Video game company gambles on internet gambling

[boczom1]

kinda interesting...

http://www.nj.com/business/index.ssf..._river_default

EDISON — One crowd rolls dice, the other rolls its hips.

Usually, Atlantic City casinos and video game publisher Majesco Entertainment — maker of the wildly popular Zumba Fitness games — see little overlap in their customer bases. That changed last week.

The Edison game company acquired social casino game developer Orid Media and Isle of Man online gambling operator Pariplay, which already has a catalog full of slot and scratch-card games, as part of its new venture to push into a growing market.

Consumers worldwide spent more than $9 billion downloading apps last year and more than two thirds of that money was spent on games, according to data from Apple’s iOS App Store.

"The biggest difference with this is a different revenue model," said Michael Vesey, Majesco’s senior vice president and chief financial officer. "A lot of the games you play online are freemiums. You play some of it for free and people who really enjoy the game spend money within it. In the retail model, a customer spends $30 or $40 one time and then your relationship with them is over until they want a new game."

The expensive consoles that users need to play pricier games, like Microsoft’s Xbox and Sony’s PlayStation, have started to lose their hold with casual gamers.

In early June, more than 35,000 game industry professionals gathered at the Los Angeles Convention center for E3, short for Electronic Entertainment Expo. There they were introduced to the Xbox One and PlayStation 4, but analysts were quick to question whether the companies would bother with an Xbox Two or PlayStation 5 given the state of the market.
mike-vesey-majesco.JPGMichael Vesey, Majesco Entertainment's Senior Vice President and Chief Financial Officer, directs a kinetic gaming system through the use of his hands movement. The headquarters of Majesco Entertainment, an Edison video game publisher that's making the jump into online gambling. Aristide Economopoulos/The Star-Ledger

"Will there be a next generation in about eight years? It won’t be in the shape and form we know today with consoles," Peter Warman, CEO of gaming industry research firm Newzoo, told Forbes just before the conference started. "It could be something you plug into your TV and gives you access to all the stuff. You might want an Xbox dongle for exclusive IP that works with other screens. I don’t think it will be a box like we have now."

Majesco’s Vesey was reluctant to paint too vivid a picture of how the publicly traded company — its ticker symbol is COOL — would combine its 26 years of experience in the industry with the online gambling talents it acquired by way of Orid and Pariplay.

But he was sure of one thing.

"We’re going to register for a license and if someone was licensed in New Jersey and operated a casino, we could provide content services to them," he said. "The big players in the casino business and lottery business, you could try to muscle it out with them and take their position. The other way to go about it is that now they’re facing this transition for internet gaming, they need partners with expertise. That’s where we see possibilities."

Companies that do business with casinos — everyone including grocers, trash haulers and sign makers — have to be registered as active vendors with the New Jersey Division of Gaming Enforcement. Neither Majesco nor GMS Entertainment Limited, the name of its new venture, were on the list yet late Thursday night.

Even before GMS gets its online casino games operation off the ground, its parent company, Majesco, already has one thing in common with Atlantic City casinos: A recent history of troubling earnings reports.

In New Jersey’s famous beach resort, revenues have been on track to sink to 20-year lows as casinos in other states compete for revelers and their dollars. For Majesco, it’s aging game systems and a drifting target audience that have done the most damage.

During the second quarter in 2012, Majesco Entertainment earned $27 million, or 89 percent of its net revenue, from games sold for the Nintendo Wii and Xbox 360 consoles. Just a year later, the company’s second quarter report tells a different story: $7 million from games sold for both systems. That was 72 percent of the company’s net revenue for the second quarter.

Those numbers have lead CEO Jesse Sutton to call this a transition year for Majesco.

"I am incredibly excited about this opportunity in the fast growing online gaming market and partnering with these talented individuals," he said in a release about the deal. "During this transition year in console gaming, we have been actively exploring emerging growth opportunities in the social media and online casino gaming industry to supplement our existing business."

If more states follow New Jersey and Nevada’s lead legalizing internet gambling, it could create more customers for the Edison firm and make the venture a success.

Scott Steinberg, head of the video game consulting firm TechSavvy Global, said this isn’t the first time Majesco tried its hand at social games.

"This is a company that has previously tried to enter the social and casual game space without tremendous success and obviously they believe what’s happening will grow rapidly and isn’t as much of a, pardon the pun, gamble," he said.

The company previously opened a studio in Massachusetts where it sent a team to develop games that would work on the social network Facebook, but closed it in January and laid off 14 employees.

Majesco has a more measured approach this time around, acquiring companies with proven talent and agreeing to invest between $3.5 million to $4.5 million in the venture depending on its success.

It’s a low entry fee for what could turn out to be a gold mine, said Steinberg.

"The average amount of revenue that can be gained per user is many times that what you can get from someone who’s just walking into a store and buying a game," he said. "Especially when you think about the the sort of children’s brands and licensed projects that have been brought into the space. In terms of video games, what they’re investing for this new venture would cover only a percentage of what they would pay to develop another console game."

[The Buzz]

Majesco Entertainment acquired social casino game developer Orid Media and online gambling operator Pariplay. The move is an indication that Majesco -- maker of the popular Zumba Fitness game -- is trying to push into the online gambling market.

One interesting tidbit from the story: "Consumers worldwide spent more than $9 billion downloading apps last year and more than two thirds of that money was spent on games, according to data from Apple’s iOS App Store."

Buzzy alone accounts for roughly one-sixth of that $9 billion total.

http://www.nj.com/business/index.ssf...ambles_on.html

[Anthony]

I merged the two threads together. Buzzy, you have to keep this reckless behavior in check, Rick is just looking for a reason to spank you.

[Renee]

Buzzy, you have to keep this reckless behavior in check, Rick is just looking for a reason to spank you.

Can we get a video of that please?

[baldidiot]

Can we get a video of that please?

Perve!

[Renee]

You know it!