IGT acquire Double Down for $500 million

 

IGT head into social gaming territory with their acquisition of Double Down

DoubleDown™ Casino was launched in April 2010 and has since grown to be the largest virtual casino in the world and is rated as one of the top social media games by Facebook. 

With 4.7 million monthly active users and an expanding portfolio of games, DoubleDown™ has created a dominating market position that is yet to come under any serious threat from competition.

 

IGT have made a clear strategic move to enter the social gaming market, with Double Down providing instant size and scale therefore enabling them to broaden their popular gaming titles beyond the physical casino to Facebook. With over 800 million global users on Facebook, the move provides IGT with a powerful distribution model and an opportunity to entertain players with consistent, ubiquitous, thrilling gaming experiences across multiple platforms. It is no surprise that IGT have made such a move, with global Facebook adoption increasing at an incredible pace and trends towards social gaming showing no signs of slowing up, especially for Casino style games they are simply creating first-mover advantage.

The total consideration includes $250 million in cash, $85 million in retention payments over the next two years and up to $165 million in cash

 

payable over the next three years subject to Double Down meeting certain financial performance targets.  IGT expects to fund the transaction from cash on hand.

Greg Enell, CEO of Double Down provided some comments on the acquisition: "Double Down and IGT share complementary cultures focused on innovation and creativity.  Both companies are committed to providing unrivaled quality, service and entertainment to millions of players. Leveraging IGT's Research and Development, global reach, and best-in-class content will provide our loyal player base with an even more robust experience and is expected to augment Double Down's growth trajectory."

"As technological innovations increasingly influence consumer behavior, social dynamics are quickly transforming entertainment and gaming experiences everywhere," said Patti Hart, CEO of IGT.  "The addition of Double Down launches IGT into a leadership position in social gaming, extends our global reach through new mediums, and leverages our unmatched expertise in game development.  We intend to drive meaningful value from this rapidly growing distribution platform that reaches a new, but complementary, demographic of gamers."

The FOUR strategic benefits to IGT

  • The transaction puts the Nevada-based slot machine maker's products in front of the booming social media market while also putting IGT out in front of the competition once Internet gaming becomes available to American customers.
     
  • The deal places IGT in the potential Internet poker market because the company will have access to a database of social gamblers. "Internet poker at the state level is increasingly likely to be legalized by year-end 2012," Curtis said.
     
  • IGT now has a new, and the fastest growing, distribution channel for its game content, which should allow them to attract new customers to their land based (slot) machines. For example, someone 
  • playing Golden Goddess on a social website might be inclined to go play a Golden Goddess slot machine at a land-based casino.
     
  • The deal offers an attractive bolt-on acquisition opportunity that is expected to be accretive to adjusted earnings in the near term, while providing the optionality to evolve into a much more meaningful earnings contributor over the longer term should the passage of U.S. online gaming legislation finally become a reality

This move marks an big change in the way that all gaming organisations will start to view the potential of social media, not just to create revenue from the social games themselves but to drive change in their customers behaviour both online and offline, increase engagement and lower more traditional advertising costs. 

 

 

 

 

 

Tags: , , , , , , ,