A white paper, not a white flag

Revenue sharing business models

NSoft CFO Igor Marković writes exclusively for Gambling Insider, delivering insight into revenue sharing business models in the betting industry

Revenue sharing has its advantages; I cannot say this is ultimately the best way in accomplishing KPIs (or profitability), but I can assure you it works.

Revenue sharing refers to firms’ practice of sharing revenues with their stakeholders. Thus, in this business model, advantageous properties are merged to create symbiotic effects in which additional profits are shared with partners participating in the extended value creation. One party can obtain a share of the revenue from another that benefits from increased value for its customer base. In short, it’s fair.

We believe the revenue share model NSoft prefers is the best way for both sides. It brings growth, prosperity, revenues and profitability for all parties included in this business solution. It is a partnership: in stable times companies grow and make progress together; bringing new solutions and becoming market leaders from both sides, by doing what we know best in our industry separately.

On the other hand, in bad times, and especially with Covid-19 restrictions, a client knows that even in such difficult circumstances, it has to have trust in its partner. A revenue share model means companies share good and bad results and it is in both parties’ best interest to always overcome obstacles as soon as possible.

This model is the most profitable solution in the long run. We see it every day, as understanding our clients’ needs and the specifics of every single market gave us specific insight. We believe it’s the best practice worldwide.

TRACKING REVENUE SHARING

As previously mentioned, in this business we are partners. Also, in the revenue sharing model, it is fully understandable and clear about how revenue is collected, measured and distributed. The events that trigger revenue sharing, such as a currency, period, price and hold are always visible to everyone involved, so contracts always outline these methods in detail.

REVENUE SHARE MODEL IN PRACTICE

If the operator has gaming revenue, the supplier receives a share of it. If the operator has higher revenue, then the supplier will get the same, if not an even smaller share of it.

On the other hand, operators can make losses. The supplier then can apply unique risk management systems, and continues to provide products and services without charging share in those periods of losses.

Benefits of this model for operators:

A clear benefit for the client is that there will be no capital investment needed to purchase a product or data. This is the biggest and most important item on the pro list. In this case, a betting supplier is the one who invests in the client, so to speak. This is sometimes the deciding factor for startups to choose one or the other operator, as the initial investment can be high and limiting for new companies.

Another opportunity and option for operators using a revenue share model gives the affiliate the freedom to work in their own way, in their own home countries. On the other hand, the supplier does its best and the affiliate does its best. It’s a perfect match.

DIFFERENT REVENUE MODEL TYPES

Of course, there are a lot of other revenue model types, including:

A transaction-based model, a classic way for any business to make money. The revenue from this is generated by directly selling an item or service to a customer.

Licensing/one-time purchases, entailing selling software products by licence, used by a single customer or a group of users; for example, a majority of video games.

Unlike licensing, subscription/recurring payment enables a user to receive access to the software by paying a subscription fee on a monthly/annual basis. Popular examples include Netflix, Spotify and Adobe products.

The pricing tactic with pay-per-use is mostly utilised by different cloud-based products and services that charge for the computing powers, memory, resources and time used. Examples of this are Amazon Web Services and Google Cloud Platform.

One type of monetisation app is freemium/ upselling, where a user may access the main project for free but charge for additional functions, services, bonuses, plug-ins and extensions. Companies that adhere to this are Skype, Evernote and many video games.

Lastly, and certainly not the least, there is also hybrid pricing, an advertisement-based revenue and commission-based model. Revenue sharing is a somewhat flexible concept that involves sharing operating profits or losses among associated financial actors. Revenue sharing can exist as a profit-sharing system that ensures each entity is compensated for its efforts.

WHAT’S NEW ON THE MARKET

Gambling Insider takes a closer look at some of the newest products on the market, as gaming companies work with creative new brands and concepts

THUNDERKICK: GODS OF ROCK!

Serving up a unique blend of gameplay, theme and blasting soundtrack in its latest release Gods of Rock!, Swedish game developer Thunderkick has another massive hit on its hands.

Gods of Rock! is a high voltage rock game that plays out on 6x4 reels with 466 connecting pay ways, in which the Gods have descended to shake the earth with their thunder riffs. With Thor on drums, Medusa on guitar and Lucifer himself as the lead singer, Gods of Rock! is one hell of a show!

The game comes with special Charged Wilds that land to increase reel multipliers and a gradually building crescendo of features that can explode into rewards of up to an incredible x20000!

We spoke to the team behind this untamed rock slot: What’s the story behind Gods of Rock!? With Gods of Rock!, we knew from the very start that we needed something intense & action-packed to jive with the hard-hitting mechanics of the game. We wanted to do something extra epic and thought, hey, what is more climactic than a full-blown Arena-Rock Concert! We also felt that we wanted to add that “Thunderkick-twist” and everyone was psyched by the idea of seeing well-known deities portrayed as rock stars, so we just went for it and didn't look back.

The hardest part was probably deciding which Gods and Goddesses to pick, as we wanted a good diversity in both mythologies and an equal guys-to-gals ratio for the band. We had to scrap a few interesting ones along the way but we’re very content with the final line-up, powerful, iconic figures that could easily be thought of as Gods of Rock! The game has had an incredible start, and many seem to really appreciate it which is very cool!

ARISTOCRAT GAMING: DUNE SLOT

In a first that changes the gaming industry forever, Aristocrat Gaming™ will release specialty Dune slot games in casinos timed to the US theatrical release of Warner Bros. Pictures and Legendary Pictures’ highly anticipated Dune film. This new game development is timed to a major film’s theatrical release, representing a landmark in entertainment and further demonstrating Aristocrat’s leadership and commitment to innovation. Furthermore, a release of this kind deepens the ties between the gaming and filmed entertainment industries.

“We are thrilled to have the privilege of releasing the Dune slot game alongside the feature film for the first time in company history,” said Jon Hanlin, Aristocrat Gaming’s Senior Vice President of Commercial Strategy and Business Analytics. “Once players leave the movie theatre, they can continue the story and fun on casino floors nationwide.”

An adaptation of Frank Herbert’s seminal Frank Herbert’s seminal bestselling book from bestselling book from Academy Award®-nominated Academy Award®-nominated filmmaker Denis Villeneuve filmmaker Denis Villeneuve (Arrival, Blade Runner 2049), (Arrival, Blade Runner 2049), Dune is scheduled to open Dune is scheduled to open around the world beginning around the world beginning September 15, and in the US September 15, and in the US on October 22 in theatres and on October 22 in theatres and on HBO Max. Dune the slot on HBO Max. Dune the slot game will feature a generous number of sights and sounds from the film with themed gameplay unique to the game.

Dune the slot game appears, appropriately, appears, appropriately, on Aristocrat’s new and on Aristocrat’s new and technologically advanced technologically advanced Neptune Double™ Neptune Double™ cabinet. Neptune Double cabinet. Neptune Double provides players with an provides players with an out-of-this-world theatrical out-of-this-world theatrical style experience with curved style experience with curved 49-inch monitors and 4K 49-inch monitors and 4K visuals, state-of-the-art sound, visuals, state-of-the-art sound, and a custom-designed, and a custom-designed, adjustable sound chair. Dune adjustable sound chair. Dune the slot game has a $500,000 the slot game has a $500,000 multi-site progressive jackpot. multi-site progressive jackpot.

Unique to Dune the Unique to Dune the slot game are new slot game are new mechanics such as mechanics such as multiplier stacks, multiplier stacks, which add increased which add increased volatility and excitement volatility and excitement to the base game, and to the base game, and frequent scatter triggered frequent scatter triggered features that use proven features that use proven game mechanics in new ways. game mechanics in new ways.