The shape of things to come?

| By Marese O'Hagan | Reading Time: 3 minutes
Earlier this month, Kambi acquired front-end technology business Shape Games for an initial payment of €38.5m (£33.5m/$38.4m) with further earnout opportunities. Marese O’Hagan speaks to Kristian Nylén, CEO of Kambi, about the significance of the deal and what it could mean for his business.
kambi shape

Kambi has largely been seen as a single-minded business: dedicated to its sportsbook, rather than trying to offer operators a wide range of other products.

So does its acquisition of Shape Games indicate a significant change on the horizon?

Chief executive Kristian Nylén suggests it just might. He notes that operators that used Kambi’s sportsbook had needed to obtain other front-end solutions and noted it may make sense for Kambi to acquire when that is the case.

“When the opportunity came about; it was part of a product we were missing,” says Nylen. “We had a front end but it was not a fully-fledged, native front end like Shape’s. It fits perfectly into our portfolio.

“There is a bigger and bigger need for front-end applications. We don’t have it in-house, so we have always had to partner up – or our operators have always had to partner up – with another supplier for that purpose.”

As the two businesses had a close relationship and shared clients before the deal, the acquisition was a natural next step.

“We [Kambi and Shape Games] have been working together for many years and we already have a few customers together, such as BetWarrior and betJACK,” says Nylén. “We have a good relationship and we know it’s a good cultural fit.”

The customer question

None would doubt Kambi’s expertise in the core areas of sportsbook, such as trading and risk.

But Nylén believes the addition of Shape Games to Kambi’s portfolio will bring customers’ sportsbook experience to the forefront. Rather than simply dealing with the odds, Kambi is making clear that it plays a role in the customer journey as well.

“With the sportsbook, it is never better than the best front-end experience you get,” he continues. “You can always make it easier to place a bet and with more data from us, Shape will be able to better analyse the player journey and improve how they are working with the front end.

“One area where I think it there will be greater demand is in personalisation, which I think will probably help us take a big leap.”

To Nylén, the deal is part of the natural next step for Kambi following the migration of some high-profile customers onto house-built platforms. The supplier’s revenue was hit hard by its former largest customer – DraftKings – creating its own sportsbook after merging with SBTech. In the following years, Penn Entertainment and Kindred also set out plans for their own migrations.

Needing to think about its future in the wake of a high-profile exit like that, Kambi set its sights on a strategy built around modularisation. Rather than offering every aspect of the Kambi sportsbook to a customer together, operators could pick and choose what they want.

Shape appears to fit perfectly into that. For those that want only a front-end solution, it’s there. For those that want only a sportsbook, there’s the core Kambi product.

“We have talked a lot about our modularisation strategy and obviously this is a module in itself that fits well into our strategy,” he says. “More importantly, I think it also complements very well our fully managed service.”

Expanding the opportunity

In this sense, Nylén believes that the acquisition will be mutually beneficial – Shape Games’ software will benefit Kambi’s sportsbook product by bolstering its front end, while Shape Games’ front-end capabilities can become stronger as a result.

“Our expertise has always been in producing a great sportsbook”, he says. “I think we have a very good front-end experience, but it’s not where we have put most of our efforts.

“In getting Shape on board, I think we can get much stronger in this area and together with the data we have I think Shape’s front end can also become much sharper.”

As well as fulfilling a missing piece in Kambi’s portfolio, the acquisition could also bolster Kambi’s pitch to future clients. Nylén notes that native applications – software that has been designed specifically for a particular platform – have been increasingly in demand over the last few years.

“We’ve seen greater demand for native apps over the last few years and we have had a few situations already where it has been a requirement in bids we have been part of.”

So where is Kambi looking for its next clients? Off the back of the deal, Nylén is optimistic about Kambi’s future expansion potential. He believes opportunity is rife, revealing that Kambi has its eye on markets that are edging towards regulation.

“In every market that is about to regulate, we are looking for more opportunities,” he says. “I wouldn’t say we’re too focused on any particular state, but there are two areas we’re focusing on, which are the Americas, both Latin America and North America, and what had historically been our core market – Europe.

“Longer term, Asia will become a very interesting market but it has to start to regulate first.”

It may be interesting to wonder what Kambi will look like when these markets open: still mostly focused on one product, or as a wider-reaching supplier?

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