Wholesale changes have been happening of late and 2015 is seeing some serious industry consolidation with a growing number of “Mega Deals”. Since Amaya’s purchase of Pokerstars (Bloomberg 2014) in 2014, we have seen GVC’s Bid for Bwin.party(Independent August 2015) William Hills approach to 888 (Telegraph February 2015), Betfair and Paddy Power (BBC August 2015), Ladbrokes and Corals (Guardian July 2015), let alone the billion dollar deals also being done in the software and machine market. Each of these deals has their own precursors, merits and reasons but I would like to consider the single thread of the “Super Marketing Budget”.

The online gambling and casino industry is still fledgling but it does have at least a dozen years of experience to draw from, and that is more than the mainstream social industry, grown from companies akin to Facebook. During that time the industry has enjoyed healthy margins and strong year on year growth in terms of size and number of competitors. For those of us who have been around for a while we are generally amazed at the amount and breadth of online casino operations in existence today. So lets take a reality check on these competitors, go back to the school books, and analyse their offering and competitive advantage.

In the halls of the great exhibition centres you will frequently hear that “online casino is just a marketing business”; operators and suppliers alike using the old adage to bemoan a lack of innovation or differentiation of each other. Some of this is borne of circumstance and if we consider a the classic 4p’s of a Marketing mix (McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin) we can see where some of this homogeneity has come from:

Product – In the early days there were only two suppliers of casino software and games online, following Microgaming and Playtech others came and went, often not going completely but subsumed within the greater software giants. Built on that bedrock and in more recent times we have seen most operators embrace a must have culture that ensures every ‘credible’ operator uses multiple software suppliers adding gaming brands such as NetEntertainment to their portfolio of the stalwarts. Furthering this need to match the oppositions’ offerings, NYX OGS and ODOBO Marketplace are specifically ensuring operators gain even further access to many many games suppliers. With most online casino sites sharing over 1000 game titles from the same group of suppliers some small attempts at exclusivity and game ownership are merely ripples in an ocean when presented to players.

Place – the beauty of online casino, is its ubiquitous availability, no longer constrained by a location and a physical number of machines the internet has presented companies with a global playground only tempered by some local regulation. With such a potential marketplace, very few firms have truly looked to differentiate based on place or location, building a multilingual trans-border presence that is talked more about in “country” or “language” focus than that of demographics, towns or delivery channels. I will readily admit that the industry has seen some delivery channel changes with the lamentable downturn in affiliate outlook at the expense of rising paid, organic and social SEO efforts.

Price – In the online gaming industry this is certainly a perverted concept; if the price of a slice of entertainment is the amount a player has spent then we certainly practice some differential pricing techniques. In fact we are potentially one of the few industries where our pricing means for many players they are paid to take their form of entertainment, novel, truly novel. Regardless of concept the fact remains that it is intrinsically difficult to differentiate on price in any meaningful way, hats off to the providers of zero edge games, but when the return for roulette is governed by the game and not the operator it is difficult to differentiate. It is worth note again that as an industry we have moved in slot play to another ubiquitous norm of 96-97% paying slots, yes higher than land-based but no more differentiated.

Promotion – And so to the last component and the one synonymous with online casino. We talk incessantly of the competitive nature of promotion and bonus’ing. But the truth is our promotion is very linear based on bigger and better numbers to acquire players, in a period of growth he who acquires players is king and we see this throughout the industry. ‘Deposit Matches’ and ‘Welcome Bonus’ generating large upfront costs in player acquisition and then bleeding into ongoing marketing retention as players are inundated with offers to jump ship as someone else’s acquisition.

But how is an online operator expected buck the marketing trend?, the offers are so generous how can they differentiate? and thus we are all drawn along a similar path attempting to innovate at the kerbside. And so the “Super Budgets” are being formed, companies with stature and access to debt that can attempt to win the promotion war,  when these companies invest in paid search the price goes up for all and the smaller operators are already finding it impossible to make profit on keywords (Gaming firm investment drive price of adwords).

However, I am no prophet and exciting times do lay ahead. A weeding of inefficient, ill-conceived and badly run businesses is not a bad thing and I feel is healthy for the industry. A few “super budgets” may also force the hand of all others and we see some truly innovative business building on a defensible competitive advantage that adds value to players and is not merely dependent on available funds. So where can this path lead?