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FEATURE: iGAMING MARKET ACCESS FOR A LEADING TESTLAB

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BMM to open gaming lab in Slovenia in May 2022 with former SIQ gaming lab management and senior testers
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Interview with Martin Storm, Chairman, CEO and Owner of BMM Testlabs
How is BMM situated presently in the gaming test lab space?
BMM is a clear number 2 and rising quickly in the gaming lab market, internationally, but more particularly in the U.S. We employ more staff today than we did prior to the pandemic as we continue to grow. Our digital testing business is growing very strongly while our traditional land-based testing awaits the demand that will come from land-based casinos opening up again all over the world. We are confident about our future growth.
As more and more people in the developed world pursue vaccinations for COVID-19 and are able to return to physical casinos, how do you see demand returning in the land-based testing space?
The land-based gaming business has been deeply affected by COVID-led casino closures across the regulated gaming world. Operators had to cut costs and wait it out. Product sales and shipment opportunities for traditional manufacturers and suppliers paused, also forcing them to cut costs and carefully select short-term growth projects. The downstream impact of that has been more specific projects but lower games volumes which has been challenging for BMM and GLI that deliver >90% of land-based product certifications worldwide. Happily, with planning and discipline, our leadership and staff have managed BMM through this interrupted period as well as I could have hoped.
The question on many gaming executive’s mind is when will the land-based industry return back to normal demand? With an increasing rate of COVID vaccinations and greater accessibility to travel, I sense 2022 might be the time when we begin to see more regular CAPEX from operators driving the industry supply chain once again. As a leading indicator for land-based gaming, Las Vegas has achieved eight consecutive record months of gaming activity, up more than 20% on record 2019 results, and 19 of 25 commercial gaming states in the U.S are tracking ahead of 2019 gaming revenue levels. The period from March through August was the U.S. gaming industry’s six highest-grossing gaming months ever. So I expect mid-2022 as the period when the land-based industry gets back on track, all the way down the value chain. Importantly, BMM is ready now.
From a test lab’s perspective, what has been the story of the iGaming space?
Quite simply, with no physical assets to close and ongoing market expansion, digital or iGaming has flourished during the COVID pandemic. It has reached all-time highs in terms of the number of suppliers to engage, the number of products to certify, and new markets opening, particularly in the U.S. I know all the labs have done well in this segment in Europe over the last two to three years. However, while there are more local market labs in Europe competing for digital product testing, the opening of the North American market has very quickly changed the narrative in favor of global testlab capabilities with real and immediate market access to U.S and Canadian jurisdictions.
BMM is extremely well placed to service Sports-Betting and online gaming players wishing to spread their wings into the U.S and Canadian gaming markets, as we are licensed everywhere they need and have more than 20 years of experience in iGaming. Right now we are seeing a lot of very large European iGaming players already in or heading to North America.
Interestingly, major operators are partnering with or investing in Sports-Betting companies to drive a unique brand and value proposition for their businesses. This tells us how important digital offerings have become and now we know that most operators don’t view online business as cannibalizing their land-based business, but rather enhancing their offerings.
What do you mean by real market access in North America for gaming customers?
Strangely, it would seem, I am the only business owner of a gaming lab that has achieved full commercial gaming licensure in North America, having entered from overseas and not having been grandfathered in. It has taken BMM nearly 20 years and almost $20 million to achieve that market access. Some of the most challenging have been the commercial jurisdictions – one of them took us 13 years and cost us almost $3 million to achieve licensure. No other lab is getting there quickly and easily. U.S. regulators make you earn the right. And if another lab tells you different, I can assure you they have neither the experience nor the track record. Just another form of hope over the stark realities.
For your customers you have to stay ahead of that market curve. Not only be well ahead in terms of market access to give them the most revenue options, but also understand completely and have real experience in the technical requirements of each and every jurisdiction. Everything that is written down and everything that isn’t. That’s the only way you can accurately certify products for your customers in new markets. If you’re starting out today, it’s already too late for your customers.
The great lesson for BMM in the North American market was that if you are not way ahead of the curve, you are always way behind it, and that ultimately costs your customer’s business opportunities they are not willing to endure. So they will go to another gaming lab that can get them there. Thank goodness that experience is over for us.
What are the global testlab capabilities you mentioned?
BMM has been a dedicated ‘trusted advisor’ for gaming product companies in all markets around the world of regulated gaming by offering experienced functional, compliance and security testing teams, combined with a great understanding of technical compliance and regulatory requirements, as well as giving customers access to any regulated market in the world, which I touched on earlier.
To generate opportunities for customers, you need professional regulatory development teams, technical compliance teams, strong account management and sales, all in multiple locations, as well as competent marketing reach. The global labs will spend >30% on SG&A to revenue to deliver these capabilities. Without that kind of investment, it’s very unlikely you will achieve your goals of market expansion, and you will let customers down.
We see a lot of new entrants wanting to provide product or technical guidance to customers into new markets, yet they have no experience in product certification or testing, anywhere. They just collate the requirements and provide the information. That’s the easy bit. Knowing how to do something successfully the first time can only be provided by an experienced test lab. The cost of getting it wrong for a supplier is enormous.
BMM Europe’s digital business has grown 1000% in the last 5 years, our North America’s digital business grew 300% in the last year, both coming off a strong base. Given how our market works, there is probably an open 2-year window for iGaming product certification growth in North America before an inevitable retreat. Again, BMM is ready to move now.

Interviews

Making a lasting mark in a new territory

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Making a lasting mark in a new territory
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We talk to Michael Bauer, CFO/CGO at Greentube, to discover the key elements to a successful entry into a new market.

What has to be taken into consideration before entering a new market?

Michael Bauer: The first aspect to consider is whether or not our games already have traction in a particular region, this can be in either social casino, or the land-based environment. If we see that this is indeed the case, then the decision-making process is a much easier one as clearly, this is a positive sign as to our potential within that jurisdiction.

Secondly, we have to take into consideration the market itself. How big is it, what is the overall population, how does that break down into demographic groups and what is the average income? All of these questions are pertinent. We also have to look at how the market is shaped by regulation, for example is it reasonable from a taxation perspective and in terms of products and content, or are there any major restrictions in place? All of these factors are in play when we are deciding whether or not a market is attractive to us.

By way of examples, looking at the Czech Republic and German markets, they have heavy restrictions in place on the product. Germany has a €1 limit on stakes and five seconds between spins, while in the Czech Republic, you also have maximum win limits. This can make products less attractive for players and from a supplier perspective an amended product, which is less scalable and attractive.

How important is it to utilise local expertise within a market?

It is usually very important, because markets are all different to one another in certain respects and this means a one-size-fits-all approach cannot be successfully rolled out across multiple jurisdictions. This is true for both suppliers and operators, and arguably even more crucial for the latter. Operators must have a detailed knowledge of local marketing networks, compliance aspects of regulation and local player tastes and preferences. Local expertise is an integral part of the growth journey towards being an important player in a market, there is the potential for an operator to buy their way to success through marketing, but it is a costly approach.

Are the current conditions in Germany an illustration of potential difficulties of entering a new territory?

Germany is the best current example of potential difficulties when entering a new market due to regulation. It is the first regulated market I have seen that has created an environment that is particularly unattractive for players, causing channelisation rates which are only around 20%. In addition, the regulators have struggled to issue licences. As things stand at present, what the regulation is creating does not lead to the desired outcome – the channelisation of the player base into a safe, regulated environment.

Is there an expectation for both operators and suppliers to enter every regulated region?

To a certain extent, yes. Our bigger, global customers are asking us to join them when entering new markets. We experienced this in both Argentina and Ontario, as well as other smaller regions. The issue here is that a market may not necessarily be attractive enough for us as we have too many other opportunities to tackle at the same time. When we are dealing with a smaller jurisdiction, the cost of entry and resources may be better funnelled towards the bigger openings.

Certain operators may seek to launch games on as global a basis, but this is a trend that is becoming less prevalent, which is down to different regulations and operators utilising various platforms in certain regions.

How long does it take to know whether you have been successful in a market? How is that success measured?

When a new region opens up and the regulations in place are crafted carefully, such as in the Netherlands for example, operators who gain a licence are able to ramp up quickly. We have also seen in Switzerland that markets can become very interesting, very quickly. Our measure of success is market share, where we receive feedback from operators on the success of our games. The other aspect is the GGR we are generating in a region and the number of players we are reaching. It may be that a certain jurisdiction has a weak currency, or low local purchasing power, but where there are many people playing our games. Colombia is an example of this, where the currency is not as strong as the European markets we operate in for example but we have a large player base, and can also be regarded as a success. Germany is a less than ideal example, because players are leaving the regulated market, and we cannot supply the black market.

Do you have any particular examples of successful or non-successful market entries?

The starting point of a successful entry for us is usually predicated on being first to market. We achieved that in Switzerland and the Netherlands, where on day one of regulation our games were available to play. In itself, this is a success because it’s normally very tricky to be that fast. Secondly, after a certain time you look at how big your market share is. Switzerland, the Netherlands, Poland and also Norway are good examples here, as we quickly gained market share through the latter with state-owned Monopoly holder Norsk Tipping. You also have high hopes of certain jurisdictions that don’t come to fruition, which despite best intentions and plenty of hard work can be out of our hands due to regulations requiring amendments of games and stakes.

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Interviews

Exclusive Interview: Vivo Gaming’s New CCO Neil Howells

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Exclusive Interview: Vivo Gaming’s New CCO Neil Howells
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Neil Howells, the new CCO of the live dealer platform provider Vivo Gaming, speaks about what he hopes to achieve in the role and the latest innovations the company has to offer in the live space.

 

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Gaming

European Gaming meets Gökçe Nur Oguz, CEO and Co-Founder of Playable Factory

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European Gaming meets Gökçe Nur Oguz, CEO and Co-Founder of Playable Factory
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Q: Tell us about how & why you came to found Playable Factory?

Over four years ago – when we founded the company – gaming was booming and it still is today. All our friends were working in the sector and we wanted to, too. We were new to it all. Monetization, LTV, CPI… sounded like another language to us but gradually we learnt from our friends and tapped into the scene. As we grew our understanding, we realised playable ads played an important role. If done well, they can add to the experience of gaming. But good ones were frustratingly hard to find. So, along with my co-founders, Berat and Omer, we started making them ourselves and the rest is history.

Q: What were you doing before that/what led to it?

After university, I completed a PhD in Fluid Dynamics, a subdiscipline within physics and engineering. There were a few gamification projects, like building games for people to play that would simultaneously have a background programme running to solve an operational problem. This part had me captivated. Outside of academia, I was always gaming and would gamify everything I did. Not just computer games, but card games, board games etc… So it felt natural to me to do something I enjoyed.

Q: Describe Playable Factory & Gearbox in a nutshell?

Playable Factory is a company that focuses on the creative needs of digital advertisers. The focus is mostly on playable ads and recently on video ads for gaming clients specifically. Our secret (or not so secret) weapon is Gearbox, an online editing and iterating platform for creatives. This is split into two: Gearbox Playable, create your own tailor made playable ads (create, iterate, download and repeat) and Gearbox Video, a tool that allows users to record gameplays easily and create/edit/tweak to their heart’s desire. You can generate hundreds of videos in an automated process with one click.

Q: What kind of support can a gaming developer (or brand marketer) expect from your
platform?

Gearbox is made for people who want to monetize their games. It’s a one-stop shop for advertising and promotional videos. No prior coding knowledge is needed so anyone can use it, which hasn’t really been done to this extent before – with full, fast-response, technical support. It’s like having the full agency experience on one platform. For developers, we provide them with market insights around playable ads, guiding them to the right concept in
a speedy manner. They can get creative with graphic filters, text to speech options, banners… and any feature that improves the performance of the playables or video ads.

Q: Who are your clients?

We work with top mobile game publishers: Zynga, Playtika, Dream, Voodoo, Lion Studios, Gram Games and lots more. Apps publishers like Funimate, Trendyol and Gopuff. And brands include Hasbro, LEGO, Unilever and L’Oréal.

Q: What is unique about the Turkish mobile market/why has it become known as the Silicon
valley of the mobile gaming market?

Turkey’s become a global mobile gaming hub. It’s amazing to watch it take off. Some of the best publishers and developers in the world are based here. I think it’s got a lot to do with the ability for rapid development. You’ll find teams of 4-5 young people making a steady stream of mobile games that they send out into the market. Thanks to home-grown success stories, the eyes of investors have turned towards us. But it’s also down to the culture here. Gaming is hugely popular in Turkey and you can feel the passion and drive among people in the
scene here. Local and global economic forces make international expansion lucrative and it feeds back into making the industry making it even bigger and better – and long may it continue.

Q: Have you always been passionate about gaming? When did you first get into it?

I’ve always liked games: console, board games, mobile games… For me, it’s cracking the puzzle that gets me hooked on a game. In my childhood, my younger sister and I were always inventing our own games. Now, business-wise, my co-founder Berat and I, enjoy gaming together and playing board games in our downtime. We actually got the licence for the hugely popular party game Codenames from Czech Games. Since then, we’ve published two more board games together. This was before we entered mobile gaming.

Q: What’s your favourite mobile game?

It has to be 2048. I like puzzles and numbers 🙂

Q: What’s been the biggest challenge you’ve overcome in your career to date? And greatest
success?

Without a doubt: building a company from scratch on a technology that we learned all by ourselves, with no training. I didn’t know how to build playable ads, I didn’t know anything about HTML5 gaming and coding so finding a good developer and establishing a business was the biggest challenge.

Q: What’s one piece of advice you’d give to start-ups in the gaming industry?

I never truly understood the importance of a team before I started working in gaming. PhDs involve mostly working solo and it misses the team spirit. The pressure is high because the success of your work is always dependent on you, and you alone. The gaming industry is totally different. Success reflects on the team who built the game. I wish I’d known that before joining the industry. So, my advice would be to evaluate your team, and believe in them because that’s the only way to reach success. If you don’t like the people you work with, it’s often much harder for you to fulfil your full potential. When your motivations align with your team’s, you can combine forces and focus to get the success you deserve.

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