How to nurture gaming successes

I’ve just returned from spending a few days at ICE, the world’s largest gaming exhibition, which this year was held at London’s Excel centre for the first time.

The setting is appropriate, its enormous size capable of accommodating even the most outrageous displays of corporate one-upmanship, cutting-edge technology and hundreds of scantily-clad beauties wearing the hottest of hot pants.  

I was invited by a handful of organisations with whom my company already does some business, but the opportunity to clinch more deals, glad-hand a few possible clients and generally be seen proved priceless. The venue, all 31,000 square metres of it, was crammed with people eager to do business. This ensured there was a constant buzz about the place as folks shook hands, negotiated, chatted, or merely shared a beer at one of the hundreds of company stands or bars.

If anyone wanted to gauge just how big the world’s gaming industry is, get yourself a ticket for next year’s event.

The exhibition’s centrepiece, occupying an area perhaps half the size of a football pitch, was (I was about to say a ‘stand’, but this doesn’t do it justice) what can only be called a gaming ‘experience’ presented by an Austrian  company called Novomatic. Most people in the UK have never heard of them, but it employs more than 20,000 employees in 32 countries. Novomatic refers to itself as “one of the world’s biggest producers and operators of gaming technologies” and, judging by the amount of space they secured at ICE, they’re doing rather well.

In fact, the group, founded in 1980, doubled its profits in the first half of 2012, reporting pre-tax profits of €112 million on revenues of €744 million; annual turnover exceeds €3.2 billion.

A little further down the exhibition hall was Playtech’s stand. It was evident from both the number of visitors and the concentration of Playtech employees that here was a gaming company doing just as well as Novomatic. Perhaps that had something to do with the free bar the company had running upstairs – yes, their stand had a first floor to it. However, if you were in any doubt about the seriousness of the operation, as you ascended the stairs, a life-size cardboard display of ‘The Sopranos’ characters stood watching you as menacingly as they would were you entering one of their New Jersey-controlled gaming joints.

Playtech reported sparkling figures yesterday when releasing its interim management statement for the quarter ending 31 December, as well as a trading update prior to the announcement of its full year results on 14 March.

The company’s gross quarterly income was up 26%, to almost €100 million, while its income for the 12 months ending 31 December had increased by a staggering 51%, to €368 million. No wonder the company’s share price rose by almost 8% today, valuing it at £1.5 billion.

One thing that struck me over the last few days was the number of folks (exhibitors, speakers and attendees) who had travelled over from Israel. Catching the Docklands Light Railway (DLR) to the Excel each morning, I felt like a Tel Aviv commuter.

I asked an Israeli guy I know well why his countrymen appeared to take such an interest in the gaming industry. His response was succinct: profits and tax breaks.

The profits element I understand, but tax breaks?

It transpires that most Israeli technology companies receive generous tax breaks and, as they recognise that gaming is an industry in constant need of fresh technology, it’s an area where demand for their services shows no sign of waning. A senior executive from a very well-known, London-listed company, which started life in Israel, told me that, ”first and foremost we’re a technology company. We just happen to offer a gaming service too.”  

As I sped away on the DLR on the way home, I wondered how we could stage the world’s largest gaming exhibition in this country, but couldn’t offer any indigenous competitors to the industry’s technological giants. Perhaps tax breaks for budding technology companies is something Mr Osborne should consider ahead of next month’s Budget. Either that or he should visit ICE next year.

posted on 08 February 2013 16:23 byPJS