Digitization Reshaped Ecommerce First, Now Moving to Online Gaming
The early days of ecommerce can be traced back decades, sluggish until the 2000s, then accelerating rapidly over the last 10-plus years. Online gaming is on a similar trajectory. Analogous to what Amazon and Alibaba did for ecommerce, online gaming has deep roots that go back decades and now has entered a growth stage that many believe will chart like a hockey stick. There are different approaches to capitalizing on what appears to be parabolic growth across the industry. More merchants than miners became millionaires during the California gold rush, and servicing the companies that provide consumer gaming just might be one of the best ways to cash a ticket. Playgon Games Inc. (TSX.V: DEAL) (OTCQB: PLGNF) (Profile),a Software-as-a-Service (SaaS) technology company, is laser focused on that business-to-business (B2B) market, developing and licensing unique digital content for the iGaming market. Other companies jockeying for the end user, curating gaming and gambling services for consumers (B2C) includeBally’s Corporation (NYSE: BALY), DraftKings Inc. (NASDAQ: DKNG), Golden Nugget Online Gaming Inc. (NASDAQ: GNOG) and Penn National Gaming Inc. (NASDAQ: PENN).
- According to Grandview Research, global revenue in iGaming will grow at a CAGR of 11.94% from $75 billion in 2021 to reach $127.3 billion by 2027.
- Playgon is disrupting the $6 billion live-dealer casino oligopoly with its mobile-first, streaming, high-definition platform.
- The Playgon platform is currently live with 26 operators through four content aggregators in Europe and South Africa and commitments for more clients are growing.
- DEAL is also in the $20 billion Daily Fantasy Sports market with its B2B platform focused on European Football and Golf (PGA and Europe).
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Big and Getting Bigger
The online gaming industry, also known as iGaming, is of global scale and currently generates an estimated $75 billion in annual revenue. According to Grandview Research, revenue will grow at a CAGR of 11.94% between 2021—2026 to reach $127.3 billion by 2027. The surging growth is undergirded by a number of factors, including the COVID-19 pandemic, technology advancements, increasing and rapidly evolving regulations, and booming consumer demand. Consumer demand is key here as, much like with ecommerce, younger generations don’t know a world without iGaming while older generations are becoming increasingly familiar and comfortable with the convenience of the digitized world.
The slow, seminal transition to digital gaming was given a shot of adrenaline in 2020, as businesses were shuttered and people were told to eat, sleep, work and play from home to prevent the viral spread. Online gaming experienced unprecedented demand and disruption that forever changed the face of the industry with next-generation streaming gaming content as entertainment and a safe social event.
Playgon Games Inc. (TSX.V: DEAL) (OTCQB: PLGNF) is capitalizing on the market growth, developing and delivering digital gaming content that the industry wants and needs. The company employs more than 80 people who provide turnkey products and a multitenant gateway that allows online operators the ability to offer their customers innovative iGaming software solutions.
Playgon’s current software platform includes live-dealer casino games, eTable games and Daily Fantasy Sports, which, through a seamless integration at the operator level, allows their customers access without having to share or compromise any sensitive customer data.
DEAL is mobile focused and uses the latest technology to build and deliver content. As a true B2B digital-content provider and outlier in the online gaming marketplace, Playgon has zero customer acquisition costs. The company’s current and future customers include online casinos, sportsbook operators, land-based operators, media groups and big database companies, just to name a few.
Live-Dealer Action
The invention of live-dealer games has captivated players worldwide, driving growth in the online casino vertical. This is exemplified by revenue in the nascent live-dealer casino market forecast to rise 60% from $5 billion in 2019 to $8 billion in 2023. The live-dealer online casino market, which unsurprisingly has a high barrier to entry, is an oligopoly dominated by Evolution Gaming, Playtech and Microgaming, which offer products that are relatively generic and similar, meaning brands cannot differentiate to stand out from competitors.
Playgon is the new kid on the block, upsetting the apple cart with the launch of Live from Las Vegas, a studio of 10 gaming tables that delivers live-dealer, high-definition streaming video. The company’s platform utilizes state-of-the-art augmented reality betting technology and live dealers for four popular games: blackjack, roulette, baccarat and its proprietary Tiger Bonus Baccarat(TM). The user interface (UI) and user experience (UX) are proprietary technology of Playgon that modernizes the old incumbent technology, which was mostly designed for desktop computers, and delivers the most-advanced and innovative products to date.
Playgon’s platform is cloud-based for scalability. Playgon’s games are mobile focused, device agnostic and built for portrait-mode-only, one-handed play. Bridging the barriers to entry, Playgon’s platform is already live with multiple online casino operators through four content aggregator clients in South Africa and Europe, with more expected to come on board soon. More broadly, Playgon’s products are live with 26 operators currently, with another 8 integrating the technology.
In addition to its live-dealer games, Playgon offers eTable (random number-generated) versions of each game with its own set of unique gaming features and is working on the development of a suite of 25 games, including craps, hold ’em poker, and 3-card poker, to offer its customers.
DFS – Daily Fantasy Sports
The company also has its hand in the wildly popular market of DFS, or daily fantasy sports, an accelerated variant of traditional, season-long fantasy sports that can be condensed down to a fantasy team for a single game. According to Research & Markets, the global fantasy sports market is expected to grow from $20.36 billion in 2020 to $22.31 billion in 2021.
Playgon has developed and offers a world-class, B2B, mobile-first fantasy sports platform for operators. Built for regulated markets, the initial sports in the platform are European football (premier league, Bundesliga, Ligue 1, Serie A, La Liga) and golf (PGA, European). The platform opens operators to new gaming demographics and full control of the player database, or the opportunity and information that is instrumental in growing revenue and widening margins.
High-Margin (Recurring) Revenue
Unlike B2C companies that must devote significant capital to acquire and retain users, Playgon’s business structure doesn’t include any user acquisition costs. The company’s revenue model includes marketing and licensing fully integrated live casino solutions to iGaming operators worldwide. Revenue is generated through a typical SaaS license-fee agreement for the platform.
SaaS is a popular business model today because it typically generates high-margin, recurring revenue as the customer pays each term for use and support of the technology. License fees will be due monthly and range from 6% to 12% of gross gaming revenue (player bet minus player win before operating expenses). The exact fee varies, depending on the customer and market size.
Playgon is led by Darcy Krogh, who is no stranger to either the iGaming industry or B2B operations. In 1999, Krogh cofounded TSX-listed Chartwell Technology, which pioneered the development of browser-based digital content for the iGaming market. The company was sold in 2011 to the Stars Group (then called Amaya) where Krogh served post-merger as VP of business development.
The B2B asset portfolio was sold to NYX Gaming Group in 2016, then subsequently bought by NASDAQ-listed Scientific Games Corp. in 2017. Krogh left the company upon the sale to NYX Gaming Group to found Playgon Games Inc. (formerly Global Daily Fantasy Sports Inc.)
Krogh is joined in the C-suite by live-dealer technology expert Guido Ganschow as CPO. Ganschow has spent 13 years creating real-time, live-dealer technology and platforms and was the cofounder and creative director for a Macau-based casino consortium. In addition, former Shaw Communications exec Steve Baker is part of the Playgon team, serving as COO. During his time as VP of operations at Shaw, Baker was integral to growing revenue from $300 million to $2.8 billion and staff from 350 people to 13,000; he also led a number of M&A deals.
Success Favors the Strong, Integrated
While Playgon builds a reputation and lucrative business in the B2B world, there are well-heeled juggernauts in the B2C market that have moved swiftly to adopt the latest digital technology to help attract consumers. Some omni-channel and others strictly in the digital space, these companies are familiar names to both online gamers and investors.
Bally’s Corporation (NYSE: BALY) is a global casino-entertainment company with a growing omni-channel presence of online sports betting and iGaming offerings. The company currently owns and manages 14 casinos across 10 states as well as a horse racetrack in Colorado; it also has access to OSB licenses in 16 states. In November, Bally’s announced that it was awarded one of nine licenses to conduct online sports betting in the state of New York.
DraftKings Inc. (NASDAQ: DKNG) is a digital sports entertainment and gaming company created to fuel the competitive spirit of sports fans with products that range across daily fantasy, regulated gaming and digital media. The company is a multichannel provider of sports betting and gaming technologies, powering sports and gaming entertainment for operators in 17 countries. Most recently DraftKings and the Boston Bruins announced a new multiyear deal, which will make DraftKings the exclusive, official Daily Fantasy Sports partner of the team and TD Garden.
Golden Nugget Online Gaming Inc. (NASDAQ: GNOG), a leading online gaming company, was first to bring live dealer and live casino floor to the U.S. online gaming market. The company was the recipient of 17 eGaming Review North America Awards, including the coveted Operator of the Year award in 2017, 2018, 2019 and 2020. GNOG continues to expand its footprint, announcing in August that the Arizona Department of Gaming has awarded its partner, the Grand Canyon Resort Corporation, an online tribal-event wagering operator license.
Penn National Gaming Inc. (NASDAQ: PENN) is North America’s largest regional gaming operator and an innovative provider of retail and online gaming, sports betting, live entertainment, parimutuel racing and hospitality. Penn National operates 43 destinations across the country with a variety of gaming, live and simulcast racing, entertainment and hospitality offerings. The company expects to open its Hollywood Casino Morgantown, its fourth facility in Pennsylvania, to the public later this month.
The fact is that many gamblers will say that nothing can replace the sights, sounds and excitement of a casino. However, there’s a change in sentiment that picked up some strong tailwinds during the pandemic. Technology is bringing the feel of a live casino to a player’s living room, and while bricks-and-mortar casinos aren’t going anywhere, both gamblers and investors alike are astutely aware of the fun and money to be made in the virtual sphere.
For more information about Playgon Games, please visit Playgon Games Inc.
