The bingo market has changed dramatically over the past 10 years, particularly in the online sector where the number of new entrants to the market has been staggering.
As of July 2015 there are now over 350 UK bingo sites available to players. These numbers show no real signs of slowing down with new brands appearing on a weekly basis.
This continuing trend in 2015 goes against the predictions of many well-respected industry commentators who estimated the growth would slow. Their opinions were based on the assumption that the new point of consumption tax (POC), introduced in December 2014 would render many of the smaller operators non-profitable.
Whilst it is probably true that many of the smaller brands, largely those who operate as white labels struggle to generate adequate income to be profitable, it is unheard of for a white label brand to be shut down.
Whilst it simply is not the case that the rate at which new brands are launching has slowed, it is worth pointing out that gone are the days when new operators would appear with their very own site.
Nowadays just about all-new entrants opt to become part of an established network of brands. In other words, investors tend to become white label owners, which in effect means they own a brand and have it powered by networks software systems.
This approach has lots of benefits, the main theme of these being that launch is inexpensive. The way it works is that all brands are essentially ‘plugged in’ to the same infrastructure and therefore share resources ranging from servers to staff.
Due to networks wishing to acquire more market share, launching a new brand can either be inexpensive or free for an investor. It is largely for that reason that the world and his wife now seem to own a white label bingo brand.
This would be all well and good, but for two reasons. Lets start with the first…
These sites are boring…
Generally all the sites on a bingo network are pretty much the same as the one before them. Except for an often ‘thin’ layer of theming, all the brands are the same. The same games, the same chat hosts, the same promotions, you get the picture.
Every now and then a forward thinking partner will break the mold and create a white label that offers genuine differentiation from the crowd, but they are in a small, sacred minority. So there you have it, these sites are boring for players.
Secondly, These sites are rarely profitable…
Even some of the most well known white label sites struggle to generate a decent income. This is because these brands have to pay an absolute fortune for marketing. After developing a good bingo product, marketing is arguably the most important factor to get right in order to ensure profitability. This is too often the part that new entrants overlook.
The tendency is that these people assume they will be able to get good deals with affiliates and so on. This is seldom the case; affiliates know their worth and charge accordingly. And of course, white labels do not take a high enough profit cut to pay affiliates as handsomely as the big brands!
So there you have it, the second problem for the white labels is that they are rarely very profitable. Whilst most new bingo sites are probably conceived as the result of a poorly thought through business plan based on pie in the sky promises of profits and the operators perpetually dangling carrot of what ‘could be’ profit wise, is not going to go away. In short, the operators will gain, their networks will get bigger and these new sites will continue to popup to bore new players.