THERE’S NOTHING
VIRTUAL ABOUT
THE OPPORTUNITY
IN REAL-MONEY
GAMBLING
Opportunities for Game Developers in
Regulated Real-Money Online Gambling
www.odobo.com
THERE’S NOTHING VIRTUAL ABOUT THE OPPORTUNITY IN REAL-MONEY GAMBLING
TABLE OF CONTENTS
1. Executive Summary
01
2. Introduction
03
3. Global Gambling Market Size
07
4. Product Size
09
5. U.S Market Size
11
6. Affiliates
14
8. Social and Real-Money Convergence
17
9. HTML5 vs. Native Apps
19
10. The Odobo Developer Program
21
11. Glossary
24
12. About Odobo and H2
25
13. Disclaimer
26
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| 01
EXECUTIVE SUMMARY
In this 2013 report, H2 Gambling Capital,
commissioned by Odobo, look at the state
of the online gambling market and future
forecasts for market growth over the next
4 years.
The report further considers some of the key developments, which
are taking place and how the revolutionary games developer
program from Odobo can reduce the barriers of entry for the
wider development community to participate in this growing and
valuable industry, for the benefit of operators, developers and
players alike.
OF GROWTH
Historically sports-betting has held the lion’s share of the online
gambling market and this still held true in 2012, where sportsbetting was worth €11.5bn, casino €5.5bn, poker €3.1bn, and
finally bingo which accounted for €1.6bn of the global online
market. Looking ahead to the state of play in 2015, it is forecast that
poker and casino will show the greatest market growth with poker
showing a CAGR of 14.4% to €4.6bn, and casino showing a CAGR of
10.9% to a forecast value of €7.5bn in 2015.
3. THE U.S WILL BE A SIGNIFICANT MARKET AS STATES START
TO REGULATE
The report has identified 5 distinct revelations:
1. SIGNIFICANT
2. CASINO AND POKER PROVIDE THE LARGEST SECTORS
MARKET
GROWTH
IN
The United States has had a bumpy ride with online gambling
GLOBAL
ONLINE
GAMBLING TO 2015 AND BEYOND
The global online gambling market in 2003 had started to make
a significant impact and was valued at around €6.6bn. By 2009
this had grown to €18.2bn with further growth by 2012 to reach
a market value of €21.7bn. Within the next 3 year period, it is
predicted that the market will grow by almost 30%, to a value
of €28.24bn. In 2012 online gambling still only accounted for a
fraction of the global gaming revenue (8%) yet it is predicted that
as consumer habits change and as more players look to mobile
24/7 consumption, online gambling as a proportion of the overall
gambling market will significantly increase.
over the past 5 years. Federal laws have restricted operators from
providing the large majority of online gambling services that are
increasingly available in Europe. It is understandable that today
the U.S only accounts for around 11% of global online gambling
(casino, bingo, poker) gross win whereas Europe accounts for just
over 54%. However as the U.S finally starts to open its doors to
regulated online gaming (as evidenced by recent movements in
state regulation that have seen 3 states so far enact legislation) H2
expect the U.S to quickly increase its share of the revenue earned
in the sector globally, starting modestly in 2013 and based largely
on when the forerunner states (Delaware, Nevada and New Jersey)
go live and reaching an expected €5.5bn by the end of 2017.
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| 02
EXECUTIVE SUMMARY
CONTINUED
4. AFFILIATE CONVERSION THROUGH CASINO GAMES PROVIDES
5.
A GREATER OPPORTUNITY FOR GAME DEVELOPERS
CONVERGENCE
In 2012 the online gambling affiliate industry generated over
It has been widely reported that there is a very real opportunity
€2.1bn of gross win across sports-betting, casino, poker and bingo.
of convergence between the social gaming industry (in particular
The current royalty rates paid for games being produced today for
social casino games) and the regulated real-money gaming
the online regulated real-money industry tend to be between 8
industry. H2 Gambling Capital estimate that the social casino
and 15% of NGR. Through the Odobo Marketplace, developers not
gaming industry generated gross win of €1.25bn in 2012 and they
only earn their selected royalty rate but they also have the ability
anticipate this growth to continue to €2.12bn in 2015. H2 take
to undertake affiliate services referring traffic to their profile
a reasonably cautious position when evaluating the growth of
page, and their games on the operators’ casinos. For an Odobo
social gambling. However as the industries continue to converge
developer, revenue streams from the game royalty at, for example,
it is highly likely that segments of social gamers will convert in to
10% of NGR, plus an affiliate revenue stream at 30% of NGR, can
higher spending real-money gambling and that there will be more
lead to a very achievable 37% total NGR (after Odobo commission)
and more effective routes to conversion.
for the developer. The ARPU available to the developer from a
combined game royalty and affiliate channel (at example rates
of 10% and 30% respectively) is conservatively estimated as
€104.03 a year.
A further consideration is that a developer can also benefit from
affiliate revenue from referred traffic that that goes on to use
other games or products on the casino environment, not just the
developer’s own game. The ARPU increases with the inclusion
of the lifetime affiliate traffic revenue from €104.03 to €284.03
a year. If we increase the game royalty rate to 15% of NRG, for
example, the ARPU from the game royalty, the game affiliate
revenue and the further lifetime revenue combined reaches over
€293 annually.
The affiliate revenue channel is of particular importance to
developers particularly those who have been successful in the
social gaming industry and can convert some of those players to
real-money gaming.
SOCIAL
VS.
REGULATED
REAL-MONEY
GAMBLING
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| 03
INTRODUCTION
A DECADE OF ITERATION
From no regulation to ‘point-ofconsumption’ regulatory models
As the online gambling industry first started to take off in the late
90s - enabled through the growth of Internet usage generally
and a natural demand for gambling products - most governments
were left playing catch-up. Some jurisdictions took a hands-off
approach and did not enact legislation regulating the industry,
some attempted to actively prohibit online gambling, and some
passed a variety of forms of basic regulation pending a more
detailed strategy for this dynamic and fast-growing new industry.
From this emerged a few licensing jurisdictions that allowed
operators to be licensed online gambling providers and target a
global audience. More recently the online gambling industry has
been regulated increasingly on a point of consumption basis,
country-by-country and even state-by-state in the U.S, with
independent requirements and restrictions applying by each
regulating territory.
Online gambling operators have had to spend more and more of
their time and resources acquiring and maintaining licenses to be
eligible to operate in multiple territories and the days of holding
one license to serve players around the world are now truly over.
THE PRESSURE ON OPERATORS TO DELIVER MORE QUALITY
GAMES CONTENT
For both existing and prospective businesses, land-based and
online gambling, content has and always will be king; players are
increasingly seeking more variety and quantity of good quality
games and operators are having to work harder to meet the
evolving customer expectation. To continue to both retain players
and add new ones, it is recognized that quality and differentiation
of content is an important factor.
However the game development process and challenge is quite
different from that which exists in the casual or social gaming
sectors, and development studios not familiar with the online
real-money gaming sector and the technological and regulatory
requirements that go with it have found themselves unable to
easily participate.
The few game developers who have been able to break into the
real-money regulated sector have also had to cover areas that they
may not be strong on in terms of business development and sales
as they have to complete the process to contract with operators to
take their games.
The real-money regulated sector has therefore suffered from a lack
of innovation and competition in game development compared
to the social and casual gaming sector where barriers to entry
are lower and there exist developer programs to participate (e.g.
the Apple iOS developers program and the Facebook developers
program).
A further challenge that exists for operators and developers now,
is the rapid shift to mobile devices – tablets and smartphones while so much of the existing content (built in Adobe Flash) will
not be usable. So beyond the general need for more content with
more variety and innovation, is the additional need to restock the
shelves with content that will work for the increasing number of
players who want to access it through their mobile devices.
THE SOLUTION...
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| 04
INTRODUCTION
ENTER ODOBO
Odobo is the new HTML5 games developer
program for game developers to produce,
distribute and monetize their games
content for the online regulated gaming
industry.
The new Odobo platform enables games
developers to produce fully compliant high
quality games that are device interoperable
in HTML5. Using Odobo’s cutting-edge
Game Development Kit (GDK), game studios
can focus on their strengths – making great
games – while Odobo takes care of the
common technologies, compliance and
standardization where that is needed to
create the necessary efficiencies to allow
participation by a greater number and
variety of game developers. This enables
operators to offer a wider selection of
great games from multiple developers
with the confidence that multi-million
dollar technology, designed for purpose by
industry experts, underpins every game.
By bringing this purpose-designed and innovative approach
to the online gambling industry, Odobo is able to provide the
solution to players’ requirements for exciting new games, thus
offering unrivalled revenue opportunities for both operators and
developers.
THE BENEFIT FOR DEVELOPERS
Odobo’s games are a combination of the games concepts and
client-side development provided by the developers and the serverside components provided by Odobo to support those games.
Odobo allows games developers to distribute content through a
network of licensed established operators around the globe in
regulated markets. Qualifying developers can produce games for
real-money play without needing to become the licensed operator
or having to develop much of the technology required, by relying
on Odobo’s multi-million dollar platform and GDK.
Game developers get to focus on what they are good at – making
great games – while Odobo provides the server-side technology to
support those games with a unique package of core ‘commodity’
technologies at the platform level, which are not specific to any
game concept, yet are required in the provision of every game,
including:
• certified RNG and game engines;
•localisation;
• currency conversion;
•authentication;
• persistent state handling;
• player account communications; and
a host of other features beneficial to operators, developers and
players alike.
THERE’S NOTHING VIRTUAL ABOUT THE OPPORTUNITY IN REAL-MONEY GAMBLING
INTRODUCTION
ENTER ODOBO CONTINUED
COMMERCIALISATION WITH ODOBO
The developer earns a license royalty on each of their games that
generates positive NGR once adopted by an operator, which is
collected by Odobo. The developer can administer all their royalty
payments and game usage through a contemporary web analyticsstyle game management system built into the Odobo Platform.
Once the game development has been completed, and the game
logic certified by an accredited industry testing facility to meet
regulatory standards, the title is deployed into the Odobo B2B
Marketplace, where operators can access the game’s profile
page and seamlessly synchronize them into their own controlled
environment. This means developers’ games can reach the market
faster and more cost effectively than ever before.
All this and more, allows the developer to focus on building
creative and innovative games, the operator to provide device
agnostic premium regulated games, and the player greater value
and enjoyment from their gaming.
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INTRODUCTION
THE TRENDS AHEAD
Odobo commissioned H2 Gambling Capital
in 2013 to analyse the international online
gambling sector and provide a detailed
report into the state of the market and its
forecasts for the coming 2-4 years.
When assessing the online gambling market, H2 has included
sports-betting, casino, poker and bingo but excluded gross win
from state lottery, skill-based games and other gaming activity.
The following sections contain data on existing online gambling
markets, revenues across product sectors, player values, affiliate
markets and social gambling revenues. Within their analysis H2
have also provided insight into the trends and forecasts for market
growth, the opportunities available to burgeoning U.S market, and
the convergence of social gambling and the online real-money
gambling market.
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GLOBAL GAMBLING
MARKET SIZE
The online gambling market is one of the
fastest growing industries in the world today.
This is being driven by a number of key factors including:
•A shift in consumer behaviour from land-based casinos
to online casinos accelerated by a further shift towards
mobile gaming commerce where users can place bets and
engage in gambling on demand regardless of location;
•
Innovations in technology that have allowed realtime gambling to greatly improve with the experience
advancing ever closer to the retail equivalent without
cannibalising land-based retail activity in majority
of cases. The latter is due to the ability of operators to
cross promote and use online channels to gain a larger
share of a player’s wallet whilst driving players back to
the retail estate;
•The resilience of the industry during times of economic
difficulty – there are a few luxuries that people allow
themselves in time of hardship. Gambling with the ability
to tailor ones spend falls into this category for a significant
number of people. The more convenient and lower stakes
gambling is the less it has been impacted by the downturn.
Furthermore, in times of tight budgets governments turn to
the expansion of gambling as a unique way of generating
income whilst stimulating growth.
•
Regulation of online gambling jurisdictions both in
Europe, where this has been the case for a number of
years, and in the United States where law has been passed
in a small number of states. A domino effect is now likely
to be embarked on across the U.S, that could extend to all
states that permit some form of land-based gambling over
the coming decade.
H2 Gambling Capital value the online gambling market in
terms of gross win which is ‘stakes less prizes’ but including
bonuses. Turnover can be misleading due to the large /
varying percentage that is returned to players in the form
of prizes. Especially where there is a high return, stakes
are generated as a result of recycling as players continue
playing with all or part of their winnings. Gross win provides
the best indication of the net value of player losses / spend
or the top line of the sector’s operators.
H2 valued the online global gambling market at €21.73bn in
2012. The value is expected to grow at a CAGR of 9.13% to
2015, where the market is expected to generate €28.24bn of
gross win. From this €21.7bn it is worth noting that the UK
alone is worth over €3.1bn a year and is expected to surpass
€3.7bn as early as 2015. A decade ago the global online
gambling market generated gross win of €6.62bn, when the
online gambling sector emerged as a lucrative proposition.
The CAGR for the period from 2003 to 2012 was 14.12%.
Online gambling accounted for just over 8% of the total
global gambling market (by gross win) in 2012.
“Predicted
30% market
growth by 2015
to a value of
€28.24bn”
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GLOBAL GAMBLING
MARKET SIZE
Global Online Gambling Gross Win 2003 – 2015E (€bn)
30
28.24
25.86
25
20.01 20.53
20
16.53
21.73
23.66
18.20
14.13 14.55
15
11.50
10
8.88
6.62
5
Source: H2 Gambling Capital
2015E
2014E
2013E
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0
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PRODUCT SIZE
Category Breakdown of Total Online Gambling Gross Win in 2012
Sports-betting 53.0%
Bingo 7.4%
Casino 25.4%
Poker 14.2%
Bingo - 7.4%
Casino - 25.4%
Poker - 14.2%
Sports-betting - 53.0%
The largest online gambling product is sports-betting,
accounting for 53% (€11.5bn) of online gambling gross
win in 2012, this was followed by casino at 25.4% (€5.5bn),
poker at 14.2% (€3.1bn), and bingo at 7.4% (€1.6bn).
Source: H2 Gambling Capital
Category breakdown
predictions for 2015
Bingo - 7.3%
Casino - 26.7%
Poker - 16.3%
Sports-betting - 49.7%
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PRODUCT SIZE
Global Online Gambling Gross Win by product 2003 – 2015E (€bn)
30
25
20
15
10
5
Bingo
Casino
Poker
Betting
2015E
2014E
2013E
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0
In 2015 sports-betting is forecast to grow to €14bn gross win, casino and poker are
projected to grow to gross win values of €7.5bn and €4.6bn respectively, and finally
bingo is forecast to grow to €2.1bn. Overall poker and casino are anticipated to show
the greatest growth of 14.4% and 10.9% CAGR respectively, with bingo (8.3% CAGR)
and sports-betting (6.9% CAGR) just following behind.
Collectively gaming (casino, poker, bingo) accounted for €10.22bn of the market in
2012, or 47%, and is predicted to grow at a CAGR of 9.7% to €14.2bn in 2015.
Source: H2 Gambling Capital
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U.S MARKET SIZE
On 13 October 2006, President George
Bush signed the Unlawful Internet
Gambling Enforcement Act (UIGEA) in
to law in the U.S. UIGEA outlawed online
gambling companies accepting payments
related to any activity that was illegal
under federal or state law.
Under the Department of Justice (DoJ) interpretation
of another law, (the Federal Wire Act of 1961), UIGEA
prohibited online sports-betting, casino, poker and bingo
but online horserace wagering was not effected. The bill
arrived as a last minute attachment to the SAFE Ports Act
and came as a surprise to the industry. Overnight up to 80%
of the value was wiped of the share price of some of the
largest online gambling companies.
In December 2011, following questions from the New York
and Illinois lottery regarding the introduction of online
lottery games, the DoJ issued a memorandum stating that
the Federal Wire Act only applied to sports-betting, leaving
the door open to federal or state regulation related to online
casino, poker and bingo. Following failed attempts at federal
regulation, a number of states have introduced and passed
legislation allowing for various online gambling products
including poker, casino and lottery games. Delaware,
Nevada and New Jersey have all passed legislation and
are in the process of working towards launch. Furthermore
there are a number of states in earlier stages of the process
along with signs of further activity at federal level.
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U.S MARKET SIZE
U.S Online Gross Win 2013E – 2017E (€bn)
30
28.24
U.S online forecasts only
25.86
25
23.66
20
15
10
4.6
5
U.S online gross win (€bn)
Total international gross win (€bn)
Note: Based on activity modelled in 17 U.S states
Note: H2 global gross win forecasts not available for 2016/2017 at time of printing
Source: H2 Gambling Capital
2017E
2016E
2015E
1.5
0.5
2014E
2013E
0
0.023
5.6
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U.S MARKET SIZE
H2 Gambling Capital have modelled detailed forecasts
covering the value and volume of the future online gambling
market in the U.S. This scenario shows some form of activity
from the following states by the end of 2017: California;
Colorado; Connecticut; Delaware; Washington D.C;
Florida; Illinois; Iowa; Maryland; Massachusetts; Michigan;
Nevada; New Jersey; New York; North Carolina; Ohio; and
Pennsylvania.
Today the U.S market accounts for almost 11% of global
online gaming (casino, bingo, poker) gross win whereas
Europe accounts for just over 54%. H2 expect the U.S
scenario detailed above to generate €23m of gross win in
2013 growing at a CAGR of 297% to €5.6bn by the end of
2017, at which point the U.S share of global gaming activity
would be closer to 30%.
Please note much of the activity will take place towards the
latter years as the states will take time to pass laws and
regulation. Furthermore H2 have not included any sportsbetting activity to take place during this period, outside
of Nevada, nor do we expect any material sports-betting
activity outside this state.
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AFFILIATES
The affiliate industry is significant for
driving players to online gambling sites
with up to 50% of traffic for major gambling
sites being generated in this way.
Given that affiliate revenue rates are paid
at around 30% of player life time value and
that affiliates can drive up to 50% of traffic
it would be reasonable to assume the NGR
paid in affiliate payments is somewhere in
the region of 15% of total NGR, though the
actual rate varies by online casino.
Affiliates have been and will continue to be very important
to online casino operators for delivering new players to realmoney gambling. The online gambling affiliate industry
generated over €2.1bn of gross win in 2012 across sportsbetting, casino, poker and bingo. This is a significant
amount of NGR available to the party that drives the player
traffic, yet traditionally this has not always ben treated as a
viable revenue channel for the developers who are creating
the games.
Odobo’s B2C portal (Odobo Play) is designed to enable
all developers and/or their marketers to leverage their
developer studio and games profile pages on Odobo Play
to generate traffic to operators for the real money games.
So while affiliate marketing is a tried and tested customer
acquisition concept, Odobo is looking to make this available
to developers in a way that matches customer experiences in
the social and casual gaming sector and to help developers
monetize any audiences they may have from social and
casual gaming as well as any other marketing efforts.
The net result of earning affiliate commission on top of their
gaming royalty (if, for example, ranging between 8.5%-15%
of NGR) means that developers, for the first time, have a
genuine opportunity for a large proportion of the revenues
in online gaming. This in turn would allow them to invest
in marketing activity to drive player numbers (benefiting
themselves and the operators who receive the players)
and to compete at a huge advantage back in the social
and casual gaming sector, due to the huge subsidy from
real-money gaming.
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AFFILIATES
CONTINUED
All game developers that produce content for Odobo sit into
a scale between two main revenue profiles:
i/ Developers who undertake no affiliate activities and
purely obtain the revenue from the game royalties; and,
ii/ Developers who undertaken affiliate activities and earn
revenue from the games and the affiliate commission; both
profiles are modelled in the charts below.
The next revenue profile for developers (shown below) is
where the developer is not only earning the royalty revenue
but also earning affiliate revenue (example at 30%). The
game royalty plus the new affiliate revenue leads to a
growth from 6.5% to 36.5% total NGR for the developer.
Odobo Developer Revenue Profile (%NGR):
Game Royalties and Game Affiliate Commission
In the game royalty only profile (shown below), the available
affiliate revenue is included in the operator split, as it is
either the operator or one of their third party affiliates who
are providing the player.
Odobo Developer Revenue Profile (%NGR):
Game Royalties only
Operator Net
50%
Developer Net
36.5%
Odobo Net
13.5%
Operator Net 90%
Developer Net
6.5%
Odobo Net 3.5%
The net result for the developer (after factoring in Odobo’s
royalty share) is 6.5% of the NGR available. Although in
this chart the developer share looks small considering
the distribution to the operator, the resultant ARPU for a
developer just focusing on gaming revenue is still €1.54 /
month, or €18.53 annually.
NOTE: The above charts are based on one game, one operator, example royalty rate of 10% NGR, and no Odobo platform fee charges to the operator
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AFFILIATES
CONTINUED
The developer revenue profile which contains both game
royalties and affiliate commission means that the ARPU
available to the developer increases from €1.54 to €8.67 a
month or €104.03 a year.
Odobo Developer Monthly Projected ARPU
at Game Royalty Rate 10%-15% (€)
30
23.67 24.44
20
8.67 9.44
10
0
1.54 2.32
Game Only
Game + Player
ARPU
Game + Player
Lifetime Value
10% Game Royalty Rate
15% Game Royalty Rate
A further consideration when combining game royalties and
affiliate commission is that a developer can also benefit
from affiliate revenue from referred traffic that goes on to
use other games or products offered by that casino, not
just the developer’s own game. If the game royalty, player
affiliate and lifetime player commission are combined
(still based on an example 10% game royalty rate and 30%
affiliate commission) we can see the ARPU increase from
€8.67 to €23.67 a month, or an increase from €104.03 to
€284.03 a year. If we increase the game royalty rate to 15%
the ARPU from the game royalty, the game affiliate revenue
and the further lifetime revenue combined reaches €293.29
annually.
H2 Gambling Capital also provides industry-wide values
for prospective ARPUs from combined affiliate traffic and
developer royalties across all online gaming products.
Where affiliate share is based on 30% NGR and the
developer royalty rate is the highest available under the
Odobo market place, being 15%, H2 estimate that the ARPU
can reach €404 by 2015.
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SOCIAL AND REAL-MONEY
CONVERGENCE
Another factor to consider in the potential
size of the online gambling market is
the convergence between real-money
gambling and social gaming.
This is particularly relevant to game developers and game
content is often attractive to both social players and realmoney players, with only minimal additional developer
overhead. The major cost with applying social game
content to real-money gambling is the cost associated
with licensing, compliance, driving traffic and branding.
Removing these costs gives social games developers the
opportunity to access revenue share deals which generate
many times the ARPU as a social game in a market (realmoney gambling) that is around 17 times larger in terms of
gross win (compared to social casino).
In 2012 H2 Gambling Capital estimate the social casino
gaming industry generated gross win of €1.25bn. This is
forecast to grow at a CAGR of 19.1% to €2.12bn in 2015.
H2 take a reasonably cautious position when evaluating the
growth of social gambling. In our most aggressive, bull case
scenario, the amount generated has the potential to double
these forecasts.
Combined social casino gaming and real-money gambling
generated €22.98bn in 2012 and is forecast to generate
€30.36bn during 2015. The upside in terms of ARPU is less
than would be expected with the same level of growth in
real-money gambling, as the ARPU per social gamer is
significantly lower. However as the industries continue to
converge it is likely some social gamers will convert in to
higher spending real-money gambling. For the majority
of cases this is expected to be at the lower end of player
segmentation but nevertheless the upside potential would
be positive.
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SOCIAL AND REAL-MONEY
CONVERGENCE
Social Casino and Real-money Gambling Convergence 2012 – 2015E (€bn)
35
2.12
30
25
1.79
1.51
1.25
20
15
10
21.73
23.66
25.86
28.24
5
Real-money gambling
Social gaming
Source: H2 Gambling Capital
2015E
2014E
2013E
2012
0
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| 19
HTML5 vs. NATIVE APPS
access the necessary player liquidity to drive revenue. This
has provided some developers great success particularly
through a clever choice of player acquisition methods,
significant investments in advertising and smart use of viral
marketing. But as these AppMarkets grow, there is concern
that over-crowding is becoming a real issue as developers
desperately try and find new ways gain exposure and reach
their particular fragment of the huge player/consumerbase. For the regulated real-money sector AppMarkets
also provide further complications around compliance,
responsible gambling and monetization, and developers are
starting game projects with a very clear choice presented to
them… Native App or HTML5.
•BUILD ONCE DEPLOY MANY
As browser availability across a fragmented device industry
grows, the AppMarkets are forced into being bound to a
particular device or manufacturer. HTML5 clients can be
published across multiple devices, operating systems and
browsers. With a single game client you can reach players
on desktop, tablets, mobiles and even terminals, regardless
of whether they are using iOS, Android or Windows
platforms; and with support from many of the biggest
and most influential players in the computer industry, the
future of the technology is extremely encouraging.
HTML5 – The future of regulated
real-money gaming?
For many developers, the choice of technical architecture
when starting a new game development is one of the first
hurdles to overcome. Over the past 5 years, a significant
portion of the casual and social gaming developers have
staked their flag in the existing native application (Native
App) marketplaces (AppMarkets) available for mobile
devices as the best route to monetize their games and
•INCREASED VALUE FROM YOUR PLATFORM FEE
With Native Apps you are at the mercy of the AppMarkets
to allow gambling content distribution in each market
or territory. HTML5 games are delivered via the browser
and therefore not exposed to the revenue share demands
of the AppMarkets. If you are sharing royalties with a
platform (game acquisition cost, revenue share royalties
or other) then at least you need be content that the
% share you are paying is providing you significant value
in return.
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HTML5 vs. NATIVE APPS
CONTINUED
• SIMPLIFIED CONVERSION PATH
Native App developers will also know that each AppMarket
has its own restrictions on the treatment of gambling
activities and the inclusions of third party APIs. AppMarkets
have not been designed as platforms for real-money
gambling and as such the AppMarket is not presently
effective at managing the complexity of the real-money
lifecycle. HTML5 however isn’t limited by such restrictions
and as such, developers don’t need to worry about
integration points with third party software, and operators
don’t need their players to hold multiple authentication
accounts for each device. This allows a much simpler
conversion path as games available from Odobo can
equally be offered through 3rd party websites (in demo
or virtual currency mode) as part of a marketing strategy
whereby players can try the game before registering with
an Odobo operator. Once registered, players can only be a
single click away from gameplay.
• AFFILIATE MARKETING AS A CORE COMPONENT
AppMarket limitations can undermine your affiliate
traffic services and thus your bottom line. With Native
Apps it would be difficult to leverage affiliate marketing
to promote the availability of your Native App within
country-specific AppMarkets. Problems arise when
trying to track affiliate tagging of referring affiliates to a
Native App page. Some AppMarkets also do not support
retaining a referral ID for further credit of a new player
referred to the gaming operator to which the player plays
the game. With an Odobo HTML5 game you can deploy
an affiliate marketing program and retain tracking codes
from the affiliate advertising through to the game profile
page, and on to the selected gaming operator.
• GREATER CONTROL OF DISTRIBUTION
HTML5 (when optimised with the Odobo Marketplace)
allows developers full control over the territories in which
their games may be offered for real-money play. This is
important for any developer as they can obtain intellectual
property licences from brands and be confident any
regional restrictions are being enforced. This is also
particularly important for certification requirements,
as many AppMarkets currently do not offer content
restrictions via state, only country. This will provide both
developers and operators problems when deploying
content for the flourishing online gambling market in
the U.S.
• NATIVE IS STILL AN OPTION
Building in HTML5 doesn’t necessarily prohibit you from
moving over to the AppMarkets as HTML5 games can still
be placed in Native App wrappers or frames. Even when
not going through extra process, HTML5 games built
using the Odobo GDK can still be presented on mobile
devices as Native App icons with a direct link through to
the operator specific game. Not only that, when updates
are issued to the HTML5 game code, a player doesn’t need
to go through an AppMarket update process as the update
is seamlessly applied.
There are arguments for and against both HTML5 and Native
Apps as enablers for game development. These are further
weighted depending on the particular gaming market the
developer is operating within and the underlying objectives
of their studio or their game.
However for the regulated real-money industry Odobo is
committed to HTML5 as the foundation of its technology
platform, Odobo firmly believes that it is the best option
for its developers, its operators and their players, and most
importantly, Odobo has proven that it works.
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THE ODOBO DEVELOPER
PROGRAM
The opportunities in the regulated realmoney industry are clearly huge and yet
for the wider development community
the barriers to entry are very real and can
make it hard for studios to gain a foothold
in this sector.
The Odobo Developer Program has been
designed to help break down these
barriers and provide game developers
from all sectors, whether they be newly
established or proven studios, greater
value from their content.
The below steps outline the ways in which a developer
can join the Odobo Developer Program and start to take
advantage of the increasing market potential:
STEP 1: DEVELOPERS SIGN-UP TO THE ODOBO PLATFORM
All Odobo developers sign just one agreement which
means that they don’t have to worry about having many
different agreements with platforms, operators and affiliate
providers. They have 1 single agreement that provides them
access to all the Odobo services and grants them access to
the Odobo Marketplace.
•
This means that there is greater transparency across
the platform, with all developers on the same terms so
operators and developers alike know exactly what they’re
getting from their Odobo enabled game.
•It also means that a developer isn’t required to manage
their terms or execute changes when new operators and
distribution partners are introduced.
STEP 2: DEVELOPERS FROM ALL GAMING SECTORS CAN
DEVELOP ON ODOBO
Developers who are not necessarily from the regulated realmoney industry can now bring their games to the Odobo
Platform and start developing or promoting their games
migrated from the casual and social gambling industries.
•Developers don’t have to be experts on compliance and
certification as the Odobo GDK provides all the necessary
certified technology out of the box ready for use within
their game.
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THE ODOBO DEVELOPER
PROGRAM
STEP 3: DEVELOPERS GET THEIR OWN PERSONAL
ACCOUNT REPRESENTATIVE
Odobo’s developers have their own physical account
representative who deals with all of their development
support and technology enquiries. This level of service is not
commonplace with other gaming platforms or AppMarkets,
and means game developments aren’t protracted whilst the
developer waits for answers to their questions.
STEP 4: QUICKER TIME TO MARKET USING THE ODOBO
GAMES DEVELOPMENT KIT GDK
A game built for Odobo can be split into two aspects: the
game client development and the server-side technology.
Once a developer is ready to develop their game, they utilise
the Odobo GDK and build the HTML5 client. Within the GDK
they have everything they need to develop a fully robust,
workable game including HTML5 Code, technical samples
and user guides. All the server side technology works in
conjunction with the developer’s client development to
extend the functionality of their game providing:
•Game test instances – allowing the developer to test the
game in a pseudo-production environment as the game is
still being built;
•Certified game engine (based on specifications provided
by the developer pre-development) – all server-side
architecture and functionality that drives the game
mechanics and allows the game to make calculations that
are compliant with regulations;
•Communication and Authorisation - removing the need
for developers to spend time managing multiple packet
and data stacks in their games, or alternatively a host of
middle wear components for each separate operator;
•Persistent State Handling technology - providing a fully
enriched state-handling layer allowing micro transactions
to be recorded so that the game provides no loss to the
player if they are disconnected at any stage in gameplay.
This means that when players leave the game, for example
on their computer at home, and pick it up again later on
a handheld device, it will always return the player to the
point they were last playing with no loss to the game or
the game status;
•Localisation and Currency Conversion - which includes
readying the game for any market in which Odobo’s
operators serve their players; and
•
Compliance features – outside of the certified game
engine, there are a number of other game features that
are required by different regulatory jurisdictions around
the world. Odobo knows all of the legislation that your
game must meet before it enters the Odobo Marketplace,
and these are pre-built into the Odobo GDK.
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| 23
THE ODOBO DEVELOPER
PROGRAM
STEP 5: ENTERING THE MARKET
There are two ‘faces’ to the Odobo Marketplace: Business to
Business and Business to Consumer.
•B2B: The game will be hosted on the Odobo Marketplace this will be accessible only by Odobo’s operators including
the largest licensed online gaming providers in the
industry. Here they will be able to access all information
about the game and the development studio that built it.
Operators can demo the games in a ‘play for fun’ mode
as well as access videos, screenshots, game rules and
marketing materials. The Odobo Marketplace is a firstof-its-kind in the regulated real-money sector and most
importantly our operators know that all Odobo games
available in the Odobo Marketplace are based on the
same proven server-side technology.
When placing their games into the B2B Odobo
Marketplace developers have a choice of 4 royalty tiers
to apply to their game (currently from 8.5% to 15% of
NGR). This allows developers greater involvement in the
distribution channel, and allows them to decide the value
of their game within competitive market forces.
•B2C: The consumer facing side of the Odobo Marketplace
is ‘Odobo Play’. Players will be able to access all the
necessary information about games available on the
Odobo Marketplace as well as ‘play for fun’ versions
of the game. Players will also be able to easily find all
the operators who are serving the game in the player’s
location and be easily transferred to the operator
environment to start playing the game they enjoy in a
real-money environment.
For those developers who have a significant established
player base, or undertake even basic marketing and social
networking activities, Odobo Play is the gateway in which
they can channel their players to their games and earn
affiliate revenue of that player’s lifetime spend on that
operator’s casino, in addition to the game royalty revenue
they can earn for play of their games.
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GLOSSARY
APPMARKET means one of the established digital web
stores providing downloadable applications and games to
consumers, typically embedded into a particular operating
system or consumer device.
ARPU means the average return per user/average return per
player.
ODOBO GDK means the Odobo Game Development Kit.
ODOBO MARKETPLACE means the online game/app
marketplace whereby Odobo games are made available to
operators.
ODOBO PLATFORM means the game distribution solution
accessed by developers, operators and players.
CAGR means the compound annual growth rate.
DoJ means the U.S. Department of Justice.
LOBAL ONLINE GAMBLING MARKET means the online
G
gambing marketing including sports-betting, casino, poker
and bingo but excludes state lottery, skill based games and
other gaming activity.
GROSS WIN means stakes/wagers placed less prizes/
payouts but including bonuses.
HTML5 means the mark-up development language for
structuring and presenting rich media content for the World
Wide Web and a core technology of the Internet.
MOBILE GAMING means gaming undertaken on a portable
internet enabled device such as a tablet or mobile phone.
NATIVE APP means an application or game that has been
specifically designed and developed in the technology and
language determined by a closed system AppMarket.
NGR means net gaming revenue which is gross gaming
revenue less agreed adjustments by the gaming operator
for non-legitimate cash transactions (so less charge-backs,
frauds and other categories agreed with the operators).
ODOBO PLAY means the specific B2C face of the Odobo
Marketplace which is focused on players and the key
enabler for game developers to drive affiliate traffic to
Odobo games.
SOCIAL CASINO means those social games which are
built based on casino style games i.e. virtual currency slot
machines.
SOCIAL GAMING means any type of gaming undertaken
on social networks or un-regulated social enabled gaming
platforms.
UIGEA means the U.S. Unlawful Internet Gambling
Enforcement Act
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| 25
ABOUT ODOBO AND H2
ABOUT ODOBO
ABOUT H2 GAMBLING CAPITAL
Odobo launched in late 2012 as the new HTML5 game
development platform and marketplace for the regulated
gambling industry.
H2 is universally regarded as the leading source of data and
market intelligence regarding the value and volume of the
activity across the global gambling industry.
Just as the Apple, Android and Facebook developer
program models were instrumental in bringing creativity
and innovation from new developers - and ultimately
driving engagement and sales for the host and device
manufacturers - Odobo aims to do the same in the regulated
gambling industry.
H2 offers the most comprehensive eGaming/land based
data service as well as detailed market reports and bespoke
consultancy. The new subscriber area of H2’s website now
includes almost 2 million data points with circa 400 new /
updated datasets / national regulatory updates published
each year.
By enabling a wider group of top-tier game developers to
more easily bring their game concepts to market in the
highly lucrative online real-money gaming industry, Odobo
aims to fuel innovation and creativity in game production
that will delight both existing and new players attracted by
the content to the market.
Recently H2 has moved to publishing its Global eGaming
Summary Dataset Monthly and launched a national
eGaming Regulatory Update Service for subscribers.
In the process, games developers who have previously
faced high barriers to entry can enjoy significantly higher
revenues than in other forms of gaming (social, casual, or
traditional gaming).
Its is one of the new breed of tech start ups in Gibraltar,
the industry-leading regulated online gambling jurisdiction
and home to top-tier operators such as Bwin.Party, William
Hill Online, 888.com, and service providers, Spielo, IGT,
SHFL and Bally.
H2 also covers Internet poker in detail and now produces
detailed market reports and one off reports on issues such
as Mobile Gambling and eGaming in the United States.
In addition, to being eGR’s official data partner H2 is a Gerson
Lehrman partner firm and partnered with TrustPartners
(Italy) and Gaming Edge Associates (UK).
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DISCLAIMER
Whilst great care has been taken in the preparation of this publication H2 Gambling
Capital take no responsibility whatsoever for the accuracy or completeness of the
data and information provided within this Report. Although we have sought to ensure
that all of the data and information contained herein have been obtained from/based
on reliable sources its accuracy cannot be guaranteed and no warranty is given as to
the correctness of the information in this publication.
This document may also contain forward-looking statements and opinions that
involve uncertainties and assumptions. All estimates, opinions and forward-looking
statements contained within this Report merely constitute a judgment as at the date
of the document. As such, should any of these uncertainties materialize or any of
these assumptions prove incorrect, betting and gaming in the jurisdictions covered by
this Report could differ materially from H2 Gambling Capital’s expectations outline
within this document. In such an event H2 Gambling Capital accept no liability
whatsoever for the accuracy of these and does not intend to update these forwardlooking statements.
It should be noted that as an updated version of the original Report all of the summary
statistics contained within this report have been updated in order to take account of
H2 Gambling Capital’s revised forecasts for the industry. Although every effort has
been taken in order to ensure that all figures outlined within the report have been
updated H2 Gambling Capital take no responsibility for any that might have been
missed during the re-editing process.
References made to royalty rates or affiliate pricing on the Odobo Marketplace are
correct at the time of publication, however Odobo reserves to the right to modify their
pricing model from time to time.
COPYRIGHT
No part of this Report may be reproduced for any purpose whatsoever without prior
permission from H2 Gambling Capital. H2 Gambling Capital owns (or is an authorised
licensee of) the online gambling industry model and all bespoke models that have
been developed in relation to the production of this report that generate the industry
values and forecasts.
‘Odobo’ is a trademark of Odobo Limited. All other trademarks, company names or
products referenced within are the property of their respective owners.
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+350 200 66899
[email protected]
www.odobo.com
@odobo
9A Glacis Road, Gibraltar