24 January, 2022

Roundtable: The rise of aggregation

Enrico Bradamante, Chief Commercial Officer at Pariplay, Andrey Starovoitov – COO at Softswiss, and Simon Hammon, Relax Gaming Chief Product Officer discuss the prosperity of online casino aggregation, and the pros and cons of this increasingly popular business model

How much has online casino aggregation increased over the  years - and why?

Enrico Bradamante: Online casino aggregation has increased more than the overall casino business in the last years, due to the multiplication of suppliers and content. Many new innovative games studios have been founded and grown while, with the opening and expansion of new markets, a lot of localised content has been developed. Because there are so many games studios and varieties, it is currently impossible for an operator to have a direct integration with all the studios.  Aggregators have more room to specialise in delivering faster, more flexible integration services with the latest technologies, providing value to both providers and operators. This has been one of our biggest focuses at Pariplay, to be a major technical solution finder, to solve all the technical requirements of our partners, no matter the challenges or legacy of their platform, and help them accelerate their growth.

Simon Hammon: Slot distribution has become more competitive, which is hardly surprising considering the number of suppliers has grown significantly. New releases require extensive distribution to get the best return on investment, and aggregators are well-positioned to distribute to multiple operators quickly.

Andrey Starovoitov: It has increased quite a lot. While trends towards direct integrations or getting content through aggregators change periodically, there has been a steady increase in clients using the Softswiss Game Aggregator’s content.

What are the pros of this business model?

Enrico Bradamante: For new studios, the biggest pros come from the value distribution channel. For operators, it is great to have all kinds of innovative content faster than ever for all their target markets. When operators are entering or expanding in a new jurisdiction, in order to succeed they need to integrate content with local appeal, deep knowledge about that market, and to make sure that all their games are certified there. In addition, regulation is expensive. The fact that companies can level our certification to launch on regulated markets is a big value that we offer as an aggregator.

Simon Hammon: For the aggregator, it’s a numbers game supporting multiple studios that may or may not succeed, but it offers them a chance to prove their product works. It also provides an additional revenue stream alongside any proprietary content.

Andrey Starovoitov: It’s one thing to get game content from a variety of studios and another to get it from the game providers directly. Often casinos want to dive into operations and marketing. A games aggregator allows you to focus on these aspects and not bother supporting multiple integrations and a gigantic game portfolio on your own. Maintaining such a large gaming infrastructure often requires serious technical expertise and an understanding of target markets. This very often requires having several teams, which does not always fit into the operator’s plans and budget. I am convinced that aggregation holds an advantage over direct integrations. The volumes of information flowing through the aggregator are just as valuable as the game content. In this case the aggregator doesn’t just resell content but acts as a stand-alone product and business unit. It brings added value through a wider network of casino data. At the same time it features key marketing tools such as jackpot and tournament systems. There is no doubt that the aggregator is an integral part of the iGaming market, acting as a separate product between the providers and the operator.

And what are the cons of this business model?

Enrico Bradamante: Since there are several aggregation services, most operators don’t rely on only one to access new content, so for Pariplay it is important to keep upgrading our offer continually, making sure that we deliver more content, more services, and more value each month. For small, new studios, it is not necessarily a con, I would say it is more part of entrepreneurial risks, only a few of them will actually succeed and generate revenue for operators and aggregators.

Simon Hammon: There are costs associated with using an aggregator; however: this is offset by the speed in which content is made available especially when using the right partner, such as Relax Apex™, which can harmonise the entire approach to distribution.

Andrey Starovoitov: Game aggregation and game content distribution is one of the most competitive parts of the online gambling industry. The market is mobile and in a constant search for the best offer. For this reason, the price factor is crucial for customer retention. We are seeing an imbalance in the market in terms of price. Prices for the B2B segment can differ slightly or even be cheaper than for standalone operators. The lack of understanding among game studios in the need to form and maintain pricing policies for games will inevitably lead to a decrease in the game provider’s profit margins. Today, game aggregators are already competing for customers with game producers/studios, as many providers are trying to sway the operator towards a direct integration. All this makes it necessary to rethink the game aggregator business model and to compete based on non-price factors such as exclusive service, professional competencies and product features.

Can aggregation become as popular in the US as it is in Europe?

Enrico Bradamante: Yes. Even when Europe is very different and more heterogeneous than the US in the cultural aspect, each state has its own set of rules. Different states have been regulating iGaming at different times, and the licences required to operate are not the same. Mainly because of this peculiarity in the US legislation, the aggregation business model is effective there for all the parts of the chain. Also, local US companies have a long legacy of operating for land-based casino. Working with traditionally land-based studios to make their content available online is another big asset to be competitive in such a dynamic new market.

Simon Hammon: Heavy investment is required to enter the US market, and aggregators can help manage the right relationships, making entry less painful. In my view aggregation can become just as popular, as aggregators can offer crucial compliance and commercial support, allowing studios to focus on building games and reducing costs.

Andrey Starovoitov: Right now it is quite difficult to determine whether the aggregator business model will be viable in the US market. This is largely because individual regulation in each state is not a favourable environment for such a business model to develop. The success of the gaming aggregator model in Europe is mainly ensured by the availability of licences, such as the MGA, as well as a unified approach in terms of aggregator requirements from various European regulators. Only time will show the prospects for the US.