The acquisition of Nolimit City for €340 million appears to align with Evolution’s plan of releasing fewer, but more feature-packed games. But will this be enough for the provider to establish an unbreakable lead in slots, similar to its dominance in live casinos?

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Evolution has made it clear since buying NetEnt in 2020 that it wants to be more than just a live casino giant, but a “one-stop shop” for online casino operators.

From this viewpoint, the reason for acquiring slots developer Nolimit City is evident.

However, Evolution’s Random Number Generator (RNG) division has shown little natural growth in recent results.

However, Georg Attling, equity research analyst at Pareto Securities, notes that this is primarily due to a shift in strategy. The provider has moved away from frequent game releases to delivering higher-quality slot content.

“Indeed, Evolution’s RNG division has not yet met our expectations in terms of growth,” Attling explained. “However, this is mainly due to the realignment of the game release process.”

Following the acquisition of NetEnt (and Red Tiger), Evolution essentially ceased releasing new games at the same rate as before, as it was no longer deemed satisfactory.

This resulted in a decrease in the number of new releases, which Attling claims hindered growth, but the situation may soon shift.

“We anticipate a surge in new games during the second half of the year, which will significantly accelerate the growth of the games segment,” he stated. “Therefore, it’s understandable that the RNG segment hasn’t performed as well as expected, but it was a deliberate strategy.”

Kevin Dale from Egamingmonitor believes Nolimit City aligns perfectly with Evolution’s approach to NetEnt.

“Nolimit City’s games are truly unique and visually stunning,” he remarked. “Games with a darker aesthetic are particularly popular, such as Mental, Deadwood, San Quentin, Misery Mining, Fire In the Hole, and Tombstone.

“They are undoubtedly a wise choice as they prioritize quality and innovative concepts over sheer volume.”

Evolution’s CEO, Martin Carlesund, highlighted the exceptional nature of this deal in a call with investors today, following its announcement.

He emphasized that unlike other game developers, players can often discern the studio behind the game they’re playing, especially with Nolimit City’s titles.

As a result, Carlesund states its content attracts “seasoned slot players.”

“This is a very clear target audience,” he clarifies. “It’s visually appealing, highly engaging, and has solid mechanics. Perhaps more suitable for experienced players, but any player who enjoys Nolimit slots will be drawn to it. They know they’re playing Nolimit – it’s evident.

“These games fill a void we didn’t have previously, it’s clear.”

Thus, Attling states the agreement represents a further dedication to Evolution’s slot strategy.

“It confirms Evolution’s commitment to the area,” he says. “I believe it’s a doubling down strategy because they see the potential, rather than a way to revive a slow-growing sector.”

Seamless integration?
In terms of integration, Dale points out that the process should be smoother as Evolution has already tackled the challenges of integrating slot developers.

“For Evolution, absorbing it should be easier than absorbing NetEnt or Red Tiger, especially as the product range is similar and they’ve done it before,” he says.

However, he cautions that the agreement won’t provide Evolution access to more operators, given the size difference between the acquirer and the acquired.

Evolutions recent purchase of Nolimit City is a minor step in terms of content, adding roughly sixty titles to their existing collection of six hundred and thirty. It also doesn’t significantly alter their market share, only boosting it from twelve percent to thirteen percent. However, Nolimit City’s games are well-liked, with about ten percent of gambling establishments already offering them. This agreement will provide Nolimit City access to a much broader audience, reaching about twenty new gambling venues through Evolutions network.

Nolimit City has been highly prosperous, converting a large portion of their income into profit. They are projected to generate thirty million euros in revenue this year, with a profit of twenty-three million euros. This is comparable to Big Time Gaming, which Evolution acquired last year.

While substantial profits are always desirable, it’s improbable that Evolution is solely seeking companies with the highest earnings. They are focused on expansion and quality, and high profits are a positive outcome, but not the primary objective.

Growth believes it has the power to elevate a struggling firm to a more advanced stage, making the takeover harmonize with its acquisition objectives.

Carlesund alluded to the possible course of Evolution’s future mergers and acquisitions strategy. He stated that slots are a natural domain for Evolution to continue acquiring, but he didn’t exclude acquisitions in the core live casino area of providers, as long as it introduces fresh elements to its collection.

“I don’t believe acquiring a live casino company has potential, but who knows? Maybe it will occur,” he stated. “But there might be some technology like Digiwheel, where we simply need that hardware or software, or require some expansion to enhance our games.

“On the slots side, we have a clearer vision of our objectives. We desire to be a complete service provider, but most importantly, we want to offer users the finest content globally.

“We still require some components, but I believe we’ve found them now.”

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