Online casinos are in the throes of a golden era. The ability to gamble on your smartphone irrespective of where you are has drawn veteran players and curious newbies in equal measure. Despite the rapid growth rate, it has been difficult to run away from the question of whether the market is fast approaching or has already attained significant saturation.
It’s a valid question – the audience for online casinos is finite and still a relatively tiny proportion of the human population. We take a look at whether and to what extent the online casino market is saturated including the indicators, challenges and opportunities that portends.
The Explosion of Online Casinos
Online casinos are not a new phenomenon. The first online casino was launched in 1994. The Kahnawake Gaming Commission, one of the world’s leading online casino regulators, was established in 1996. While there were understandable reservations about online gambling at the time, this eventually dissipated. Today, online casinos are a multi-billion dollar industry with thousands of market players. A number of factors have played a disproportionate role in fueling this growth.
- Internet Ubiquity – There are more than 5.3 billion internet users in the world. That represents the vast majority of the world’s adult population. Access to reliable and high speed Internet created a large potential market for online casinos.
- Smartphones – A primary drive of global internet access is the smartphone, now shipped in much greater numbers than PCs. Mobile access means players can more conveniently access casinos whenever they want to.
- Better and more diverse gaming platforms – Modern online casinos are backed by sophisticated gaming technology and offer a wide range of casino games.
- Millennials and Gen Z – Millennials and Gen Z are considered the first digital native populations. Now forming the majority of the world’s adult population, they have less reservations about transacting over the internet compared to earlier generations.
- Legal grey area – Gambling is illegal or heavily controlled in many jurisdictions. Online casinos were a grey area in a context where existing laws were designed for brick-and-mortar casinos.
Indicators of Market Saturation
In any industry, market saturation is not an overnight event. There are warning signs that often start to show years before the industry reaches peak saturation. It’s no different with online casinos. Some of the more important indicators include:
- Slowdown in new online casinos – New online casinos continue to launch virtually every other day. However, the launch rate seems to have slowed significantly compared to times past. This points to a more competitive landscape where there is a higher barrier for entry and where gaining a foothold demands substantial financial resources.
- Player base growth – The online casino player base continues to grow but the growth is leaning toward a moderation. This implies fresh and new players are not coming into the industry as quickly as they previously were. It also suggests existing players are distributing their spending across different casino platforms – effectively the casino growth is driven by cross-platform cannibalization.
- Market share – The industry has established players with a significant market share. It’s a sign of consolidation that makes it harder for newer entrants to gain traction.
Comparison of growth in online casinos relative to traditional, land-based casinos could show whether the industry is plateauing. Given land-based casinos are stagnating, a relative deceleration of online casinos compared to their brick and mortar counterparts could point to market saturation.
Challenges in a Saturated Market
New and existing online casinos have to contend with a number of challenges in a crowded market. For example:
- Increased marketing costs – As the battle for player attention intensifies, the cost of customer acquisition grows. The casinos that survive and thrive are those that develop and deploy innovative marketing strategies that articulate what sets them apart from the competition.
- Customer retention – With casinos competing for a stagnant or slow-growing base, retaining existing players is increasingly difficult. Casinos have to explore diverse ways to maintain player interest such as enticing bonuses, loyalty programs and a positive user experience.
- Differentiation – The more the market players, the more difficult it becomes to set oneself apart. The online casino has to demonstrate better user interface design, game offerings and unique features.
Opportunities Amidst Saturation
Market saturation is not all doom and gloom. In the sea of competition, there remain opportunities for online casino growth such as:
- Niche markets – While the industry may be saturated, there will always be segments within it that aren’t. An online casino could target specific game types, player experiences or demographics.
- Innovative technology – Embracing new technologies such as virtual reality, augmented reality and artificial intelligence can create a more engaging and immersing gambling experience.
- Exceptional customer service – Online casinos do not always deliver the most pleasant experience for players. Providing exceptional customer care is bound to leave a lasting impression in audiences.
Ricky Casino is an example of a casino making inroads despite a tough market. It has leveraged high quality graphics and lucrative bonuses to attract new players and keep existing ones.
The Role of Regulation and Technology
Both regulation and technology affects market saturation.
- Regulation – Stringent regulations can create a market entry barrier while lax laws can open the floodgates to new online casino brands. Counterintuitively, regulations build consumer trust making them more willing to participate.
- Technology – The proliferation of smartphones has been one of the most important factors in online casino growth. Current and future technological innovation such as blockchain, virtual reality and augmented reality could attract a new segment of players thus mitigating saturation.
Conclusion
After exponential growth for years, many indicators suggest the online casino industry is approaching saturation. Aggressive marketing tactics and increasingly lucrative promotional offers to players, indicate an intense contest for market share. While saturation remains an industry challenge, it comes with multiple opportunities as well for online casinos that leverage creativity, innovation and high quality customer service. Looking ahead, shifts in technology and regulation are bound to have the greatest impact on online casino saturation.
