If a novel were to be written about Caesars Entertainment Corp., it could easily be called “Debt and Acquisition”; the casino operator seems to bounce back and forth between racking up IOUs and purchasing everything they can get their hands on. The latest chapter of this book involves Israeli-based social gaming company Pacific Interactive, and it makes Company Number Four in Caesars ongoing expansion into the popular free-play social gaming market.
“Free-Play” Isn’t Always Free
No purchase terms were released on the sale, but Caesars is now the proud owner of House of Fun, a digital slot-machine, free-play gaming site. Of course, “free-play” doesn’t always turn out to be exactly free; these social media gaming sites have turned into lucrative online businesses by offering tempting, inexpensive add-ons of additional digital game tokens – often under a buck each – to players, many of whom access the site via Facebook.
For Pacific Interactive founder and CEO Omri Shitreet, it’s all about movin’ on up.
“We are excited to join one of the largest and most successful social and mobile games companies in the world,” said Shitreet. “We are confident that under the Playtika umbrella, we will be able to deliver an even better game experience for our players while at the same time creating great value for our new shareholders.”
According to gaming industry Eilers Research analyst and online gaming expert Adam Krejcik, Pacific – which is privately held – pulled in somewhere between $25 and $30 million for 2013, with 3/4 of that coming from Facebook patrons and 1/4 from various mobile apps.
Krejcik told investors recently that the social site is rated ninth on Eiler’s social casino tracker, among those companies with a Facebook presence. Pacific claims to have 700,000 users each day, and about 2.7 million per month.
Social Gaming Proving Lucrative for Caesars
Caesars, of course, isn’t new to online or social gaming; the company’s 2013 revenues from Caesars Interactive’s social gaming presence alone brought in $290 million. Their other social sites include their kingpin World Series of Poker brand, as well as Playtika and several Buffalo Studios-produced games. According to Eilers, Playtika was a $103 million purchase for the gaming conglomerate, while Buffalo Studios was picked up for $45 million. And the gaming analyst company says Caesars is on a good path with all these acquisitions.
“We believe Caesars acquired both companies at attractive multiples,” said an Eilers report. “In fact, its acquisition of Playtika has turned out to be one of the best merger-and-acquisition deals we have seen in the past five years.”
Caesars says it plans to merge Pacific’s products into its existing Playtika social and mobile gaming platforms. They also noted that Pacific’s 100-plus employee base worldwide would be safe in retaining their positions after the merger.
For Playtika’s CEO Robert Antokol, the deal is also a plus, saying the House of Fun addition will simply pull in new users to his business’s platforms.
“The acquisition allows us to offer a new quality product to our loyal user base and to attract new users,” said Antokol. “We believe the talented team at Pacific Interactive not only brings with it a unique product, but will also be a strong addition to the group and add to our market leadership in the category.”
Besides Caesars Interactive, other global gaming businesses – such as International Game Technology (IGT), Zynga and Scientific Games -have found success in the social gaming market segment. IGT operates the DoubleDown Casino online. Krejcik says this latest move by Caesars may, in fact, make IGT and these other companies step up their social gaming presence.