CQ9 2021- Market Commentary for Second Quarter

Digital Coins May Fall from Hero to Zero Under Global Regulatory Oversight   
The global gambling market is constantly changing. Local markets around the world have experienced dramatic changes, too, due to COVID-19. This CQ9 commentary summarizes the market focus to date from the first half of 2021.
The wide adoption of digital coins and blockchain technology began in 2020 and reshaped the landscape of the gambling industry. Online casinos, payment systems, Big Data and artificial intelligence applications and game development were flourishing. However, a significant challenge hit the market amid the seeming prosperity. Many players were affected directly or indirectly.  
In April 2021, Jesse Powell, CEO of the U.S. cryptocurrency exchange Kraken, issued a warning: “A global regulatory crackdown could happen” on digital coins such as Bitcoin.
The capital flows and payment systems in China were tightened up by government policies. Operators offering digital coin withdrawal and gambling services were adversely affected. Other countries in Asia such as Thailand, Indonesia, Turkey, Iran, Palestine and Korea also joined the strict control and monitoring of digital coins. As the saying goes, there are always counter-policies for policies. We look forward to tangible solutions emerging in the marketplace.  
CQ9 knows that the high penetration of digital coins will be a blessing for players. We have been ahead of the game and will soon provide relevant services by working with our cooperation partners. We are always at the forefront, no matter how the market evolves.

Gaming towards blockchain! Rise of “PLAY TO EARN”!

The combination of games and blockchain technology transforms the traditional “FREE TO PLAY” model into a “PLAY TO EARN” (P2E) model. It is a brand new business model.
Traditionally, vendors offer free-to-play games. Constant top-ups are required for a better gaming experience or interaction. The P2E model is an upgrade of this traditional paradigm by using blockchain. Players can earn real money with non-fungible tokens (NFTs) backed by digital coins. With proactive involvement in the virtual economy, players can earn the assets and tokens from the game and trade such assets and tokens in the open market. Going forward, the “FREE TO PLAY” model will give way to “PLAY TO EARN” all over the world. Games will be financially institutionalized.
This is enhanced by the technological application to games. Many platforms have launched games based on blockchain so that games can support encryption and validation. For instance, online card games and baccarat use encryption and third-party validation to resolve the previous problems associated with dealing with fairness and credibility.

Going with the Flow with Continued Footprint Expansion in SE Asia
Leading vendors have been shifting focus to emerging markets such as Southeast Asia and India during the past two years due to fierce competition and government policy pressure. Many products have been developed to cater to Southeast Asian markets for players to choose from.
CQ9 started to establish its presence in Southeast Asia a few years ago by introducing many games popular with players in Thailand and Vietnam. Among these games are “XócĐĩa”, the most popular game in Vietnam; “Rollingbet”, the most down-to-earth game in Thailand; “Pok Deng”, the localized version of baccarat and “Alice Run”, a cool parlor game in Thailand.
Meanwhile, India is a bright spot in the Asian gambling market, particularly with “fantasy sports”. According to a report by Maple Capital, more than 745 million players of real money online games in India and fantasy sports account for about 30% of the market, heading into the right trajectory. Whilst fantasy sports vendors attempted early on to enter the Asian market, the development has been somewhat awkward due to regulatory restrictions and market sizes. However, we remain optimistic that the market will find its way out by continuing to add to the variety of online entertainment in Asia.

Winners Take It All in Global Live Casino Market by Launching Games of Rich Variety to Attract Players
The world’s biggest live casino operator, Evolution, acquired the lot and live casino supplier NetEnt to integrate the strengths and features of the two companies and introduce the whole new concept of live casinos with slot machines.
The famous character Gonzo in Gonzo’s Quest, NetEnt’s most popular online slot machine, is given the second lease of life by using Evolution’s proprietary video technology to successfully integrate the virtual and the real worlds. Players can enjoy the blend of live and slots-style gameplay in virtual reality. This product has created a lot of buzz in the marketplace.
In general, the decentralization of blockchain technology brings new changes to online gambling. The use of digital coins to circumvent government control measures remains a promising solution to revised policy schemes. The shift in the Asian market provides more opportunities to emerging markets and serves as a catalyst to more different online casino games. We continue to stay a close eye on live and virtual reality technology so that we can keep abreast of the future trends and offer quality and up-to-date products for our cooperation partners.