CPU model vs forced ecosystem model: A guide to choosing the right platform for you
You’ve recently released a white paper on the contrast between a CPU model vs. a forced ecosystem model. What drove you to conduct such a comprehensive analysis of these two approaches?
“We spend considerable time in discussions with leadership teams of online gaming business who are facing the critical business decision of choosing their platform technology.
“Through these conversations, we have noticed a predominance in the industry to approach this choice in binary terms: the question operators pose is whether to own their igaming platform (by building it in-house or buying it) or license it from a third-party provider.
“This understanding is based on the original conditions of the igaming industry, where platform technology followed what we call a “forced ecosystem model.” Initially, a PAM platform – either in-house or offered by third-party providers – was part of a monolithic technology stack, with services and applications interconnected through opaque or poorly segregated protocols.”
Was this based on client challenges that you were presented with directly from the igaming market?
“In today’s dynamic environment, we see that this traditional model falls short of the operator’s needs. Operators now require more control and flexibility to integrate best-in-class multi-vendor and proprietary technologies into a cohesive stack.
“Operators express frustration over the technological and contractual restrictions inherent in the forced ecosystem model, which hinders their ability to quickly adapt to market shifts, enter new regulated markets, innovate with new features, and integrate third-party vendors or in-house solutions of their choice.
“That is why we propose operators transcend this dichotomy and think of a model that provides a third alternative. It is hybrid approach, unique to Pragmatic Solutions, that we refer to as the “CPU model.”
“This name comes from an analogy, where we metaphorically liken our modern PAM platform to a Central Processing Unit (CPU) in computing. In this model, the platform acts as the core of the operator’s online gambling technology, handling essential but uniform services – such as bet processing, account management, and compliance functions that are crucial yet standard across the industry. This central role is comparable to a CPU within a computer that coordinates and executes instructions with reliability and efficiency.
“The CPU model enables the creation of a unique technology stack suited to operators’ immediate and future needs, empowering them with superior adaptability and customisation possibilities.”
What has the feedback been on this white paper from the industry?
“We’ve been encouraged by the industry’s response to this white paper, with high-level decision-makers and stakeholders from a variety of operators expressing enthusiasm. They see our understanding of their daily challenges and view our proposed solution as a timely and effective way forward.”
What are some of the limitations that the licensing approach brings to operators and what is the impact of this?
“There historically were severe technological limitations in this model, particularly when operators, adapting to market changes, required integration of a mix of the best multi-vendor and proprietary products and technologies. These integrations were either difficult, not supported, or against the commercial interests of the platform vendor (and therefore a point of frustration).
“Contractual limitations with respect to integration of the best multi-vendor products, in addition to technical limitations with respect to any integrations, effectively force the operator to, predominantly or exclusively, use products and services offered by the PAM platform vendor (which were often not independently marketing-leading).”
How does the CPU model combat these limitations?
“In contrast, the CPU model, while still effectively a licensing model, empowers operators with the flexibility to enrich their platform with products from leading third-party vendors or custom developments, enabling the creation of a unique technology stack suited to their immediate and future needs.”
Which model offers better long-term sustainability for igaming operators in terms of evolving player needs and market dynamics?
“Our licensing model, and the services that Pragmatic Solutions provides, were designed in response to the feedback we have had from many gaming operators. Therefore, naturally, we see many benefits to our approach to platform licensing providing many intentional benefits to our licensees, such as:
- Reduced upfront cost and risk versus in-house platform development.
- Faster speed to market and more rapid entry into new markets by leveraging existing regulatory compliance capabilities within the licensed platform.
- The benefit of a shared master codebase providing advanced capabilities informed by the needs of other operators in the licensee network (without any single licensee bearing the entire development cost).
- A rate of forward development that is faster and more robust than the individual platform licensees would achieve independently.
- The ability to implement and integrate bespoke services and applications to differentiate from the competition (even if competitors license the same core “CPU”).
- The ability to focus on the core business of winning market share as an operator rather than the distraction of also managing technology development.”
How does each model handle scalability as an igaming platform grows? How does it support more users and allow operators to offer more games?
“Under a forced ecosystem model, improving the velocity of development while maintaining platform stability and reliability is a formidable challenge. Platforms, including those developed in-house, that claim high stability often do so at the expense of new feature development.
“Conversely, platforms that emphasise swift feature development usually do so at the cost of performance at scale, or they become brittle due to subpar architecture or the introduction of bugs through new code.
“The CPU model, instead, is perfectly able to obtain speed of development while maintaining stability and scalability, since the platform has been robustly built and designed for its intended purpose from the outset. The technology offered by Pragmatic Solutions has been proven, at scale, across many operators and under high load conditions for over 10 years.
“By leveraging containerization and the elasticity of cloud hosting environments, our platform scales efficiently and has seen no upper boundary to its capabilities in production environments.
“Pragmatic Solutions has a decade-long track record of delivering both rapid development and dependable platform performance. This is attributable to the foundational quality of our platform’s design and the foresight of our engineers and architects in planning for scalability and ongoing development.”
How does the ability to adapt to local market conditions differ between the two models?
“Due to the platform modular architecture and our client-based business approach, our model of platform provision allows operators to completely customise and localise their offerings. This can be achieved with the integration of top local providers of content and services and the further development of the platform’s features.
“In regulated markets, our platform is prepared to support the compliance requirements services by its own technology while it also addresses the integration with external services – such as self-exclusion lists, regulatory databases, vaults, ID and age verification tools, data processing tools related to responsible gambling, affordability verification services, and more.
“With Pragmatic Solutions securing the utmost efficiency of the platform core functionalities, the operator’s internal development resources can concentrate on producing unique, customer-facing services and components. This method allows for the distinction of the operator’s offerings and the enhancement of their player experience by relying on a dependable platform for fundamental operations.
“The speed of platform development in the CPU model is high and sustainable, which in contrast to monolithic platforms, enables business to adapt to market requirements incredibly faster.”
What are the key security implications for igaming operators in a CPU model versus a forced ecosystem model, particularly regarding data ownership and protection?
“There could be a misconception that owning the platform would bring a higher level of security and data protection. However, the best practices on data protection rely on the capacity of the technology and development teams to adapt to the latest security measures, and it is ensured by the integration of the best-in-breed services and the strict adherence to data security protocols.
“If the platform provider is compliant with data protection regulations and frequently audited by third-party organisations, data ownership and security are absolutely not an issue to be concerned with.
“As a full compliant platform provider, Pragmatic Solutions abides to global data protection laws, such as the General Data Protection Regulation (GDPR). We confirm to all EU GDPR operating standards, policies and protocol and are audited yearly, ensuring that access to platform data is secured, highly controlled and audited 24×7. We ensure all data is encrypted and secured within the platform and hold a zero data breach record.
“Open API, cloud-based technology is sustained by its advanced development of security measures. API security is a key component of any modern web application security framework or platform, ensuring the protection from attacks or misuse. AWS, our default hosting platform, prioritises security and compliance, offering a wide range of security features, such as identity and access management, encryption, monitoring, and compliance certifications.
“Finally, when licensing our PAM platform, we deploy an independent instance of our technology into the operator-controlled AWS environment. This environment is procured by the operator directly from AWS, and the operator has full control over the access and security policies that govern this infrastructure.
No resources are shared with other licensees, and all data for each licensee remains in their independent AWS virtual environment. Pragmatic Solutions provides professional infrastructure maintenance support for our clients (to the degree they require) to always ensure high security over data, both for compliance and business protection demands.”
How do the operational costs compare between a CPU-based model and a forced ecosystem?
“Developing a platform in-house or acquiring one incurs substantial initial investment and ongoing expenses, requires time, and involves risks related to the success of the project. In contrast, licensing a PAM platform generally entails a variable cost proportional to the business’s revenue generated on the platform, offering a more cost-efficient solution with shared development and operational costs.
“Additionally, in-house development demands a significant allocation of resources, which can divert attention from an operator’s core business functions. Licensing enables organisations to concentrate on crafting distinctive customer experiences and innovative products.”
What is Pragmatic Solutions approach to working with clients looking for a CPU model but previously used a forced ecosystem model?
“In practice, the added flexibility, adaptability and extendibility of our licensing model affords operators the opportunity to take more of an active role in the product requirements that define their vision for their customer experience.
“Operators that have made this transition often find it an adjustment to a different way of working where they have more of a voice in the forward development of the technology that supports their business. They will have more options available to them in terms of 3rd-party vendors to integrate or more control over their front-end websites and native apps, the customer journeys, and bonuses and promotions offered.
“For some operators, this requires a difference in thinking from an attitude of frustration – making do with what you have – to an attitude of creativity and strategic planning to define the business priorities (supported by technology) that can give them an edge over the competition. Fortunately, these are positive adjustments, and we are with them every step of the way to offer consultation and support.”