Supply and demand: How B2B M&A moves became an industry hot topic

Industry headlines are, as a rule, dominated by the operator side of the business. The B2C giants, either breaking new ground in North America or facing gale-force regulatory headwinds in Europe, are always watched with an intrigued eye. Mergers and acquisitions are one such topic that can explode onto the scene, from shock bids to failed takeovers, it is always a juicy subject. A crawl to consolidation is now a charge, growing in stature, and pulling the B2B sector into its gravitational pull.

Supplier M&A, while a steady prospect in the past, is now mirroring its B2C cousin with rapid pace as multi-million-dollar moves are becoming more common. In April, for example, IGT announced it was set to acquire supplier iSoftBet in an all-cash deal worth €160m.

And last month, live casino giant Evolution bolstered its ever-growing portfolio with the acquisition of slots developer Nolimit City in a €340m deal.

Evolution noted its new acquisition is expected to generate €30m in revenue this year, with EBITDA of €23m as it adds to its slots content output which already includes the likes of Big Time Gaming, NetEnt and Red Tiger.

At the time, Jens von Bahr, Evolution chair, said: “With the addition of Nolimit City to the Evolution family, we extend our portfolio of truly innovative and cutting-edge games from the top brands and game makers in the industry.

“We have followed Jonas, Emil and their team for a few years and have been impressed as they have established a completely new style of slot games. I am proud that yet another of the very best minds in our industry has chosen to join the Evolution network,” he added.

Interestingly for suppliers, an M&A move doesn’t necessarily immediately present the boon that it would to operators. The thinking behind Entain’s acquisition of Dutch operator BetCity is more obviously understood compared to IGT parting with a significant sum to add 225 of iSoftBet’s proprietary games to its offering. But peel back the layers and the thinking becomes clearer. It is summed up by one word: scale.

Light & Wonder has been on an M&A spree in recent months, acquiring Elk Studios, Authentic Gaming, Lightning Box and, most recently, Playzido. Following the sale of its sports betting division to Endeavor, the Las Vegas-based company has firmly shifted its focus to dominating the gaming landscape.

Light & Wonder igaming CEO Dylan Slaney

Touching on the latest deal, Light & Wonder igaming CEO Dylan Slaney says it was a match made in heaven for the supplier. He comments: “The acquisition was a perfect marriage, bringing together Playzido’s agile technology and expertise in building innovative games to our global distribution and scale.”
A quick route to growth
With this new, refreshed focus on gaming, coupled with a rebrand, Light & Wonder has used M&A to power ahead. Developing the tech and expertise acquired via these deals in-house would be a laborious, time-consuming exercise. While it is not as simple as plug and play, onboarding via M&A is a potential fast-forward button to company growth.

Slaney explains: “Behind every acquisition, there is a lot of strategic thinking. With Elk Studios, they have helped fulfil our provision of content that appeals to EU players. With Lightning Box, it was a similar story for delivering new content to the US. Authentic Gaming gave us a new product vertical with live dealer, and Playzido has levelled up our rapid custom game development capability.

“We are always looking ahead to the future of the industry and will continue to invest in content and technology that supports our strategy to be the leading cross-platform global game company.”

Elsewhere, RAW iGaming has completed two M&A deals in quick succession after acquiring aggregator platform Leander Games in April and Sapphire Gaming in June. CEO Tom Wood tells EGR Intel how the need for greater expansion, with the supplier set to bring its SuperSlice technology to market, meant M&A was a perfect catalyst for growth.

RAW iGaming CEO Tom Wood

“With the creation of our patent-pending technology SuperSlice, and with more innovations on the horizon, it was important for us to achieve distribution quickly and, let’s face it, finding qualified talent in the industry today is a challenge. I wouldn’t say M&A is a leading strategy for RAW but more a means to an end,” remarks Wood.
Staying power
As calcification continues, and the big fish swallow up the guppies, it does pose the question of the role of startup firms in the supplier side of the industry. A litany of battle-hardened industry veterans have taken the leap within the last 18 months from the relative comfort of a larger firm to the choppy waters of the startup world. Former Yggdrasil duo Paweł Piotrowski and Grzegorz Przybyłowicz established Nailed It! Games in Poland and have since attracted investment from Velo Partners, while ex-Gaming Realms execs Daniel Lamond and Phil Halston launched their venture Rogue in February 2021.

And while a desire for autonomy and personal success has driven the quartet to their new plans, the success rate of a startup to survive on its own against stacked market conditions is slim. The chance to be acquired by a larger firm would bring a payday and praise for building a platform worthy of piquing interest. Slaney suggests some startups may well have an eye on this end goal as part of their growth roadmap.

He says: “I have little doubt that for many this is the case, but that is perhaps one to ask startup studios themselves. For our part, our stated quest is to become the global leader in cross-platform games and entertainment, and to that end we are always on the lookout for dynamic studios and providers.”

On the alternative side, smaller firms, such as Wood’s RAW iGaming, can use M&A to springboard growth, attack new markets and partner with operators in a much-reduced timescale. Wood describes M&A as a “means to an end” and champions his acquisitions of Leander Games and Sapphire Gaming as accelerants for the company’s overall plans.

“M&A has provided RAW with a time-saving opportunity as well as supported a rapid build-up of senior people to join our journey to roll out innovative approaches across as many markets and operators as possible.

“Looking at where we were two months ago, we only had the ability to launch in one regulated market with one operator. Now through our M&A activities, we can launch across more than 200 operators and 14 regulated markets. M&A has allowed us to scale much quicker than we otherwise would have been able to if we grew the company organically,” notes Wood.
Crystal ball
As the supplier industry continues to develop and capital available to the major players continues to accumulate, M&A machinations will hang in the air.

This, however, does indicate another step to quasi-oligarchy, with only a handful of suppliers dominating the market and hoovering up potential newcomers. Once again, a reflection of the B2C industry, the two entwined.

888 is set to take over legacy brand William Hill, while the US giants are always on the lookout, acquiring a potential challenger and pacifying a threat by welcoming a company in with open arms. Light & Wonder’s Slaney predicts further consolidation is a likely outcome, with benefits widespread across the industry, from the acquired firm to the end user.

He adds: “There is always space for additional consolidation in a global market as competitive as online gaming, particularly given the large-scale opportunities that exist in North America. As a supplier, while we gain from M&A in terms of market share from those operators who value our improved offering, so too operators gain the benefit of a solution that is superior to that they could expect when pulling in content and technology from a variety of sources.”

Wood also notes RAW is “always interested” to acquire a good business and good people, and will continue to action M&A to power the company’s expansion. The CEO explains the next stage of growth as moving on from its startup roots and establishing itself as a major player, something that would have been years in advance had he relied on organic growth.

“We are just going from startup to scale-up, so we are extremely busy. We have new offices and teams in four different locations and the key right now for us is a continued focus on building a strong team, sustainable platform and acquiring strong content partners,” he states.

While the fervour and febrile atmosphere surrounding B2C firms continue at quite some pace, especially in the public markets, heads could yet be turned to the supplier side of the industry. With several companies now publicly listed, and the appetite for M&A showing no signs of abating, the industry headlines may well start to read differently in the coming months and years.