Content owners hate to take risks, but gambling may soon become second nature to big players like FremantleMedia.
With it getting harder to find the next “American Idol” or “Got Talent” franchise, rights holders like FremantleMedia, one of the world’s biggest owners of entertainment rights, are looking at new ways to make money in addition to the funds earned from production and distribution.
Earlier this month the company, part of the RTL Group, appointed its first head of gambling, an exec with no TV experience, but who has almost a decade’s worth of expertise in the U.K. gambling biz.
Simon Murphy has worked for online and mobile gambling outfits IGT WagerWorks and Million 2-1.
His appointment coincides with FremantleMedia’s decision to integrate its gambling division, which bowed in 2008 as part of FremantleMedia Ventures, into distribution arm FremantleMedia Enterprises.
According to Murphy, its success, tied to shows such as “The X Factor,” “The Price Is Right,” “Family Fortunes” and even “Baywatch,” has encouraged the company to beef up investment in this area. The shows all have associated online slot machine-style gambling games that require only a credit card to play.
This kind of gambling is illegal in the U.S., so FremantleMedia’s services focus on Europe, the Middle East and Asia, where a more relaxed regulatory environment enables media firms to grab a slice of the highly lucrative market.
It is also a relatively risk-free way of boosting bottom line. An online game linked to a long-running hit show — or to an old one that still resonates with auds, such as “The X Factor” — requires no lengthy development costs or expensive contracts with celebrity showrunners.
In 2008 the U.K. Gambling Commission estimated that online gamblers generated £896 million ($1.4 billion) in revenue.
Last year, financial magazine the Economist wrote: “Britain seems to have found the right balance between paternalism and permissiveness, recognizing that people who wish to gamble will do so, particularly today when all they need is a computer, a broadband connection and a credit card.
“Ensuring they are not cheated requires regulation, rigorous oversight and a commitment to an open and competitive market. All of these things are to the good.”
Firms like FremantleMedia and rival Endemol, which has enjoyed success in this field via its “Deal or No Deal” game, hope that policymakers in Washington, D.C., will emulate the more liberal U.K. and relax the rules.
“Everyone thinks there will be change in America. It could be as soon as this year,” says a former Endemol games producer.
Murphy’s brief is to concentrate on territories where online gambling is permitted, principally, he says, the U.K., Italy and parts of Scandinavia.
“When we see what works in the U.K. we will try to expand it into other regulated territories,” he says.
Germany, where RTL-owned webs are hugely important to the company’s success, is out of bounds for online TV-related gambling.
But Canada is another market where online gambling is allowed; two years ago, FremantleMedia bought a stake in local games developer Ludia.
Of course, the key question is how big a cash cow TV-related online gambling is likely to become.
Murphy, not surprisingly, declines to provide any hard information, but the odds are stacked in FremantleMedia’s favor. The outfit owns rights to many shows that customers recognize at the click of a mouse, and further launches of online slot-machine style games look imminent.
A “Got Talent” game is in the cards. Working with local third-party games developers Electracade and gambling firms Betfair, Rank and William Hill, Murphy is betting that even a show as seasoned as “Sale of the Century,” which bowed in 1969, can be turned into a lucrative online gambling property.
“Brands are very useful in customer acquisition,” he explains. “In gambling, we talk about the ‘walk-up factor,’ which is why a TV title like ‘The X Factor’ or a film such as ‘Legally Blonde’ (FremantleMedia owns several MGM titles for exploitation in the gambling space) are very useful for customer acquisition. ‘Legally Blonde’ is especially valuable because it appeals to women who, in general, are less likely to gamble than men.
“But the challenge is not just to have a good brand but to underlie that with very good game play and good margins,” Murphy says. “It is one thing using the brand to recruit and acquire a player, but if you want to build a serious business, the games have to be engaging.”
Murphy says a typical player spends around £1-£2 ($1.60-$3.20) a spin “with the maximum of probably £500 ($800 million), but high rollers are rare.”
And if Murphy succeeds, FremantleMedia could hit the jackpot.