Inside Asian Gaming

inside asian gaming October 2015 34 Online Gaming T he global casino gaming industry is undergoing an interesting period of transition. Innovation in mobile technology and social media platforms have fueled this online gaming momentum and created lower barriers of entry for new entrants, in what traditionally has been a “brick-and-mortar” sector. We expect a continued strong level of deal activity in the industry driven by these disruptions from new players and from existing competitors positioning themselves to capture market share. It will be critical for deal makers to follow a disciplined approach to their deals to capture the value of these opportunities. So what is the casino gaming industry? The sector has long been dominated by brick-and-mortar casinos which provide an all-encompassing entertainment experience looking to maximize customer value. However, capital requirements are high—ranging from millions to billions of dollars for each facility. Over the past two decades it has evolved into the online space, fueled by emerging technology and impacted by changing regulation. EVOLUTION OF A SECTOR As the dot-com era emerged in the late 1990s, innovation in technology and an essentially undefined regulatory landscape in the online space allowed the casino industry to expand into online gaming. This led to the clear establishment of two key segments in online gaming: real money and social gaming. Real money gaming: Real money gaming is played on virtual casinos that offer traditional style casino games through websites, social networks, and mobile applications. Regulation varies by jurisdiction. Similar to the traditional casino model, users can wager real currency on games directly against an online operator. Social gaming: Social gaming, the newest market segment, allows users to play traditional casino games for free through capped virtual currency provided at sign up or on a recurring basis. No regulation exists, allowing companies to reach users in real money restricted areas. Revenue is earned when customers choose to pay for additional virtual currency or other bonuses and locked upgrades. According to Morgan Stanley, the average conversion PwC examines new entrants and market convergence in the growing online casino gaming space A Wider Web