Published on the 2021-02-18
It might come as a surprise to learn that Sweden only recently (in terms of online gambling timelines) became regulated in January 2019, despite having a number of very strong brands operating particularly successful in the Swedish market.
Arguably one of the leading online gambling software providers in the industry as a whole is Stockholm based NetEnt, which services a vast majority of operators in multiple regions.
Having recently agreed to a merger with fellow compatriot company, Evolution Gaming, this will create a mammoth in the industry, however, NetEnt for all intents and purposes will continue to operate under the brand that has brought it so much success and recognition over the years.
Following the regulation of the Swedish online gambling market, new brands have been quick to enter the country over the last two years and the number now stands at in excess of 100 that are available to players.
While it could be a naturally obvious choice that these would opt for software providers that are in their home country it isn’t a complete and forgone conclusion. However, in this case, the likes of NetEnt have one of the best reputations in the online gambling industry.
Having been founded in 1996, they are one of the longest serving software providers and as a result of this, their products are almost instantly recognisable among online gambling fans all over the world. This would also lead to the assumption that online gambling players in Sweden would be familiar with their products, however, there are a number of other factors that come into play.
For example, player preferences and behaviours vary greatly across each market and while one type of product might be attractive in one market, does not automatically guarantee that it will be successful in another.
In Sweden now, the vast majority of the big brands are available there for players, which is a huge advantage for NetEnt, due to the fact they work with most of these, so their products are now getting the exposure with the players who are there.
In anticipation of the regulation being passed in Sweden though, NetEnt was already laying the foundations for this as well. In June 2018, the software provide agreed to a deal with Swedish operator, Svenska Spel Sport and Casino to provide their portfolio of products, which was a clear indication that NetEnt was laying the foundations to do everything that it could to hit the ground running in the country from the day that the market opened.
At the time, MD and Head of Business Unit for Senska Spel Sport and Casino, Frederik Wastenson spoke of the importance but also delight that the software provider had come on board, underlining the importance of the deal for the company: ”NetEnt was an obvious choice when selecting an online casino supplier ahead of our re-regulated market entry on January 1st, 2019. We are convinced that NetEnt will deliver casino games of the highest quality and become a very important partner for us.”
Meanwhile, Henrik Fagerlund, MD NetEnt Malta Ltd. and Chief Product Officer of NetEnt echoed similar sentiments at the time: “I am very pleased that Svenska Spel has selected NetEnt as supplier ahead of the Swedish market re-regulation. Svenska Spel is the most established gambling operator and the largest sponsor of sports in Sweden. We really look forward to a close collaboration to deliver best-in-class digital casino games to Svenska Spel’s customers.”
In April 2019 however, it was reported that the software provider was struggling to adapt to the newly regulated market, following declines in revenue for the first quarter of that year, amid a number of challenges that the company had faced in this latest regulated market.
Around mid-February of that year, the company revealed that its game win had decreased by five percent and this was attributed to by lower volumes in the Swedish market, however, at the time NetEnt cautioned that it was still too early to predict the mid to long term consequences of the Swedish market. Despite that, the company had targeted the release of 35 new games during that year, a stark contrast to the 21 it had released throughout 2018.
One contributing factor to a slowdown in performance for NetEnt in Sweden during the first quarter of 2019, was it said partly down to the gambling taxes that were paid under the country’s new, regulatory scheme which decreased the company’s revenue by two percent in the first quarter, however, it wasn’t just that which appeared to be a factor.
It also said that changes had an impact on customers and players to an extent that they had no foreseen these, however, there were other software companies who were also experiencing difficulties in the Swedish market at the time. In Sweden during the first quarter of 2019, NetEnt reported that there were less players as well as lower average revenue per user in Sweden and this was despite the software provider having agreed to a deal with the country’s premier casino Svenska Spel.
At the time, half of NetEnt’s operating revenue came from regulated markets (which excluded Sweden), and during that period, NetEnt’s growth in these regulated markets had increased five percent, despite Italy’s ban on advertising resulting in a weakness in the overall market. In April 2019, NetEnt reported a 2.8 percent drop in revenue from 12 months previous.
While for the first quarter of 2020, NetEnt reported a 23.9 percent growth on the previous year, which looks great on the face of it, this was mainly down to performances in the UK and the US, with Sweden still reporting a decrease in figures.
The country only accounted for six percent in revenue figures for the company, one percent behind the US and two behind Italy, with both of these markets relatively hamstrung by what they can do in the online gambling markets, because of legislation of their own.
It is perhaps surprising how NetEnt has been reacted to by the Swedish market, however, with similar effects for other companies, it could well be that players are refusing to adjust to new legislation laid down by the regulators, compared to before when they had free rein at online casinos