Considerations regarding the true value of businesses occupying positions ranging from software providers, to aggregators of these providers, to operators and affiliates in the gaming industry.
🤝Leading with B2B might be easy, but can it work longterm?
Businesses based on selling or leasing services to B2C opertors in iGaming specifically, face a difficult predicament in order to become viable.
The B2B business might often provide an operator with access to a platform, their bespoke software, or aggregate several services such as KYC, payment processing and access to game providers.
In almost all of these cases although it might appear that both the B2B provider and B2C operator have aligned interests, the B2B businesses only concern is in generating as much revenue from their agreement with the B2C operator as possible. The B2B supplier is only interested in the operator’s profitability so far as it generates income for them.
As a result there are a large number of examples of these B2B providers whose services are designed to maximise the number of clients they can onboard. After the client has been onboarded and committed to monthly minimum payments, in a sense the B2B provider should be happy with the operator exactly in this position. For, if it was the case the operator would grow to huge revenue, in many cases they would develop their own version of the B2B provider’s offering, and it would probably be longer standing and more fit for purpose than that offered by the B2B provider because it would be customer focused.
The B2B software provider almost never directly interacts with the customer. In fact they do not really have access to the data to understand the customer journey. Whilst they might be able to see top level data such as number of players, maybe player location and things like this — An understanding of the complete user journey, why they are playing, are they playing because of the quality of the offering from the B2B provider? Or perhaps due to an affiliate, perhaps due to the operator’s brand or some other quantity that (forever will) remains unknown for the B2B provider.
For any B2B provider to be truly viable it they must provide something unique that cannot be found elsewhere. It can be their brand, in the case of Evolution, or Pragmatic, it could be the complexity of their offering and pricepoint in the case of sportsbook providers who give prices, odds, fixtures and a myriad of functionality that is not viable to re-create without significant investment.
One of the first questions when entering into a discussion with a supplier of technology should be: Who else uses this solution? and how does it contribute to their success?
In the event the supplier more or less has nobody to point at who uses their product in a meaningful way that is successful, some have concluded to build their own B2C operator. However, if one leads with B2B and therefore is only concerned with set up fees, monthly minimums and maybe in some cases some kind of clandestine takeover of any operator that seems worthwhile, they inevitably find themselves stuck. Their product is not interesting for the customers and marketing will only ever be a temporary band aid, that once removed runs the risk of not only normalising the situation, but in fact, highlighting it.
🎮How about B2C First?
A project that is customer first has a different journey.
In the poker and casino space, this has can be seen with GGPoker and 888 respectively.
These companies have been interested in B2B at various points, but given the fact they mastered the art of acquiring, retaining and re-activing customers with their own brands, and their technology, the question then follows: Why would leasing their software and tech be profitable for them instead of directly entering the market?
In the case of GGPoker, satellite brands were used for specific markets where they could not enter, and also for speed of acquiring market share. However, over time, naturally, these partner brands faded and were overtaken by the parent brand of “GGPoker”.
888Poker hosted local skins such as LuckyAce or Littlewoods. In the case of the USA, they have a partnership with WSOP which offers 888 a regulated entry into the US market and brand value. However, with the only exception being WSOP (World Series of Poker), we have seen a similar pattern to GGPoker whereby it made more sense (on all fronts) to expand the parent brand as widely as possible.
đź““Conclusion
The B2B companies that cannot succeed in the B2C arena can logically only compete on price and this results in an inevitable race to the bottom.
Where customers see clone products, with the same games, and often only so much as a logo or colour scheme being the differentiating factor.
The companies that will prosper and be around in the next decade can begin with a partial foundation from these providers (or of course a provider with genuine value to add), but it will be their brand power, marketing and ability to build truly fit for purpose alternative platforms in house, that will be the determining factor in their longevity.
🧩Thoughts of a Solution
888 and WSOP demonstrate a harmony of one party (who is proven not only in B2B but B2C operations) offering technology, and operational know how, partnering with a well-regarded brand with the ability to give access to a market, that otherwise might prove difficult to access.
It can be considered a game of hats where each party must recognise their strengths and weaknesses in order to properly focus on their role.
Many of the B2C Casino operators, especially whitelabels, obviously have their key strength as marketing for they are able to attract users to a product that is effectively a clone. Could they not retain and acquire users for a greater ROI with a truly unique product and brand under an affiliate agreement?
