Channel Flips Game SwitchTV: GSN turns to court to salvage offer for mobile bingo business. Monday, December 9, 2013
Game Show Network, which launched in 1994 as a channel airing classic game shows such as “Match Game,” began making big changes in 2007, when it hired David Goldhill as chief executive. Since then, it has developed more original programming, including reality shows, and expanded into more households. It now reaches more than two-thirds of cable households.
Though average ratings haven’t gained during that span, revenue and cash flow from television operations jumped every year due to higher licensing fees and advertising rates, according to SNL Kagan. The company is expected to hit earnings before interest, taxes, depreciation and amortization of $97 million on $216 million in revenue this year, up 24 percent and 14 percent, respectively, from last year.
It moved into social media games in 2010 with the purchase of Mesmo Games, a developer of games playable on Facebook. GSN launched casino-style games playable on the social network in 2011 and then expanded to games on mobile devices.
The allure of casino-style games playable on social networks is clear: The global social casino gaming industry doubled in one year to $1.6 billion in 2012 and is expected to hit $2.5 billion by 2015, according to research firm SuperData. Games are usually free to play, but might charge real money for bonuses such as additional playing chips.
That growth – and the potential legalization of online gambling, which could open an even bigger rush toward such games – has led to more money being poured into the market. International Game Technology, a Las Vegas maker of gambling machines, agreed to pay up to $500 million last year to acquire DoubleDown Interactive, a developer of casino games playable on Facebook. Casino giant Caesars Entertainment paid between $80 million and $90 million in 2011 for a majority stake in Playtika, another online casino game developer.
GSN was looking at an acquisition in the growing niche of casino games playable on mobile devices last year, and during that summer entered discussions to acquire Bash, according to its lawsuit filed in Los Angeles Superior Court.
Bash has one game – Bingo Bash, a variation of bingo that awards extra points when certain bingo spaces are called out. Users initially play for free, but they need to purchase additional bingo chips. Bash announced last year that it was on pace for $55 million in revenue, up from $3 million in 2011.
“GSN has been working to reach mobile customers, and GSN believed that Bash’s product offerings, content production capabilities and business model would complement GSN’s own business,” its complaint states.