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Nick Batram suggests vigilance in the social gaming sector

Nick Batram, leisure analyst at KBC Peel Hunt, has told iGaming Business that investors should “tread warily” in the social gaming sector.

Speaking after news emerged that mobile games developer King had filed documents for an initial public offering (IPO) in the US, Batram cited the examples of mobile games developers Zynga and Zatikka in explaining why the sector does not guarantee a positive return on investment.

“There is a lot of money being invested in social gaming and there is no guarantee of success. Indeed the investment that ‘hard’ gaming companies have made has not delivered much of a return – just look at 888 and,” he said.

“One of the challenges in social gaming is that a game can burn very brightly very quickly but in a fast moving, rapidly evolving market consumers can move on quickly.

“One way to create long-term sustainable value is to do what the video game and film industries have done and that is to create franchises.

“But consistently delivering new hits is challenging, which is why I think the big studio model – investment in a large portfolio of content to improve the odds – is one approach could reduce the risks.”

King, the developer of the hugely popular Candy Crush mobile game, plans to float on the Nasdaq exchange.

“When you get it right it can be huge, just look at Candy Crush Saga,” Batram added.

“If does IPO and it is well received I don’t necessarily see it dramatically changing things for the UK gaming industry as a whole, but such a huge British success shouldn’t be unhelpful.”