Cash Infusion to Fuel Next Generation Entertainment's Growth

15 September 2000
A $6 million cash infusion into Next Generation Entertainment, a leading game and content design studio, will allow the eight-month-old Australian start-up to expand product development and fuel its drive into new markets.

Touting it as a coup in the tight Internet venture capital market, the Sydney-based Next Generation announced Wednesday a deal to raise funds from the prestigious Allen & Buckridge group; its "tinshed angels," a venture capital group comprised of some of Australia's wealthiest people, including Jamie Packer, son of media mogul Kerry Packer; and the firm's original backers, Los-Angeles-based Entertainment & Media Ventures.

At a time when many established Internet companies are struggling to raise capital to survive, Next Generation managed to pull off this venture capital trifecta by raising the $6 million ($3.33 million U.S.) from the three firms.

"The investment is significant on two counts," Next Generation Entertainment CEO and co-founder Tony McAuslan said. "Firstly, it allows us to fast-track our expansion plans, something that is vital when you consider how fast the Internet is moving; and secondly, the investment from such high-profile groups as those involved serves to draw people's attention to the fact that this is a very exciting space for the few companies who actually have the talent and the ability to change the future. By investing in Next Generation, these guys have said to the rest of the business community--'Hey, these guys not only know what they are doing, they have a great vision for the future and we are prepared to back them all the way with hard cash.'"

Each of the three investors will hold equity stakes in the company and sit on its board of directors. McAuslan said he was "very pleased with both the financial result and the added value that these highly experienced groups will bring to our board."

McAuslan added that the successful conclusion of the current funding round had "vindicated our contention that our management team, breadth of gaming industry experience and market penetration offered one of the best business models operating on the Internet today."

The investment will cover the costs of hiring additional employees for offices in Las Vegas and London as well as new development staff in Sydney. McAuslan said Next Generation hopes to hire about 12 employees in the next few months, bringing its staff to about 50.

McAuslan noted that the Australian Federal Government's push for a moratorium on online gaming had affected Next Generation's business plans, forcing the company to look beyond its borders.

"Since Next Generation's inception, our focus has been on the wider global market," he said. "Australia is a great place to carry out development, but 90 percent of our customers are located in Europe, Asia or off the coast of North America. Consequently, any change to the status quo here in Australia will have a minimum impact on our plans. While it is unfortunate that the Australian government doesn't have the foresight to see the benefits of a regulated online gaming market, over 40 other countries are starting to get the message and this is being reflected in the number of deals we are currently doing offshore."

Next Generation Gaming draws much of its expertise from the land-based gaming market, where McAuslan and co-founder Mario Castellari both held senior executive positions with some of the world's largest gaming machine manufacturers, including Aristocrat and International Game Technology. The company currently supplies games and gaming content to both the online and land-based wagering and casino markets as well as content for the WAP, console, Internet and interactive TV markets.

Next Generation Entertainment Pty Limited is currently the world's largest independently owned game design studio specializing in interactive games for online casinos.

Years of research in the land-based gaming market have enabled the company's staff to gain an in-depth knowledge of player psychology, mathematics and game preferences, giving it a unique competitive advantage over other game designers.

The company--at has three divisions producing games and related content for the wagering, interactive and promotional games markets and holds patents on unique games and business processes related to gaming. Next Generation is the world's largest independently owned game design studio. The company's Next Generation Gaming unit, which supplies cutting-edge games to the online gaming industry;, provides promotional games to online advertisers; and Next Generation Interactive, works with console game development partners in the U.S. and Europe. Although game development team are located in Sydney, Australia, Next Generation Gaming currently deals with customers in Europe, the United States, Canada and South Africa.

Next Generation is currently developing some of the most advanced slot machines and tables for the Net, McAuslan said.

"Unlike the USA, where 3-reel mechanical slots are the norm, Australia has had 5-reel video slots for over 10 years and, consequently, we have a much more sophisticated range of features," he said. "More importantly, we are developing 'the next generation' of wagering games that are like nothing ever seen before, and these include multi-player games, new styles of slots and lots of 3-D second-screen features-not unlike a SONY Playstation game. Many of our new ideas are currently being patented, as we feel these will become the standard over the next few years."