Looking back at 2015, what were the main milestones for NetEnt?
2015 was a very special year for NetEnt as some of our digital games became available for the very first time in a land-based environment. We entered into a partnership with William Hill to provide some of our most popular digital games to their betting shops in the UK. Players can now enjoy our blockbuster games Starburst and Gonzo’s Quest as well as our latest release Koi Princess in William Hill’s retail network. Today’s players expect the same casino experience on different channels, and more and more operators are implementing omnichannel strategies. This offers exciting growth opportunities for us, too. We must keep in mind that the online market accounts for only 5 to 10% of the overall gambling market. In 2015, we also received our operating and software licences from the UK Gambling Commission, and the UK is now one of our Top 3 markets. We have also been granted a licence for the Spanish market, and in June we started distributing our products there, strengthening our presence in regulated markets.
2015 also marked a shift in the balance of power in favour of mobile games. How mobile-friendly are your products?
We have been focusing our attention on mobile for a number of years now, and NetEnt has been recognised as an industry leader in mobile innovation by receiving various awards, including EGR ‘Mobile Supplier of the Year’ and ‘Innovation in Mobile’ in 2015. From May 2015 all our new games are released simultaneously on both desktop and mobile – a synced release. It is very important for operators to make a new game available to players on all devices and platforms to maximise the return on investment. It doesn’t make financial sense for them to spend money on marketing a game, which is not yet available on mobile. We have also upgraded our mobile toolbox to Touch 2.0, improving the player experience even further by leveraging more of the functionalities of the smartphones. We are currently upgrading all our games to this technology as we do see rising revenues from this source. In general we have also seen no cannibalisation of desktop business when we launched mobile, something that has been validated by the operators themselves.
What makes a game successful these days?
Our game development process is constantly refined and improved by analysing our games’ performance and player preferences, mainly by our Business Intelligence and Product Owners colleagues. NetEnt is known in the industry for the fact that all our games are unique productions. The theme, the mathematical model and the visuals are all very important components of a successful game, and we have brought a lot of innovation into developing the sounds of a game, which has become an area of differentiation for NetEnt. What we have also learnt is that it is important to create games for specific markets, having localised and targeted content optimised for chosen audiences.
Which technologies do you use to create your desktop and mobile games?
We now use HTML5 for both our desktop and mobile games. This technology has underpinned our synced release. Before we used Flash for desktop, and HTML5 for mobile. We are also converting our historical games to HTML5, a process that started several years ago.
How is NetEnt reacting to new device innovations, for instance wearable technology?
They are very high on our agenda, and in 2016 we will reveal more details on how we view the future of gaming. In my opinion wearables, such as the Apple Watch, are too small to offer a satisfactory gaming experience but they can, for example, play a role in informing players of new games, bonuses and free spins.
Personalisation is seen as the key to customer retention. what would be your one key piece of advice to an operator integrating your games into its website?
Thus far the majority of operators have chosen to personalise their experience by offering exclusive game content that cannot be found elsewhere. This is an expensive option, both for the operators and for ourselves. To drive the innovation in the personalisation area, we have developed a feature called NetEnt Extend, which allows our casino partners to tailor the experience for their players via an application programme interface (API). The extended API enables operators to see a number of parameters in real-time, and to add extra animations, rewards and other social elements to the games. For instance, if a player loses three or four times in a row, the operator could offer a bonus to keep the player engaged. We have seen a number of visionary companies really leveraging the possibilities enabled by NetEnt Extend, creating a unique gaming experience for their players on their site. My advice for operators is to invest a lot more time and resources in exploiting those in-play and real-time processing features.
How is the recent wave of mergers and acquisitions affecting your operations, and how are you reacting to the consolidating market?
Mergers and acquisitions have not affected us negatively, as we have grown successfully with our operators through those events, and I don’t see that dynamic changing fundamentally going forward. NetEnt is proud of developing long-lasting business partnerships with larger operators, which leads to economies of scale and optimised go-to-market strategies for all involved. In addition, we continue to see a lot of very dynamic start-ups coming on the scene, for instance in the social gaming and gamification segment. They are driving innovation in the gaming field, while the larger operators, especially the ones involved in mergers and acquisitions, are necessarily focusing some of their efforts on aligning their operations and improving efficiencies. This leaves room for the smaller, more agile start-up companies to identify niches and grow very quickly. We are also seeing affiliates expanding downstream and becoming operators themselves. All in all, I expect that these market dynamics will continue to have a positive net effect on NetEnt.
What are your expectations for the future of the gaming industry?
I think we will see a continuation of the existing trends in the coming years. Mergers and acquisitions will still be high on the agenda. The demise of Flash will continue and perhaps even accelerate. We will also see a lot of virtual reality concepts, but their business and monetary impact will be small for the time being. Mobile will continue to rise to the fore, but we need to keep in mind that not all markets are experiencing the same mobile growth rates. It is important not to forget the desktop and laptop – as those channels still account for the majority of our revenue today, and we need to ensure that those devices get the right level of attention, while we steer our development focus on future devices.