Playtech-GTS: the first power play of 2010
Playtech's recent JV with US lottery giant Scientific Games might be occupying minds right now, but its acquisition of games developer Gaming Technology Solutions (GTS) late last year marked the first power player of 2010. eGaming Review asks what the deal means - not least for Playtech rivals CryptoLogic, Dynamite Idea, NextGen Gaming and WagerWorks, who all deploy games through GTS' enhanced gaming engine...
OF THE SERIES OF significant acquisitions in the sector in late 2009, Playtech’s buy of games developer Gaming Technology Solutions (GTS) for an initial 10.8m is the one set to reverberate through the most boardrooms in the egaming sector during 2010. And not just over at 888’s B2B Dragonfish arm, also linked with a move for GTS.
On the surface, the benefits of the deal for Playtech appear straightforward. It takes a direct competitor out, secures additional revenue streams, bolsters its product portfolio, and provides access to 10 key operators Playtech does not have contractual relationships with in its own right, including leading European sportsbooks Bwin, Unibet and Mangas Gaming-owned brands Betclick and BetAtHome.
Playtech chief executive Mor Weizer (pictured) told EGRMagazine.com that supplying games into the markets served by those operators would enable Playtech to expand its product range in regulated and soon-to-be regulated markets such as Italy and France.
But rather less publicised and perhaps equally as important for Playtech is that its ownership of GTS means several of its leading rivals in the casino providers’ space “ CryptoLogic, Wagerworks, Dynamite Idea (GTech), NextGen Gaming “ which deploy games to operators through GTS’ Enhanced Gaming Engine (EdGE) open platform, now find themselves in a direct business relationship with and trickling revenues to a competitor.
Although WagerWorks and CryptoLogic declined to comment when contacted for this article, it seems fair to assume providers deploying games through the GTS platform will be weighing these issues up against the revenues they receive through the open platform from a key group of operators while reviewing their business relationships with GTS during 2010. Contractual conditions not withstanding, of course.
But a further consequence of the deal could be to hasten the move by other casino software providers towards developing open platforms, meaning the GTS platform may not be the main platform to these operators by year’s end. Microgaming and WagerWorks are among content providers developing open platforms based on the GTS template, according to an industry source who did not wish to be identified.
Potential gainers
So, while it remains to be seen how this scenario plays out between Playtech/GTS and the other casino providers during 2010, potential gainers should be some of the larger games providers look to extract themselves from this deal or Playtech/GTS’ sphere of influence during the year include the smaller providers of content through the GTS platform.
According to Meir Moses, president of one of these smaller providers, BaddaMedia: “If larger content providers pull out, there may be scope for smaller guys to get in on the scene and provide content that isn’t cannibalising existing content and is outside of the whole ME2 development we are seeing in the space. It can only work to our advantage.”
Reactions to the takeover during 2010 from some of the operators taking content from the GTS platform, such as 888 and Mangas Gaming, are also not out of the question, given the GTS deal means they are now effectively trickling incremental revenues to a competitor via Playtech’s current joint venture with William Hill Online (WHO).
Again, any response in 2010 will be shaped by the contractual arrangements in place between respective operators and GTS, which vary considerably. Bwin for instance is bound to take certain games off the platform for its FortuneGames soft gaming channel, while others are required to take on a certain amount of content from particular content providers exclusively through the GTS platform.
But that said, Mangas Gaming’s Expekt is among several competing operators to WHO in established business relationships with Playtech and therefore already paying revenues to the software provider for running poker platforms on Playtech’s iPoker network.
However, if the unfolding regulatory and consolidation play means 2010 is going to be a critical year in terms of gaining market share, particularly around the football World Cup, operators such as 888, Bwin and Mangas would probably prefer not to be kicking it off by having to review where their content is going to be coming from, and how it will be implemented. The power play could unfold in intriguing ways over the year ahead.
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