry.
Analysts could never have predicted igaming to operate under this circumstance, as Microgaming was once leader of the pack. However Microgaming’s focus has proved to be too singularly focused on one vertical (casino). Whilst Microgaming focused its resources on casino deployment, Playtech would acquire technologies it viewed would strengthen its network offering (acquisitions of Virtue Fusion and Ipoker network).
Playtech’s success has been driven by an understanding of building and maintaining networks within igaming’s fractured value chain, where many top level operators preferred to outsource key disciplines, such as product development and operations. Under these terms, igaming operators have had to simply fulfil one or two capabilities in their operations – mainly that of marketing their products and customer services.
This separation by operators from core capabilities has allowed Playtech to effectively gain control of igaming’s value chain and extend its influence throughout its channels. Since Playtech controls the fundamentals of product development and its delivery, it can extend its feelers to other core disciplines in the value chain. So much so that operators now seek the software developers help in marketing and player management operations. It is little wonder that OpenBet is feeling the pressure from its previously dominant stance on sportsbetting.
Put simply the relationship between some igaming operators and Playtech, resembles that of James Caan and Kathy Bates in the movie Misery.
Igaming seeks a contender, a company who can challenge and possibly break part of Playtech’s network. The industry has seen many challengers step up, but to date all competition has been thwarted.
Giants from the land based sector have entered the sector with deep pockets in an attempt to buy market share (GTECH and Amaya). These companies built igaming conglomerates through swift acquisitions as they look to replicate Playtech’s network approach. Nevertheless the theory has proved easier than the practice, mass integration of separate products has proved costly and in some cases completely ineffective. Whilst Playtech continues to evolve and win new contracts, its competitors are slowed down by corporate restructures and operational reorganisations.
Under this context, igaming can no longer be viewed as a fast paced technology driven sector, as one company will simply control the products, the management and the services displayed to players.
Using the term ‘fast paced’ to describe the igaming sector has become easy rhetoric for senior management to deflect from answering core questions as to why they cannot compete in the sector.