Market Overview

The Group is in a strong position to gain significant share of the fast growing mobile gaming market, underpinned by its focused strategy and end to end gaming platform and content portfolio specifically designed for the mobile channel.

Nektan’s considerable market opportunity is driven by the increase in ownership of smartphones and the reshaping of the internet by mobile devices. Within the gaming sector, mobile is the fastest growing segment, reflected by the estimation that mobile gambling – including betting, gaming and lottery – will generate just over €19 billion of gross win by 2018, reflecting a CAGR of 29.5 percent (source: H2GC).

Forrester Research predicts that there could be 3.4 billion smartphones and 905 million tablets in active use worldwide by 2017, implying 46 percent and 30 percent year on year (‘YOY’) growth in smartphone and tablet adoption respectively. A study published by Deloitte estimated that smartphone penetration is at 66 percent, while 54 percent of UK households now own a tablet (source: Ofcom). This has driven consumer demand for all forms of mobile entertainment, including RMG.

Growth in RMG is also clearly evidenced by the fact that many of the established betting operators have been building up their mobile offerings in recent years and are exhibiting strong growth in their mobile channels.

Drivers for mobile gaming include convenience, privacy, an improving user experience based on user interface enhancements, and content configured specifically for mobile consumption. Consumers have also become more accepting of mobile based payments. These drivers underpin the H2GC forecast growth of the mobile based gaming market from €0.95 billion in 2014 to €2.25 billion by 2018 and to €2.81 billion by 2020.

Nektan is well positioned within the expanding mobile market, with its content being built in HTML5, a mobile development technology that allows games to be built once and then deployed across multiple devices, from mobile phones to tablets, laptops and desktop PCs. In addition, to fully leverage the opportunity, its end-to-end platform, Evolve, simplifies the route to mobile RMG revenues for partners, by managing the full customer experience and back-office operations for the partner.

The US casino market is estimated to be worth c.US$66 billion in 2015 and is the second largest gambling market in the world, after Macau in China (source: Statista 2015). There are two distinct types of casino in the US: tribal andcommercial. In 2012 the split between commercial and tribal gaming revenues was 57 percent/43 percent.

There are 39 states that have some form of legalised electronic gaming device – including traditional slot machines, video poker and bingo – at tribal casinos, commercial casinos, racetrack casinos, and/or bars, restaurants or other licensed establishments.

The Group’s Respin joint venture is a genuinely disruptive business in an estimated potential market of $3 billion. 40 percent of slot machines on casino floors are estimated to be unsupported by the original manufacturer, based on the 2013 figure of 775,000 slot machines in commercial and tribal casinos.

An opportunity has arisen, on which Respin is capitalising and has gained first mover advantage, as a result of casino operators’ reluctance to purchase new machines from manufacturers. Respin offers casino operators an innovative and capital efficient way of refreshing their customer offer and increasing revenue from unsupported end-of- life slot machines whilst providing players new and innovative content to play which includes functionality on mobile devices.