Several factors will drive sequential growth. The primary driver will be the ramp-up in players' awareness of online gaming as a result of operators' marketing efforts. Online operators' executives have been open about the importance of marketing aggressively early on, which is at least partially driven by the industry's tendency to consolidate around two or three major operators. In
Online gaming advertising is abundant as one drives through
Other factors driving growth include technology improvements, users' adaption to the available payment methods and rollout of mobile products. One issue reported early on was instances of false negatives when identifying the location of the players (a player needs to be within
The adaption to the available payment methods by players could be a longer-term and more serious issue than the early geolocation hiccups. Certain banks affiliated with Visa, MasterCard and American Express are not processing online gaming payments (reportedly MasterCard transactions are more widely accepted due to how the company codes gambling related transactions). All sites offer direct deposit as a payment method although deposits/withdrawals may take two days or longer to process. Alternative methods offered by several sites include payments at 7-Eleven locations and/or the use of Skrill, a payment processor site that can be funded with paysafecards available at select convenient stores and supermarkets.
The lack of convenient payment options will slow the adoption rate of online gaming as potential players are turned off by waiting for a deposit or withdrawal to process or by having to find a nearby store that facilitates payments. Longer-term people will adapt to the available payment methods and some banks will find increased comfort with the legal framework around processing gambling related payments.
In the near-term, operators also have levers to increase trials, such as ramping up promotional spending.
The roll-out of online gaming on mobile devices can also speed up the rampup process in
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
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