Posted in Industry August 9, 2019
NetEnt’s Q2 Revenue Drops
Starting a business and making it grow to a certain level is extremely tough. However, the real challenge begins when the maintenance period comes. Regardless of how optimistic the CEO and all employees are, growth drops are inevitable. However, the drop in revenue, especially over a larger period of time, can cause companies to panic.
Looking at the statistics, NetEnt didn’t have the best quartal so far, as their revenue dropped by 4.1%, down to just under 40 million euros in Q2 2019. Yes, that amount sounds massive, but that is exactly why that 4 percents are massive as well.
What Caused the Drop?
Answering this question is often quite hard, even for the companies that have the biggest experts in the world in their team. However, NetEnt explains that they needed to take legal actions to protect the IP rights to one of their biggest games. Although the dispute was settled favourably in May, the costs, as you can imagine, were extremely high.
Was it the right move for NetEnt to go ahead and spend millions of euros trying to protect their rights? Absolutely yes. It sets the standard in the industry and shows everyone else how relatively easy these cases are won. NetEnt is a huge company that can afford to take actions such as this one and, although we all know how expensive the court can get, they are a perfect example of how a giant company should operate and behave on the market. Smaller companies can have a hard time defending their rights due to high costs, but the investors are always there to support them if they are, of course, right.
Read all there is to know about NetEnt in our comprehensive breakdown – find it here!
The Nordic Countries
Besides the lawsuit, people from the Nordic countries seem to have been lacking interest in NetEnt’s games over the past three months, especially in Sweden. That is what hurts NetEnt the most because the company was established in Sweden back in 1996. The lawsuit most likely doesn’t have anything to do with this, which is why figuring out the drop becomes harder.
Therese Hillman, the CEO of NetEnt, confirmed the loss of traction in Nordic countries, emphasising the one in Sweden, and talking about lower ARPU and a drop in the number of active players compared to the previous results. She also said that NetEnt kept working hard by improving their technology, increasing productivity and aiming for the rise in market shares in all the markets.
NetEnt is Still Dominating
Regardless of the Q2 drop, no one can deny the impact NetEnt has in the online gambling industry and their relevance on the market. The news about the drop was interesting and of course unfortunate, but once we move away from that, NetEnt is actually doing extremely good. As a matter of fact, NetEnt took the top spot in iGaming’s Tracker for June!
NetEnt operates in 23 other regulated markets (excluding Sweden), which actually grew 1.7% in the second quartal. As we already know, they have recently penetrated the US market, which is actually where the majority of that growth is coming from. The US market is still relatively fresh and not all the freedom is given to operators, but once all countries agree with the already established federal legislation, there’s nothing that would stop the companies that have already been there to completely dominate the entire market. NetEnt is already out there, ready to take over the continent and offer their outstanding content to millions of people.
Should Players Worry About the Drops?
Unless you are an investor in some of the companies related to the online gambling industry, you most likely don’t need to think about this stuff at all. As a gambler, you want regular releases, high-quality content, and fair play, and all that is guaranteed with NetEnt. The company is doing its thing, establishing new subsidiaries, hiring different people, going through lawsuits, or anything else that might cause a drop in value. That is something that players shouldn’t worry about until it gets to the fair play part of the story, which is highly unlikely to happen not only with NetEnt but also with any other big company out there.
If the total number of active players drops, you should know that the company is going to do everything it can to get the traction back and acquire more customers. Who knows, maybe they will decide to do so by publishing an outstanding bonus deal which you can use to your own advantage.
As long as you are treated well and are enjoying your stay at any casino, the profit drops or rises shouldn’t affect your opinion about the quality of that casino, as it is 100% subjective. Reviews and statistics matter when you are looking for young, and relatively unknown operators, but the ones that have been in the industry for decades, such as NetEnt, earned their reputation by offering the best possible user experience.
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