Opinion: Start me up

Adi Dagan, CEO of gaming marketing optimisation specialist Beehive, on why a lack of start-ups entering the egaming industry will lead to market stagnation 

The online gambling industry is going through a period of major consolidation. The weak are being swallowed up by the strong, and the powerful are becoming, well, more powerful. Mergers like Paddy Power Betfair and Ladbrokes Coral have sent shockwaves through the sector, with the ripples likely to be felt for a long time to come. And while these deals mark the start of a new and exciting chapter for global egaming, they look set to close the book on a vital component of the industry – of any industry, in fact – and that is the start-up.

Whether it’s because they perceive the challenge of going toe-to-toe with the big boys to be one marred by futility, or whether it’s because of the mountain of cash, energy, time and stamina often required to bring a product to market, there is currently a lack of new companies entering the fray. And this should be cause for concern for all associated with, and operating in, online gambling markets around the world. For without start-ups we are starving ourselves of innovation and creativity, of seeing things differently and taking a fresh approach.

Lean and nimble  

Start-ups are lean and nimble, and foster new concepts and ideas; they have to in order to stand-out from the also-rans. Unlike the cumbersome titans of the industry, they can focus on their product rather than the day-to-day operations of a large-scale business, bringing it to market quickly and efficiently and without compromising on quality. Such companies are often staffed with some of the brightest minds and technical talents, who can breathe life into a market struggling to find its next truly innovative product. In short, they can do everything that the big-players in the market no longer can.

There are exceptions, and Israel – particularly Tel Aviv – has made a name for itself as a hotbed and spring board for start-ups. Following the success of Playtech, Playtika and 888, which innovated out of the city, small tech firms have looked to base themselves there in order to grow their business and make a name for themselves. It is not uncommon to bump in to major investors in town searching for the next industry start-up acquisition target. It’s an exciting place, and one that has given birth to companies and products that have changed the game for online gambling.

Fast feet

Here at Beehive, we are also lucky to call Tel Aviv our home, and as a start-up ourselves understand just how difficult it is to bring a new company, brand, and product to life. Hell, it’s almost impossible. Our approach has always been to think and move quickly, while being aggressive and direct when the situation requires us to do so. And since we launched in 2011, it has been an effective strategy for us. It has meant that we have not only kept our head above the water, but we have been able to build a successful and sustainable business.

But we are just one of a few, and the industry as a whole needs to do more to welcome new companies into the fold. The mobile channel is particularly ripe for innovation, and we’ve seen a number of operators emerge in recent years by focusing on the platform.

Without start-ups, the online gambling industry will stagnate and decline. Large operators and suppliers are simply juggling too many balls to be able to drive innovation and deliver new and compelling products and services to market. The mega mergers may have hit the headlines in recent months, but the real story is about a lack of new companies throwing their hats into the ring. And this has to change.