Striding ahead in the bingo sector

If Stride Gaming’s annual results are anything to go by then rumours of the terminal decline of UK online bingo may have been overstated. Stride, which operates over 100 bingo brands, posted 31% growth in the year to August 2016 with revenues of £35m and adjusted EBITDA of £8.2m from its real-money operations.

Wider growth in the UK is harder to measure with pure bingo-derived revenues in single digit growth or single digit decline, depending on your interpretation of the Gambling Commission data, with casino growing at closer to 20%. 888 and Intertain’s Mandalay Media brand reported growth in the 8-9% range for H1, with Rank’s Mecca business growing just 2% in the year ending June 2016. Gala, meanwhile, was up 7% for the quarter ending August 2016.

However you approach it Stride is outperforming the market at the present time, and what is interesting is the seemingly old-school way in which it’s achieving it. The Stride business is based on a proprietary bingo platform, as opposed to most of its rivals who are on either the Dragonfish or Playtech networks, and is resolutely multi-brand and digital marketing focused. In an era where a large chunk of its competition is focused on TV-led brand building it’s a notably differing worldview.

Daytime TV ban

The potential ban on daytime TV advertising for so-called “soft” gaming products such as bingo is expected to hit most of the bingo sector hard if it comes in to effect. But Stride was summarily dismissive of it in its results. “Recent discussions around the new proposed TV daytime advertising regulations for the bingo-led market are expected to have very little direct impact on the Group since the Group is focused more on digital media as a source of traffic,” Stride said in a statement.

It will be harder to shake off the impending introduction of a tax on free bets and bonuses, however, with Stride’s sites one of the key proponents of this bonus-led customer acquisition offer. This is predicted to decimate the bingo sector, which exists on lower average player yields and high bonus costs. And it would be no surprise to see larger operators, of which Stride is now one, look to use it as an opportunity to take a short-term hit to drive smaller firms out of business.

Stride noted it would look to take “further market share from the larger multi-product operators who are prioritising their marketing spend on their core operations, and from the smaller operators who are being squeezed out of the market.” But it’s not alone in this strategy, with the likes of Jackpotjoy, Gala, Mecca, Sky Bingo and more competing for an increasingly squeezed middle.

But to look at this as purely a bingo play doesn’t entirely tell the story. Bingo has always been a sector driven by side-game revenue and reports from operators suggest a continued shift from bingo to casino games as players migrate to mobile and the integration of gaming content into the bingo UX becomes more mature. What we’re now seeing is the blurring of the lines between bingo and casino gaming.

From bingo to casino

It’s notable that Stride describes itself as soft gaming or bingo-led rather than a bingo operator, and bingo is as much an acquisition tool for a softer female-led casino gaming demographic as it is a vertical in its own right. And its metrics resemble more that of a casino firm, with monthly yields of £162 in its core Stride Gaming business.

Its acquisition of two firms (Tarco and 8Ball) targeting resolutely low-stakes punters, with yields around a third of this, suggests it is looking to use its knowledge and network to use these cheap acquisition channels to create much more valuable players. But when it comes to targeting this softer gaming demographic there is no shortage of competition.

Gaming Realms, which notably launched as a bingo-focused group before pivoting to mobile casino, is aimed squarely at it, as is mFortune and to a lesser extent LeoVegas. You can also see a shift to this type of player from 888’s new 777 product and in some of the marketing around other casino brands.

As the market shifts from desktop to mobile we’re seeing a move from all verticals towards players spending more money and less time on simple slots-style games on their mobile devices. This is borne out by the huge growth in slots revenues across Europe, and it’s a market where every operator in every vertical is competing for the same spend.

What we’re seeing is the convergence of two previously distinct sectors, and operators who considered themselves as bingo operators or casino operators now shifting to a wider view of gaming with brands targeting demographics as opposed to products. How this will impact on the ‘bingo’ sector remains to be seen, but you sense the next 12 months will be a lot tougher for Stride than the preceding 12.