The importance of aggregation

31 October 2019

Despite fierce competition, Relax Gaming chief product officer Simon Hammon believes there are still opportunities for smaller studios to disrupt the market leaders - but only with effective game distribution.

The healthy explosion of new game providers onto the market has accelerated over the past 12-18 months, loosening the grip of large suppliers yet further and putting their share of pocket under pressure.

With this increase in competition, the landscape within which suppliers thrived a few years ago has changed dramatically. M&A continues as a driver for expanding market presence and diversity of content, with the benefit of consolidating core competencies, but this is no longer the only end goal for small studios.

Comprehensive distribution agreements that offer rapid and extensive market penetration, with fair and transparent commercial terms, can provide a critical path to success in their own right. Good strategic partnerships are now the major drivers of success, particularly where the chosen route to market reduces the period of pre-profit investment.

Sea of content
There are still many barriers to entry for start-up studios going it alone, from the heavy overheads associated with any tech industry, effective cashflow to pay for operations to critical regulatory commitments. The list of potential hurdles is extensive, and operators now have a huge amount of content choice each month with upwards of 70 game releases vying for launch promotions and positioning.

In this landscape, the main issue for smaller providers is how to gain that initial player visibility and the subsequent stickiness of their games. Working with aggregation solutions can provide wider market opportunities and remove a lot of the entry burdens – but the content must do the rest.

For small studios to cut above the noise they need support to showcase innovation. Being nimbler and more agile can serve as an advantage against established suppliers which have seemingly reduced quality on the larger scale by releasing skins or mechanical mishmashes of previous successes.

Ironically, in a sea of content with highly perceptive end-users, the imitation strategy is allowing small developers that offer something different to quickly carve out market share. Aggregation provides a quick and efficient route to market with sales and compliance support and significant cost reductions, allowing studios to focus on what they do best - developing games.

Picking and choosing
Finding the right aggregation partner is therefore a critical path in any growth strategy. Aggregators have the keys to open much needed doors for studios regardless of the size of their portfolio, so they need to ensure that their partner is like-minded in terms of business approach and quality. The market is already full of those who reproduce the same type of content.

For a partnership that will work to optimise business efficiency and deliver value to an aggregator’s integrated customers, both parties must share the same long-term vision of what they want to achieve – particularly in terms of content strategy.

In the last few years it has become increasingly difficult for studios to form direct relationships with operators. Without experienced aggregation platforms, many suppliers simply would not hit the critical volumes to drive interest in a direct integration and reach markets or operators on their own.

But equally, what happens when a studio reaches significant scale and decides to go it alone? An aggregator that tries to pin down a supplier even when that ultimately stifles the studio’s growth is not offering a partnership. When a studio reaches a good market share, they need options to help them to grow their independence in any way that aligns with their business strategy – whether it be commercial, compliance or technical.

An aggregator should not hamper the growth of the studios it fosters in their early days. One that supports and realises the growth ambitions of a studio is one that will maintain a longstanding partnership.

Effective content distribution requires transparent and fair commercial terms that provide studios with the tools they need to reach significant scale. Consolidation will always be a driving force in an industry as saturated as the online casino market, but with the right aggregation partner, the odds of making the big-time independently can be significantly shifted in a studio’s favour.