Writing for CasinoBeats, Double Up Media Director Pavlos Sideris asks whether the trend of acquiring smaller game developers is resulting in less innovation across the slots sector.

It’s rare to find a slot site lobby that stands out, offering a different range of games or promoting newer studios and content front-and-centre. The industry has become homogenised to the same lobby front page. Yet, it’s no secret that innovation typically occurs at the bottom of the market, where the pace of competition for exposure is the fiercest, and thus the need to disrupt the market is the greatest, not the top.

With a bottle-neck created by slot sites  that only grant exposure to a handful of the most prominent, popular developers and games, is it even possible to break through, or is the lack of diversity killing innovation in slot site lobbies?

Big names dominate: market monopolies, acquisition, and absorption

Despite slot games being a competitive industry that sees multiple new developers hit the market yearly, slot site lobbies seem stuck repeatedly listing ever-popular titles. Starburst, Book of Dead and the oversaturation of Megaways remakes permanently filling the top row leaves little space for new additions. So prevalent are these titles from the front-running studios; some say they’ve earned the industry nickname, “the Swedish mafia”.

We know from the movie, music and more general gaming industry, along with a multitude of academic research, that when market bottle-necks and monopolies significantly affect a market, they do not facilitate innovation. This is a stance taken by many traditional economists, who argue market monopolies stifle innovation, promoting a lack of competition and patenting new tech only to consolidate the leader’s market position rather than encourage revolutionary products.

In the igaming industry, there is a growing trend toward larger studios acquiring newer game developers or forming distribution partnerships. This is often a strategic move in markets like the USA, where licenses are hard to come by. However, depending on how much you adhere to traditional economic arguments, this could also be seen as the more dominant studio ensuring its top spot through absorbing innovation. Strategic acquisitions have been practiced by Scientific Games (now Light & Wonder), Microgaming, and Evolution Gaming (who recently acquired Red Tiger, NetEnt, and, in June, Nolimit City).

While the precise effects of such acquisitions on innovation in smaller studios are unclear, it’s fair to presume that it could affect innovation negatively, as some level of assimilation with the larger studio is bound to take place, affecting operating practices and potentially the product range (which is one of the reasons market monopolies and acquisitions are closely regulated in some markets).

On the other hand, if players are exposed to appealing game content and the smaller developer gets recognised through better lobby positioning, isn’t it a win-win scenario? The answer depends on how much the studio has had to adapt and how they are managed going forward. It must also be considered that the need to innovate is lessened if the smaller studio is acquired.

Innovation: a bottom-up process.

Over the last decade, a significant proportion of the industry’s biggest game innovations have come from newer studios carving their place in the market with disruptive originality. Big Time Gaming, Relax Gaming, Nolimit City and Evoplay (the minds behind the revolutionary Star Guardians slot) are great examples.

However, this showcases a small sample of success stories, with the majority going undetected. The fact that we can point to these examples shows the demand for new games and styles, suggesting that the repetition in games lobbies is not player-led. Even the lobbies of the best slot sites don’t seem to make a big deal out of some of the industry’s biggest games.

Many game studios create innovative new mechanics and concepts, but barriers to success include slot site interest, game marketing, and exposure. This typically leaves new studios with the choice of paying for lobby space and more exposure (increasing the chance of game success), taking less revenue for better positioning, or partnering with a bigger studio.

Paying for space or taking less revenue are strategies that could pay off in the short term (if the studio is successful) but are not sustainable longer-term as it increases financial pressure and operating constraints. While the option of joining a more extensive distribution channel under an almost conglomerate-style business model may alter innovative practices within smaller studios (as discussed above).

Ways forward to a solution?

Is the lack of disparity killing innovation in slot site lobbies? Most likely, yes, as it makes it more difficult for new games to reach audiences and for smaller studios to be successful. As a player, it certainly makes it harder to find an online slot site offering unique games, which, going by market trends, are in demand.

Exposure is in the hands of slot site managers, who have constraints, including space and finance, but more chiefly, player preferences (they must first supply the most popular, revenue-generating titles). Even with exposure, only the right games that are well-designed, easy to understand, graphically appealing and well marketed are likely to grab players’ attention.

There is, however, a solution; slot sites should foster innovation by keeping a portion of lobby space for up-and-coming developers, allowing them to reach the market. With more chances of exposure, there are fewer barriers to innovation, creating a more competitive landscape, which would ultimately push the whole industry forward.