The e-cigarette industry has much to learn from the experiences of the online gambling business, including the precedence of politics over science, according to a new analysis by ECigIntelligence.
Separated by about a decade in their genesis, the two sectors share characteristics including innovation, disruption and rapid growth – as well as a lack of specific regulation to address a range of public policy concerns such as under-age usage, addiction, and the potential risk to taxation revenue.
However, just as e-gaming steadily became the object of thorough regulation in many major markets, e-cigarettes are going through the same process and provoking much the same battles.
“Online gambling is a highly emotive issue, which generated a good deal of political debate.E-cigarettes generate huge levels of public interest, and as such are a highly politicised issue, with some political grandstanding,” says the report.
Among the lessons to be drawn from the gambling sector’s experience is that complete prohibition is unlikely to succeed; that local issues will remain significant even if there is international consensus on product standards; and that “as a political process, the regulation of e-cigarettes may not always follow the sensible path indicated by scientific data”.
The business itself is also likely to develop in a similar way to e-gaming, especially once regulation is more widespread.
“As regulation was implemented, and the cost of entry and price to obtain customers increased, consolidation occurred in the e-gaming market, with many markets dominated by five to ten large operators,” says the report, exclusively available to ECigIntelligence subscribers.
“In mature e-cigarette markets such as the U.S. and UK, consolidation is already underway, with much or the market dominated by five or so brands; this pattern is likely to be repeated in other markets as regulation is implemented.”
What This Means: The parallels with tobacco are such obvious ones to draw that it is sometimes easy to forget that e-cigarettes also have a great deal in common with other innovative consumer sectors, both in services like e-gaming and in goods (we’ve recently been exploring some resemblances to the MP3 player market when it was new, for example).
Of course, the progression of different industries will never be identical. But especially given the slightly disreputable, adult image of the two sectors, it’s very likely that the regulatory ups and downs of e-cigarettes will follow e-gaming quite closely.
– Barnaby Page ECigIntelligence staff
Photo: Images Money
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Please see this page for a detailed description of our methodology.