Acquisitions of successful companies is nothing new in the iGaming space. However, we have often seen existing developers purchase live casino software providers. Best we can tell, this is the first time the opposite has happened. These two companies combining would create an industry giant like no other! What would such a union mean for the live dealer industry and iGaming as a whole?
Details of the Deal
Rumours about this deal have been floating around for a while. However, in a statement of the 24th of June, NetEnt’s board of directors confirmed that Evolution Gaming wanted to acquire NetEnt. Not only that, but the board unanimously recommended to shareholders to accept the offer.
The offer values an individual NetEnt share at SEK 79.93. Evolution Gaming announced it would offer 0.1306 of its own share for each NetEnt share sold. This placed the entirety of its offer to an impressive SEK 19.6 billion based on closing prices on 23 June 2020. Evolution said they do not plan to increase the offer.
Shareholders have been given some time to weigh their options. The acceptance period commences on or around 17 August 2020 and will expire on or around 26 October 2020. Given that NetEnt’s board gave their approval for the acquisition, it is hard to imagine shareholders saying no. Not when it will create an iGaming giant few software providers will be able to compete with.
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What It Means for NetEnt and Evolution
Despite the massive earthquake this is bound to cause, we do not think many things will change for NetEnt. The reason we think this has to do with Evolution Gaming’s treatment of Ezugi after they acquired them in 2019. Even after the company was bought out, they were still given a fair amount of autonomy. Ezugi continues to be a separate brand and has continued to thrive.
We believe NetEnt will be given a similar status. The company’s name is legendary among online punters. It has become synonymous with fantastic online slots. However, NetEnt’s live dealer division has not reached the same prominence. While they have created a few interesting games, they are nowhere near on the same level as Evolution Gaming.
NetEnt Chairman Mathias Hedlund said “Evolution’s position within live casino combined with NetEnt’s position within online slots will create a company well positioned to take significant market shares”. Due to this quote, we predict that NetEnt Live will be dropped or significantly reduced. The company will instead refocus on slots, and let Evolution Gaming take care of the live casino side of things.
What It Means For the Industry
There is no doubt that the live dealer industry has grown rapidly in the past couple of years. However, larger companies quickly snatch up new developers that enter the market. We already mentioned Evolution buying out Ezugi. Pragmatic Play acquired Extreme Live Gaming to serve as a backbone to their own new live dealer wing. No matter where you look, you see the same trend occurring.
For the time being, the downsides of these acquisitions have been minimal. In the case of Extreme Live Gaming, we have seen many of their games disappear, including the popular Golden Ball roulette variant. This is always the scary part of consolidation. The fact your favourite game may disappear to make room for something else.
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However, we think what happened to Extreme Live Gaming is an exception, rather than the rule. We remain optimistic for two reasons. First is Evolution Gaming’s exemplary track record with acquisitions. Ezugi’s entire library remains untouched, and they continue to operate with autonomy. Our second reason is the huge amount of competition in this space.
Playtech, Pragmatic Play and many other developers will force Evolution Gaming to stay on its toes. While Evolution acquiring NetEnt is undoubtedly big news, it will not radically alter the live dealer industry. We may see fewer NetEnt Live titles in the future, but it will not decrease the diversity of games. In fact, with both Evolution and NetEnt under one umbrella, we expect to see increasingly impressive live casino releases!