$ £

Microgaming sees opportunity in online gambling regulation

The trend for individual governments to regulate, license and tax online gambling is now firmly established, especially in the more progressive environment of Europe, and that's a good thing, opined Roger Raatgever this week. The energetic chief executive officer of veteran industry software developer Microgaming was speaking at the Isle of Man launch of his company's latest branded game The Lord of the Rings: The Fellowship of the Ring, themed on the blockbuster movie trilogy The Lord of the Rings.

Raatgever believes that the strong move to regulatory instead of prohibitionary or monopolistic regimes is a positive evolution for the industry, and one which he intends to ensure benefits both his company and its licensees.

"Regulated markets are happening, and Microgaming will be at the forefront of those industry companies who are ready to meet the toughest licensing requirements for their licensees," he said.

"This is something we have been waiting for; and it will additionally enable us to dispel negative myths and misperceptions about the industry by demonstrating our professionalism and the considerable technological developments now available to defend against under-aged or problem gamblers, money laundering and other concerns of those who oppose internet gambling."

Microgaming is a respected and acknowledged pioneer in this dynamic global industry, and in the early 'nineties was among the first to develop the ingenious software that enables companies to safely bring the action and excitement of gambling in its diverse forms to the punters' PCs, laptops and mobile phones via the internet.

The rapid development of underlying industry technologies has enabled Microgaming to build up an enviable reputation as a creator and purveyor of quality games - an inventory of around 500 at last count - and the complex back end administrative and marketing systems used by online casino, poker room and sportsbook operators who licence the software.

Working with associate company Spin3, it was also one of the first to start developing the mobile gambling business model and software, a global enterprise that is now gaining significant momentum and has been independently estimated to be worth $48 billion by 2015.

Raatgever says the company's approach is built upon a commitment to quality, a keen interest in what players want, technological progress and innovation. The company was the first to bring concepts like big money progressive jackpots, player accessible information on financial and betting records, mobile wagering, and the use of major movie and videogaming brands in slots to the online environment.

"There are many companies in this industry that are models of customer care, corporate governance, fiscal responsibility and professional business conduct, and we intend to remain among them in the new and exciting world of regulatory opportunity now opening up," he said.

Ensuring that the company retains the capability to do that, are development teams on nearly every continent around the world; an impressive talent pool of over 1,000 people. Raatgever presides over the group from his 80-employee head office in Douglas on the Isle of Man, a location ideally positioned in a geographic sense with an advanced communications infrastructure and a business-friendly legal environment.

Last week saw the opening of a newly refurbished live dealer studio providing feeds to service the growing demand around the world for live dealer gambling over the internet. As with all Microgaming initiatives, the objective is to extend the range of options available to licensees when areas of business opportunity are identified.

Given the size and success of the organisation, several industry analysts have on occasion speculated why Microgaming has not been publicly listed - a course taken by many smaller industry companies in the past.

Raatgever does not favour the idea, saying that the private company business model is best suited to his company, which has no need to go public to attract capital. "In fact I regard the private nature of our company as an absolute competitive advantage in that it enables us to maintain security on projects until we are ready to move to market," he says.

Similarly, there has been conjecture that Microgaming has the wherewithal to be both software provider and an operator in its own right, a proposition firmly discarded by Raatgever. "We are essentially a technology oriented company," he notes. "We prefer to stick to our knitting, which we know and do rather well, and leave the operational side to our licensees or partners," he says.

"We've had approaches, but we're not interested."

Finance Director John Coleman supports Raatgever, confirming that he has turned away many approaches: "You might say that we could be defined by the deals we have turned down in this area," he observes. "But we have our own imperatives, which are the provision of top product at a fair price, and a commitment to a service oriented partnership with our licensees."

Raatgever sees trends other than the moves to regulation ongoing in the industry, namely consolidation, technological convergence and the continued growth of strong competition; all areas which he has constantly under review, with planning and preparation dictated by ongoing research into player demands, technology advances and new gaming trends.

With one eye on the competition, Microgaming, in common with other providers, has adopted a more flexible approach in providing specific products to clients as well as complete packages. One area it has entered is the cross-platform trend whereby operators offer their players a range of games from different providers, all integrated into the same administrative platform. High profile operator Virgin Games is among the latest to advertise new games from Microgaming on its multi-provider platform.

New poker products

Another of the highly competitive market sectors in which Microgaming is active is online poker.

Head of Poker Lydia Melton says that her teams have been preparing for two major events on the production calendar: the introduction of the new downloadable Microgaming 3D poker software, and the launch of a new novice-oriented Flash poker product.

Microgaming's software is also available through Prima Networks Limited which is currently engaged in launching a dedicated French poker network as a result of a joint venture with 888 Holding's PLC. Initially comprised of four client operator companies, this joint venture into the French market has achieved the most approved licenses from the French regulator ARJEL to date.

The company has also been quietly getting on with its own approach to the 'poker ecosystem' where the problems associated with balancing the ratio of relatively inexperienced 'fish' against more skilled 'sharks' has been stimulating debate in the industry for some time.

Microgaming's approach is multi-pronged, involving monthly rake reconciliation and encouraging licensees to adopt a far more wide-ranging marketing approach. This is designed to bring in more recreational players, giving the network a better business balance despite the higher acquisition costs.

The Flash poker product is particularly interesting, enabling Mac players to access the action, and at the same time presenting novice players with a 'One Click' simplified choice that does not delay or intimidate and makes site navigation easy.

The new product is already live on Unibet's Maria Poker site, along with Nordicbet and Ladbrokes, and features play for real or fun and a selection of tournaments, sit n' goes and cash game options.

Sports book operators are reportedly showing an interest in taking the Flash product on board as an additional player service, with the added benefit that Flash clients have shown good conversion rates to download games as they progress.

The move toward more complex 3D poker is another example of Microgaming's preparedness to extend its technology reach. High profile companies like PKR currently occupying the downloadable 3D poker space will find themselves under growing competitive pressure from the new MGS offering, which may prove to be faster, yet carries the same level of customisable avatars and varied perspective views.

Again, the company's push in this direction is intended to provide licensees with the widest possible selection of player-attracting products.

Bringing famous brands to the online environment

Poker is just part of the jigsaw for the Isle of Man based Product Team, whose international remit covers everything from research to brand licensing and game development.

The past nine months has been a busy period with the development teams bringing to fruition the first game in The Lord of the Rings trilogy as a multi-featured flagship game which captures the spirit, characters and atmosphere of the big-screen impact of the blockbuster movie.

Development was preceded by an exhaustive licensing and approval process which involved exacting standards at Warner Brothers which has been delighted with the final product.

Microgaming is no stranger to the branded content process, having held rights to the Tomb Raider brand since 2004. New game formats, player demands, technology advances and convergence in delivery systems are just a few of the elements where it is imperativefor software companies like Microgaming to stay at the sharp edge.

Is the UK bingo market saturated?

Pessimists who claim that the online bingo sector is at saturation point will find a spirited debate from Neill Whyte, Head of Bingo for Microgaming.

"We've been involved in this burgeoning market segment since 2008 and now have 8 brands on our network," Whyte says.

Online bingo is a $2 billion-a-year business with particular focus in the UK, where there are an estimated 300+ brands operating, and to a growing extent in Western Europe and the Nordic countries.

"As much as 70% of the business is in Europe at present, mostly in the UK," Whyte observes.

Competition is fierce, with bingo providers like 888's Dragonfish, Playtech's Virtue Fusion and the independent Cozy Games all active.

Microgaming concentrates on quality, entertaining and diverse content and product diversification, leaving its operators free to focus on customer care and marketing.

Whyte sees the currently hot topic of free bingo play as a potential acquisition and retention tool, but feels there is a need to sensibly balance free play with real play, with industry pundits pretty evenly split on its true value to business.

Independent estimates from respected research firms have predicted that global growth is set to continue at anything up to 30%, including the UK.

Interestingly, bingo players are seriously into side games, with as much as 60 to 70% of revenues emanating from this source. Microgaming thrives in this department, with a massive inventory of innovative games and the capability to deploy these into the bingo sites, increasing player pull.

Microgaming's development teams have so far provided licensees with some 300+ instant-play Flash side games, mostly well-proven 5 reel slots....and there are plenty more in the group inventory.

Progressive jackpot, scratch card and AWP interactive pub slot games are all popular as side games, which are used extensively by players.

"We listen very carefully to what players are saying and what they want," says Whyte. "We invest in pre-testing and extensive research with the changing demographics of bingo players, which now embrace a younger and more equally balanced gender profile.

"Bingo players tend to spend less per visit, but play more often and stay longer, providing operators with better life-of-customer longevity."

The current focus for Microgaming bingo is a major upgrade to the software, which bingo fans will see on their screens some time in the upcoming months.

Keeping pace with regulation

Microgaming execs Chris Hobbs in Corporate Affairs and Andy Clucas in Regulated Markets are seeing their company roles become significantly more demanding as the regulatory trend spreads through Europe.

With the formidable task of keeping pace with a multitude of legal changes and developments, they ensure that the company is ready at any time to support its licensees in entering newly regulated markets by meeting the diverse requirements of individual regulators.

Their 'campaign map' covers a growing number of licenses already obtained, those in process and timelines for the implementation of new regulated markets that stretch from the present to 2012 - a veritable patchwork of nations and dynamic time estimates.

"There are clearly advantages for existing or potential licensees where Microgaming is already established or is well prepared to enter new markets," Hobbs notes." Our responsibility is to ensure that the company maintains that positioning."

Hobbs refuses to be drawn on the complex and troublesome US market, where the authorities have decided on a prohibitionary approach to online gambling but moves are afoot to reverse this negative direction.

"Clearly we watch developments closely, but the situation remains very fluid at present," he says, concluding that the manner in which he and colleague Clucas work is thorough, cautious and measured.

Responsible management

CEO Raatgever returns to the subject of perceptions as the visit ends, observing that educating interested parties on the positive aspects of the industry is important.

"There are many highly professional companies in this business who go above and beyond in maintaining high standards of corporate responsibility, integrity and professional behaviour - it's important to get that perspective out there to dispel the myths - some of them maliciously created - about the industry.

"The fact that little cash changes hands in online gambling, because credit or debit cards are used, ensures a high degree of trackability that is anathema to organised crime and fraudsters.

"Once you explain the breadth of reliability and accurate tracking systems in online gambling, and the conscientious precautions taken by operators to obviate concerns about underage or problem gambling, fraud and money laundering, many critics are surprised into a reappraisal."

Turning to fair and safe software, Raatgever points out that tier one companies in the business, including his own, go to extraordinary lengths to ensure that their software is independently tested and monitored.

In collaboration with two major competitors, Microgaming invested substantially in the creation of the independent eCOGRA seven years ago; a London-based stand-alone player protection and standards organisation that mediates player disputes, sets international standards of business and responsible gambling conduct for the industry, and tests and monitors operators who volunteer to meet its tough requirements.

Since then the professionally-staffed organisation has become self-funding and has earned the respect of regulators, trade associations like the influential European Gambling and Betting Association and major international companies unconnected with the original founders.

"eCOGRA has now achieved the goals that we set for it, which has made the internet gambling environment a safer place for players, and has simultaneously improved operating standards throughout the industry," Raatgever observed.

"I believe this is indicative of the serious approach to business and player care that characterises a significant and growing proportion of industry businessmen.

"We are a business with very strong professional commitments to fairness, efficiency and legality," he concludes.

Source: InfoPowa News

Share this