Recently one of South Korea’s gaming giants, Netmarble, bought a social casino platform SpinX that is based in Hong Kong. The scope of the deal and its implications make it one of the most interesting and the most influential deals in 2021 when it comes to the online casino industry.
If you’ve been following the news on companies that create and promote casinos online in the Asia-Pacific region, namely in Australia and South Korea, you’ll be interested in staying on this short read to keep the hand on the pulse.
One of the largest deals in the industry
While the sum of the deal is nothing unprecedented in the world of regular land-based casinos, when it comes to online casinos, this is a sensational deal. The South Korean giant purchased this company for a whopping $2 billion! That’s one of the biggest deals in this industry and it made international headlines.
However, it could be argued that spending so much money was a great decision on Netmarble’s part. According to SpinX’s financial statements, the company raked in more than $400 million in sales. With the financial statements for the first two quarters of 2021 showing sales of over $250 million, it’s clear that this company is growing fast. In fact, it currently ranks third in sales in its niche. This is probably why Netmarble decided to make the move fast and buy the company before it’s become too large for an acquisition.
Netmarble broadens the business
Netmarble itself doesn’t have gambling and online casinos as its core business. Its main money makers are mobile games, notably ARPG fighting titles like Blade & Soul: Revolution and Seven Knights. The latter was also released on Nintendo Switch, which is a first for Netmarble and a great pride for the company according to their website and official statements.
Why did the company decide to tip the toes in the online casino business if their main thing is selling adventure games? Social casino market is a lucrative opportunity, to say the least. SpinX raked in over $400 million in profits in 2020 with the core product being rather simplistic games. Netmarble, a company that creates rather complicated mobile and console titles, managed to generate 2 trillion Korean Won in the same year, which is just shy of $2 billion. It could be argued that adding another half a billion to that with a relatively easier production process is a rather desirable goal for the South Korean company.
SpinX Games Limited is a Hong Kong based company that ranks third in the Social Casino industry and is projected to net over $500 million in sales this year. Its main products are Social Casino games, casino-like games that are available for download on both Google Play and App Store.
Even though the company is one of the top earners in the industry and is among the fastest growing companies right now, the founders decided to go along with Netmarble’s offer and sell 100% shares to the South Korean casual game developer. It’s not stated publicly whether the founders of SpinX are going to stay in the leading positions in the company but it’s safe to assume people who created such an income machine are going to want to keep building it up.
What is social gambling
Why did Netmarble even want to get into social gambling? You may need to know what social gambling actually is to understand their decision. Social Casino or social gambling is a $6 billion market that seems to be one of the fastest growing ones in 2021. The allure of this industry to consumers is rather simple and captivating in its simplicity.
Social Casino apps like Cash Frenzy made by SpinX are available on Google Play and App Store, which make them easy to consume for the customer. The app features a casino-like slot game that has all the fun of your typical online casino slot — the juicy symbols, the actively animated spins, the flashy lights when you score a bonus or win a decent sum of money.
However, it does have a caveat that lets it operate from the official platforms unlike regular online casinos. Social Casinos are meant for entertainment only, not gambling. What this means in practical terms is that you can never win any money in a Social Casino. You deposit the funds needed to spin the slots, but you can only use the winnings to keep spinning them. You can’t withdraw the funds, naturally, because that would be considered gambling, and neither Google nor Apple would have that kind of game on their platform.
While this seems a bit unfair to the users, this business generates over $6 billion per year and growing. This is why Netmarble’s gamble is probably going to pay off in the end. With the company’s capital and marketing resources, it may very well make SpinX not the third but the first in the industry and earn close to one billion each year in three or more years.
Now, if casino players want their gamble to pay off, they should probably look for a real online casino that offers withdrawals to its players instead of simply showing a nice picture of spinning reels and promising nothing else in exchange for their money. If you do look for one, keep in mind that it has to be legal in your country as it is in many countries like the UK, and from 2020 in the Netherlands.