The online casino industry is powered by a number of different software developers who create and operate literally thousands of slots, table games, scratch cards, video poker games, along with all the other casino games that can be enjoyed online.

However, software developers don’t operate online casinos themselves – rather, they license their game software, CRM and marketing expertise to operators, who are either individual casino sites or business groups operating multiple sites (usually between 2 – 5 separate casino brands).

Software developers then derive their revenue through license fees, which are usually based on a percentage of the gross revenue generated from the games the casino then provides to its players.

In most cases, the developer will assume and retain responsibility for the efficient and ongoing operation of the games it supplies, including a range of ancillary services and training, while the casino will instead focus on providing services for its players and the overall quality of the gaming experience and environment.

However, despite there being a significant number of players in the market, the industry is largely dominated by three well-established names who have managed to capture and maintain a lion’s share of the market.

The Big 3: Playtech, Microgaming and NetEnt
There are currently three dominant players in the online casino software market – NetEnt, Microgaming and Playtech. Although each produces games of all kinds and for all tastes, they also each have their own particular strengths and games for which they’re especially renowned.

The award-winning Scandinavian developer NetEnt, founded in 1996 and now based in Malta and Stockholm has been growing its market share in recent years, offering a range of more than 200 games featured in over 100 online gaming sites, with the most prominent NetEnt Casinos now having the same brand exposure and name recognition as 888 and other leading Microgaming and Playtech sites.

Part of the reason for its increase in popularity and the use of its games in a growing number of casinos sites is down to their successful re-invention of the video slots market implementing a range of innovations and a creating new approach to even the most traditional elements of these games.  Their slot games are noted for their imaginative gameplay combined with higher than average payout percentages and exciting visual effects.

Microgaming is probably the best-known software developer in online gaming, having been in operation since 1994, with its games being found in more than 400 online casinos. Operating out of the Isle of Man, Microgaming has been the recipient of numerous awards for its collection of more than 400 online slots, which features some of the most popular and enduring games available today.

It is in the realm of progressive jackpot slots where Microgaming dominates the market, their networks being larger and the payouts bigger than their rivals. The most successful game of all – Mega Moolah – holds the world record payout of more than USD$20 million, with the total payouts across the entire Microgaming progressive jackpot network now being worth over USD$500 million.

Playtech, the third of the major players, likewise has an extremely popular range of more than 500 casino games, including slots and progressive jackpot games. Founded in 1999 and listed on the London Stock Exchange, Playtech also provides sports betting, mobile and social gaming options for more than 130 online casinos in more than 20 markets, and in 2015 had around 41% of the online gaming market worldwide.

The most notable of these are its range of progressive jackpot slots based on Marvel Comics superheroes, including titles such as X-Men, Wolverine and Iron Man. Live casino games are also a strength of Playtech’s offering, with classic casino table games such as blackjack, baccarat and roulette being streamed live, with real professional dealers,

There are also differences in the way each developer manages its CRM (customer retention management) relationships with its licensees. NetEnt, for instance, seeks to establish longer term relationships with games providers, Microgaming’s aim tends to be to see revenues over the short to medium term, whereas Playtech instead seeks larger initial payments from its licensees.

The Battlefield
Competition between the three major players is intense, with each constantly seeking ways in which to get ahead in the market.

Branded slots games for instance is an area where the leading developers compete aggressively. Generally, these games take successful ideas and franchises from other media and use their themes, plots and characters in the creation of online slots. Hit movies, like Jurassic Park and Terminator 2, video games likes Lara Croft: Tomb Raider and Hitman, and comic book heroes such as The Incredible Hulk and Spiderman, have all become extremely popular slots games.

However, NetEnt has broken the mould recently (as you can see with their slots here) with its release of new games based on popular acts from the music world. Guns N’ Roses and Jimi Hendrix, both released in 2016 have been phenomenal successes, and these will be followed up with a Motorhead-themed slot later in the year.

The features included in online slots games have also undergone something of a revolution, with the specific aim of attracting younger players through creating slots that look like and play more like a video game rather than the traditional, Las Vegas-style slot machine.

Innovations such as multiple and expanding wild symbols, rolling and falling reels, combined with more elaborate bonus rounds and a host of special features that are complex and highly engaging, have completely altered the slots experience. Software developers have, through this imaginative and creative gameplay development, succeeded in increasing the audience for their games and is an area where each is looking to innovate and introduce new and novel features.

The way in which slots and other casino games are played is also an area where the main three software developers seek to gain market advantages. Until relatively recently, most online casinos only offered the games of a single developer; however, new developments in Flash software, such as the Quickfire platform by Microgaming, mean that licensees are able to offer games by a number of different software providers on a single site. However, Playtech is the exception to this, preferring for its games only to be played at standalone sites (although their games can nevertheless be played in Flash); however, it also acts as a provider for third-party games i.e. it offers the games of other, smaller developers as part of the package of games it provides to licensees.

This has advantages for both parties; casinos are able to attract larger number of players through being able to offer greater diversity in the choice of games, while for developers the move away from exclusivity means that they are able to create partnerships with growing numbers of licensees.

The Future
It may be that in the future, games developers no longer try to compete by increasing the number of licensees they partner with. In part, this may be due to market saturation and a slowing in the rate of growth in revenue (although most forecasters predict that the growth in the rate of revenue from online gambling is set to remain in the region of around 10% in the years up to 2018).

The growing number of regulated markets may well change the way in which online gaming is delivered in the future. Deregulation and re-regulation of gaming markets that have hitherto been largely left to their own devices means that developers may well spend as much time in developing relationships with government gaming authorities and regulators – who are only now beginning to recognise the amount of tax revenue and income they can derive from online gaming – as they do working in conjunction with individual business groups. The aim will be to gain local operating licences in these new, regulated markets and to exclude unregulated operators from these lucrative areas. This could represent one of the most significant changes in online gambling in recent years, and the major software developers all appear well-placed to be able to capitalise.

A further key battleground will be the shift to mobile-first strategies as a growing number of casino brands move to capitalise on the rapid take up of mobile interactive gambling (growth is estimated to be 17% between 2015 and 2018) and prioritise their mobile offerings over their desktop sites.

Known in the industry as omni-channel, this strategy is based on total accessibility so that players can play anywhere, at any time and on any device using a single account and access details. The way in which the major players are able to respond to and meet the changing needs of players will be an indicator of how well equipped they are to retain their place in the market.

Overall, the word of online gambling continues to develop at a rapid place, and there are no signs that the internet arms race between the major software developers is going to slow down any time soon.