As slot gamers, we don’t really consider anything more than how compelling and lucrative a game can be most of the time. After all, we’re there to deposit our money into the games, spin the reels and hope for a successful outcome of that spin. Potentially, we’ll be hoping to trigger one of the game’s inbuilt special features as well. Be that free spins, a bonus round, a multiplier, a progressive jackpot or anything else, we’re usually focused solely on what that game will do for us. Rarely do we ever question how it works for the developer.
It wouldn’t be beyond the bounds of curiosity to wonder how these developers get paid for their games, though. After all, they create the games and we play them – but how do they make the money to be able to continue creating exciting slots for us to access? There must be some recompense from the people placing bets on them at the online casinos that stock them within their lobbies. But how does all this work? Is there a deal worked out that operates in the favour of both the casino and the developer?
Well, it is important to note that there are different grades of developers. Bigger developers who are popular with gamers will obviously get pride of place on the homepage or at the top of the game lobby. This is because they attract players in to the casino, and with them offering popular games, they are likely to be played a lot more. Games that are played more means more money coming in the direction of the casino. And, as a result, it means more money coming to the developer as a result.
But we’re getting a little bit ahead of ourselves with this. Let’s take a closer look at some of the different slot developer categories and how their placement on the site earns them more money than other companies.
The Very Best Developers Come First
The prime group of slot developers usually come under the category of AAA class. These are the best of the best, so you can expect to find companies like Netent, Microgaming, Yggdrasil, Playtech and so on included in this selection. These are big-name brands that pretty much all casinos would love to feature in their lobbies, because they offer the highest quality games and, as a result, the most popular slots, too.
Big companies like these have a lot of power within the casino gaming industry, as one would expect. At the same time, they tend to be the creators of some of the most innovative mechanics and features in the slot world. Take a look at the Big Time Gaming Megaways function, for example, or the Netent InfiniReels.
It’s also the case that these companies purchase licences to be able to construct slots surrounding highly popular television shows, movies, musicians and bands and so on. Anything and everything surrounding popular culture is often a theme that is utilised by these big brands in their slots as a theme. Take a look at Netent’s selection of games surrounding popular rock and metal groups, or its unison with Universal Studios for a series of monster-themed slots like Creature from the Black Lagoon.
Due to the fact that they manage to get hold of such licences and create slots with impactful themes like this, they are able to take their position on the homepage of online casinos and at the top of their respective game lobbies. Due to this increased status level, players are more likely to play the lesser-known slots from these developers, too. Therefore, companies within the AAA class group of developers will usually get a percentage of the casino profits as a result.
The Smaller Companies with Excellent Work Ethic
Smaller companies in the development sphere will usually work on contract projects. This sees teams hired for one or more projects by companies that supply gaming equipment to land-based establishments. These developers are a lot smaller than the AAA class companies. However, even though this is the case, they tend to have a great work ethic, providing high-quality creations. Sometimes, they can surpass companies like Play’n Go, Microgaming and so on with their designs.
Unfortunately, they tend to have much less freedom when it comes to this work. With external contracts, you usually receive the mechanics of the game and the mathematics that need to be applied to it. At the same time, you will usually use the graphics of the original base version, with some minor adjustments, so as to adapt it to board and mobile devices.
In this circumstances, and depending upon the client who is part of the deal, if the game is highly popular with players, then the small developer may be offered a one-time payment once the game is completed. On the other hand, and especially in cases with lesser-known slot games, the team may be offered a percentage of the profits from it instead. This is usually the outcome that happens with small slot developers that will rarely have their games featured in a land-based casino. In this case, the studio will primarily return its investment before any profit is paid out to the owner of the intellectual property rights.
Independent Studios with Originality in Their Designs
Normally, independent studios are fairly small studios themselves, and they often try to create original slot machine games and mechanics. At times, they do take on contract work as well, in order to finance a main project they may have ongoing. It is the most difficult situation for these independent studios because the gambling industry is so strictly regulated. This creates quite a hefty barrier for them to get passed and enter into the scene. For this reason, it is only the hardiest of companies that survive through it.
Even if they do manage to get through, because of the nature of the casino gaming industry, only a small part of the profits from slot releases will come their way. This is due to the fact that it is exceptionally rare for independent studio releases to be featured on the main lobby page or the homepage of an online casino site. In order to be bumped up to such a position, they would need to pay the operators a much higher percentage of their profits. Such independent developers will still receive interest, but at a much lower value than that which is paid out to the AAA class providers.
Companies with Several Studios to Their Name
There are some development brands that possess several studios, found in different locations around the world. These conglomerates tend to have different studios working on different things. While one focuses on introducing innovative mechanics or something similar, others will be looking towards other competitors and trying to outdo them with the production of games in a shorter timeframe etc. As is expected, these companies tend to produce the largest number of slots and, as a result, often make the most money from the industry, too.
It will come as no surprise that brands like Playtech (the largest online game company in the world), which was founded in Estonia in 1999, pretty much control the whole vertical of the industry. Then again, with 140 global licences across 20 regulated jurisdictions, and around 6,000 employees in 19 countries around the world, it is little wonder that a company as big as this will easily outdo a smaller brand in the profit that it makes.
Online casinos will almost never pay for a developer to create a slot game to be included in their lobby. Unless it is specifically asking for one that surrounds its own theme, such as the slots introduced to the Mr Green casino by Netent, which were branded and very exclusive to that site, this never takes place.
Payment from Profit
How does the profit payment scheme come into things? Well, let’s explain this a bit further to you.
The standard RTP rate of many online slots is about 95%, so we’re going to use that as a guideline here. This value is actually calculated over a huge number of spins on a slot, just for its statistical significance. Let’s take a random slot game like Faust by the Greentube brand, which has this 95% RTP rate.
For this example, let’s say that Greentube has agreed upon a deal with the online casino Leo Vegas, that the profits generated by the Faust slot will be divided in a 90-10 format. Of course, these agreements will usually depends upon how many slots the developer can provide, as well as the quality of those games at the same time. But let’s say for example that Faust makes a total of £10,000 in one month from people spinning its reels. In this respect, Leo Vegas will be the recipient of £9,000 of that money, while Greentube will get the remaining £1,000 instead. Obviously, the developer is getting quite the short end of the deal and in a highly dramatic way.
Now, as noted earlier, those developers within the AAA class bracket are much more likely to obtain better deals from the casinos that they work with. On the other hand, teams of developers working under a contract will see their profits dished out in a significantly different way. Leo Vegas would still earn its £9,000 in this example from Faust, while a Greentube subsidiary or alternative smaller company would possibly be given 25% of the remaining profit. In the case of the £1,000 left, the contract team would get £250 for its efforts. Greentube then takes the remaining £750.
How Much Do Developers Get Paid from Online Casinos?
Naturally, each different software developer will work out its own deals with casino operators. Each supplier has its own rate for this. However, the trend already spoken of does exist within the industry. The bigger the studio is and the better its games are known, the more profit it generally takes from the online casino.
Gross gaming revenue (GGR) is utilised for the calculation of this, translating to gross gaming income for this circumstance. The sum of winnings is deducted from the betting amount, providing the GGR. Let’s say players bet a total of £1,000 and won £600 altogether. This means that the GGR is £400, for this specific example.
According to SoftSwiss – an online software provider, gambling platform and more – the following terms are required by these developers:
- Netent charges a fee of 17% of the GGR for standard games and mobile games. For its premium game releases, it charges a 20% premium.
- Quickfire charges a fee of 13% GGR for its standard games, while 19% is charged for premium releases.
- Yggdrasil charges a fee of 16% on its standard slot releases, while 19% is charged for its branded game creations.
- Play’n Go charges a fee of 13% on its standard slot game releases. A total of 16% is charged for games by third party companies.
If you were to compare this with lesser-known developers in the industry, they take an average of between 11% and 13%. Bgaming from SoftSwiss itself for example, takes the least amount at 9% GGR. One of the higher of these smaller studios, Iron Dog, takes 13%.
Therefore, it generally depends upon your status within the online gaming industry as a developer, as to how much profit you are likely to receive. As a bigger company, you can afford to charge higher rates, because, in theory, your games should be of a higher quality. Smaller developers don’t have it quite as easy though, and it is often for this reason that they get swallowed up by the larger brands in takeover bids.