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Aristocrat Goes Big on Social

By Staff Reporter | Feb 14, 2018 12:39 PM EST

Aristocrat has made a huge investment in the future of mobile gaming by completing the purchase of Big Fish Games.

The Seattle company, which was founded in 2002, claims to be the largest producer and distributor of casual games in the world.

Australian poker machine firm Aristocrat moved to snap up Big Fish Games in a deal reported to be worth a $1.3 billion at the start of the year.

Aristocrat, which is listed on the Australian Stock Exchange, will be hoping to take advantage of the rapid growth of games such as Big Fish Casino through the takeover deal.

Big Fish Casino is the number one mobile social casino game, boasting an incredible 50,000,000 downloads worldwide, showing the vast reach of the Big Fish Games company.

Of course, there is a lot more to Big Fish Games than merely Big Fish Casino. The company has a number of well-performing games, two of which are Gummy Drop! and Fairway Solitaire.

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Why did Aristocrat want to buy Big Fish Games?

With Big Fish Games enjoying an increasingly large profile in its field, it felt inevitable that the firm would soon be snapped up by a much bigger company.

And that has proven to be the case, with the phenomenal global success of Big Fish Casino tempting Aristocrat into a deal the firm intends to finance partly through the use of an incremental $890 million loan facility.

Aristocrat chief executive Trevor Croker gave an insight into the reasons behind the firm's purchase of Big Fish Games when the deal was first announced at the end of last year.

"The strategic and financial benefits of this acquisition are highly compelling," Croker said.

"Big Fish's digital-first social casino content and industry leading meta-game capability and applications are highly complementary to Aristocrat's existing and industry-leading land-based digital content business.

"Big Fish will immediately provide scale across our entire digital platform, and our social casino business will become the second largest social casino publisher globally."

Playtika, a China-based company, is arguably the leader in Aristocrat's field right now, but the purchase of Big Fish Games will likely allow the Australian firm to make up some ground.

Match made in Heaven ?

A brief history of Big Fish Games

So how did Big Fish Games reach a position where the firm was being purchased by Aristocrat, one of the biggest social gaming companies in the world?

The company is only just over 15 years old, having been founded by Paul Thelen as a game development studio. Critical Mass was the first game released by the firm and its first number one hit - Mahjong Towers - followed only a few months later.

Big Fish Games began to expand internationally in 2006 and over the last decade the company has gone from strength to strength, with its first game for iPhone, which was named Hidden Expedition: Everest, yet another landmark for the firm.

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The one billion downloads milestone was reached by Big Fish Games in 2008 but the business continued to expand at a fast pace, launching its first games on Android and Kindle Touch as the company experimented with a range of new formats.

Is the acquisition of Big Fish Games a good move for Aristocrat?

News of the deal for Big Fish Games was broken by Aristocrat in November and the initial response to the announcement was not overwhelmingly positive.

Worries over Big Fish's recent financial performance were aired by investors and on the day of the announcement the share price of Aristocrat fell by around seven per cent. However, analysts looked at the deal and suggested it made sense given the previous purchases completed by Aristocrat, as well as the future goals of the company.

"Unlike other recent acquisitions, Big Fish will require greater focus on optimisation but in time should provide a solid growth platform," Macquarie analysts said, even though they noted Big Fish Games had only been delivering growth of around the two per cent mark.

In theory, input from Aristocrat over the coming months and years should allow the company to be a lot more profitable, which in turn would justify the investment made in Big Fish Games - the company currently employing in the region of about 700 employees.

In its financial results released at the same time as the Big Fish Games deal was announced for the first time, Aristocrat confirmed it had seen a 41 per cent rise in full-year reported net profit to $495.1 million. The company can therefore evidently afford to take what constitutes a risk on Big Fish Games being able to grow at a much faster pace in the future.

Aristocrat speeding up expansion plans with Big Fish Games purchase

Among the major reasons for the purchase of Big Fish Games by Aristocrat was the chance to increase its share of the online social gaming market, which is increasingly lucrative.

In 2017, it was estimated that the social online games market in the United States alone, without even taking into account any other countries, was worth 2.15 billion U.S. dollars. And with Big Fish Games able to boast impressive figures of more than 12.4 million active users every month, it is clear Aristocrat is hoping to make the most out of those existing players.

Social gaming - typically defined as including free-to-play online poker, slots, table games and bingo that are available to be played on both desktop and mobile devices - is also huge in Asia. Conquering this market is going to be one of the most important targets for Aristocrat over the course of the next few years.

Aristocrat had already signalled its intention to grow quickly prior to the purchase of Big Fish Games, which is a unit of Churchill Downs. In August of last year, the company confirmed it was set to pay $635 million in a takeover of the Israeli gaming firm Plarium, maker of the Vikings: War of Clans game, which was downloaded 200,000 times in December 2017.

A focus on a quickly expanding digital arm in the last couple of years has helped it to now account for 38 per cent of Aristocrat's revenue and this will surely keep growing following the takeovers of both Plarium and Big Fish Games in the last six months.

What's next for Aristocrat following the purchase of Big Fish Games?

Aristocrat - formerly a firm that focused on its core offerings of poker machines and other electronic gaming machines for casinos, pubs and clubs - continues to launch new titles, with its new Dragon Link game creating a lot of buzz, according to the latest EilersFantini Quarterly US Slot Survey, which was published earlier this week.

"Dragon Link has already established itself as a market-leading game in Australia and these survey results from the US indicate that it is firmly on course to be a stellar brand for the company," said Erik-Jan van den Berg, Aristocrat's Sales Director for EMEA, in a press release.

The game will be launched by Aristocrat to European markets on Stand S3-250 at the upcoming ICE Totally Gaming event, which is set to take place at the ExCeL London venue this month.

"Dragon Link will begin its European roll-out this Spring and is set to become one of the star attractions at ICE," added van den Berg.

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