Events
IAGA SUMMIT New York 2017
In the US, we are seeing a lot of new entrants concentrating upon new technologies, such as virtual reality. When the shift to the adoption of HTML5 took place, we saw a lot of new entrants into this sector. If you are innovative and you’re quick then there are a lot of opportunities. I think we’re in a good space in terms of new entrants right now.
I think there’s a lot of new technology options for start-ups to focus upon too; on-property mobile, mobile tournaments, virtual reality, social gaming etc. Tere’s a lot more innovation in technology today that have direct applications in the gaming industry, which provide niche opportunities initially that make it somewhat easier to be a start-up now. When we started True Blue, there were five manufacturers with proprietary platforms operating in a much more rigid regulatory framework. So I would say overall, there are more opportunities for start- ups in gaming industry today than ever before. Te only caveat being that if you’re going to provide traditional slot cabinets with a platform and 50 line video slots, that opportunity has sailed. Today, there are around 20 manufacturers instead of just five, and launching into that particular space would be much, much harder.
Are we seeing a healthy volume of new startups entering the gaming sector?
If you separate Europe and the US, Europe seen a lot more startups, new entrants and competition in the market because the regulatory compliance bar is simply not as high as in the US. Tere are opportunities to shelter under existing licenced entities, which mean the barrier to entry in Europe is a lot lower, particularly from the compliance side. Te downside to that is that there are now more content providers in Europe than the market actually needs.
In the US, we are seeing a lot of new entrants concentrating upon new technologies, such as virtual reality. When the shift to the adoption of HTML5 took place, we saw a lot of new entrants into this sector. If you are innovative and you’re quick then there are a lot of opportunities. I think we’re in a good space in terms of new entrants right now.
P50 NEWSWIRE / INTERACTIVE /
247.COM
How do you ‘handle’ venture capital and angel investors involvement in the business and how do they handle the word ‘gambling?’
It’s a bit of a double-edged sword. A lot of investors get very excited about the word “gambling” because they think of it is as a very fruitful industry in which casinos are cash-cows licensed to print money. However, on the other side there are certain companies with ethical issues about investing in gaming, so I think the focus for any startup is upon finding the right kind of investor. Tere is a pool of startup investors especially focused on gaming, so it’s a lot easier if you approach this group first.
As regards ‘handling’ the investors, there are ways you can manage investment without triggering licensing issues that are all above board. It all depends upon how deep the investor wants to get involved in the business. Generally, the trigger is over 4.9 per cent, at which point they need to be licensed. Tere are others way to achieve this with a convertible note, whereby they lend you the money under a debt scenario that has an equity trigger upon a material event. When that event occurs they’re out of the business, so there’s no need for them to be licensed. And if licensing is an issue for the investor, especially if they don’t understand the landscape (it’s a lot of work, time and disclosure of personal information after all), there are creative ways to achieve your goals, but getting advice from regulators is always adviseable.
Is hiring the right staff for a tech startup both complicated and expensive?
From a compliance perspective it’s normally just your senior people that need to come forward for licensing, which is something everyone in the gaming industry has to deal with. You have to be aware of it and tick the right boxes when you employ people.
One of the issues that is really important is geography. If you setup your startup in San Francisco then you’re going to be paying astronomical salaries. However, one of the great thing about the US is that there are a lot of regional areas that have a lot of great talent that aren’t necessarily in Seattle, Los Angeles or San Fransisco, where the cost of living is so expensive. We are based in Reno and have a very good relationship with the university here.
From a programmers’ perspective we employ a lot of people from UNR directly out of the computer sciences department, which means we employ great people at a reasonable salary.
It’s been extremely successful for us as people coming out of college want to work hard, buy their own home and pay off thier student loan - so they are both motivated and maleable in terms of being molded to work within our business culture. Overall, Reno has been a fantastic environment for Spin Games. We came in at the right time in which there were a lot of technology start-ups in the city creating something of a hub, which has expanded a lot since then.
Spin Games has been going twice as long as True Blue. How do you manage the growing pains of scaling a startup business?
Scaling the business comes down to your objectives. If you want a nice lifestyle business that grows organically, that’s a very different scenario to one in which you’re seeking to turn the company into a US$100m business. If you really want to leverage the business then you need to inject additional, substantial capital, which changes a lot of the dynamics in the business. Te fundamentals of that, obviously is that you have to show a growth trajectory and have a clear idea of what that capital injection would do to take you to the next level.
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