This story is sponsored by Party Poker
PartyPoker and bwin owner bwin.party digital entertainment is to launch a social gaming division, putting it in direct competition with Facebook game developers such as Zynga.
The world’s largest listed online gambling operator, formed from the merger of the PartyGaming and bwin online gambling businesses last April, made the announcement this morning as it unveiled pro-forma earnings of €199.1m last year, 3% up on the €166.4m it recorded in 2010. Revenue was up marginally to to €816m from €814m, as a strong performance in casino and sports offset the impact of having to close its French casino business and the tough comparative presented by the 2010 football World Cup.
Co-CEO Norbert Teufelberger said during the group’s full-year results presentation that bwin.party had decided to launch “a dedicated business unit with its own management” for social gaming after looking “at least 30 companies to buy, with valuations we are not willing to pay.”
The Austrian cited the example of the recent IPO of Zynga Poker, Zynga Casino and Farmville developer Zynga, which “reached US$12bn, with similar revenue and similar EBITDA to what we have”, as demonstrating the “extraodinarily different multiples” applied in the social gaming space compared with bwin.party’s.
He said that the new division would: “[L]everage our assets, use our slots engine, use our games engine, our sports fixtures, our media content. These are pretty unique and hard to replicate for the social people. We have more assets, we believe, to be successful in the long run in this area than the social gaming guys have.”
Teufelberger, following his criticism last year of IGT’s decision to buy the Entraction poker network rather than bwin.party’s Ongame platform, was also scathing of the the US slot machine giant’s entry into the social gaming space in January through its acquisition of Facebook games developer Doubledown Casino for US$500m, saying it had bought “we believe, an inferior software product” to that of the Playtika business purchased by US land-based operator Caesars last year for US$220m.
Teufelberger admitted to having “underestimated personally how powerful [social gaming] can be, presenting figures credited to Think Equity in showing that social games generated total worldwide revenue of US$5.4bn last year, expected to reach U$14bn in 2015 based on an annual growth rate of 28%.
In common with other online operators, gambling on smartphones and tablets also grew strongly for bwin.party last year, revenues rising 104% year-on-year to €25.3m from €12.4m in 2010, despite Teufelberger admitting the company had yet to invest as much in marketing the channel as rivals such as Paddy Power, Ladbrokes and William Hill. Teufelberger said this was an area which had seen “explosive growth”, citing data showing that 2011 had been the first year where more smartphones and tablets had been shipped than PCs and notebooks, “100 million more globally”.
Betting on smartphones for bwin.party was dominated by sports, accounting for 85% of revenues placed via this channel last year, with casino and poker representing the remaining 15%, but this was expected to rise to 25% during 2012, said the company. 34% of the group’s customers in one of the group’s markets were already using smartphones and tablets to access its sportsbook offering, said Teufelberger, although he declined to disclose exactly which market this was.
