The team of KTC looks into the prospects of post-COVID online gaming and weighs in on how quickly the industry can recover after the major hit of international lockdowns.
While the world is still battling the pandemic and countries of Europe, Asia, Oceania, Africa, North and South Americas brace themselves for the COVID-19 winter wave of 2020-2021, it is time to take a look at how the lockdowns already impacted the online gambling industry.
Prior to the virus spreading and paralyzing all aspects of life, many businesses, including online gambling, were riding a fast wave towards major growth. Experts predicted a dramatic jump from USD 53 million documented by the end of 2019 to USD 95 million anticipated by the end of 2025.
The major chunk of this pie belonged to Sportsbooks, with one of the biggest markets, the USA, experiencing an unprecedented thaw in local legislation and letting states regulate online sports betting. If we’re talking the most promising and quickly emerging new market, the heads of the investors and businesses were turned in the direction of Asia.
By the end of the summer of 2020, the industry reported a decrease of about 25% in revenues, H2GC sums up. Most of it, around 15%, was registered during the first months of the pandemic, with a steadier, less dramatic dive of 10% maintained over the next few months.
Out of all the markets, Asia showed a consistent decline since February, with the countries of the region being synchronized in reacting to the preventative actions and closing countries in a unified and well-rehearsed manner. The numbers in gross wins for this region dropped by 30%.
North America managed to maintain a sinking ship above water up until the middle of March, and then the gross wins plummeted within a week, resulting in up to 20% in losses.
For Europe, downgrades look more like a mosaic of ups and downs, most of these due to the fact that different countries of the continent approached handling the lockdowns differently. Spain, for instance, closed everything entertainment-related for spring but reopened in summer. For the European online gambling sector, the losses reached a mark of 25%.
During these turbulent times, many major brands reported partial or permanent closing of certain services, venues, and/or productions. When commenting on the impact of the COVID-19, Playtech admitted in its financial report a loss of about 4 million Euros across its Sportsbook services per month before mitigation, and also a significant loss of earnings across the gaming sector.
The company already closed its Italy-based Snaitech, reporting a total loss of €3 million of Adjusted EBITDA a month before mitigating actions. It also had to let go of its Austria and Germany-based HPYBET after a decline of €0.5 million Adjusted EBITDA a month during the isolation period.
The company tries to stay optimistic about the prospects, though: “Playtech’s Poker and Bingo businesses have seen increases in activity in recent days following the restrictions on physical movement put in place by various governments. The company believes there is a risk that player behavior changes the longer the COVID19 situation continues”, the report states.
Evolution Gaming, though it had to temporarily close its live studio in Georgia, is also looking into the future with hope. “It is a turbulent time and it is inevitable that COVID-19 also impacts our business, but all employees are now doing a hard and fantastic job. Calm and methodical with the right decisions every day, we are slowly moving forward. We work in a precautionary manner and according to national guidelines to protect the health and safety of our employees. We have a strong financial position, and in the midst of all this, we experience a high demand for Live Casino. With the safety of our employees as a priority, we are doing our utmost to continue delivering the market’s leading product”, says the company’s CEO Martin Carlesund
KTC has kept the hand on the pulse of the industry throughout the turbulent months of the lockdowns and we must admit that while the industry, in general, took a plunge, there was a particular sector that not only escaped losses but also showed some growth. We are talking about the game development sector that grew by 6% from the start of the year 2020.
For the developers, the self-distancing measures were not much of an obstacle, with freelancers creating content from home, and the teams organizing the workflow via online meetings. During the year 2020, our portal added quite a few startups to the database of slot developers, including Bang Bang Games, Slotmill, and Arcadem.
Launched on the verge of the year 2020, Gamzix recently shared its experience of surviving the turbulent times of the pandemic as a young business, with our portal. When commenting on the challenges, the CEO of the studio Aleksandr Kosogov said: “Every time when there is an economic crisis it’s a time of new ideas. Everyone who cannot change his mind and adapt to new rules will lose. We can’t change the situation in the world, but we can change our perception to it, even if we need to start everything from scratch.”
The prognosis from H2GC is that growth-wise, things will get back on track for the online gambling industry by 2025. After this year, the industry will be done catching up with the time it lost during the year 2020 and will start showing a significant increase in revenues again.
When reflecting on the predictions form H2GC, the team of KTC could not help but wonder whether this is too optimistic an expectation that the growth will bump back to normal by 2025. The behavior of players has changed, and the industry must still catch up with the new normal. This means an innovative approach to services, new and immersive experiences, and lots of other dramatic turns in how online gambling is now expected to be delivered.
Although, it looks like some of the online casinos are already adjusting, with Casino Heroes and Lucky Bull introducing new realities and immersive experiences within their platforms, and software developers like Evoplay Entertainment rolling our debut role-play slots like Dungeon Immortal Evil.
This won’t be a fast climb up back to the top, that is one thing we can say for sure. But it looks like a very productive one, too.