This story is sponsored by Party PokerPartyPoker owner bwin.party is to invest US$50m over the next two years on establishing a standalone social gaming business.
The social gaming unit, called Win, will be headed up by former Mytopia and Amuso CEO Barak Rabinowitz. The company has already spent US$17.25m of the US$50m on acquiring a number of social gaming assets from Velasco Services and Orneon Limited to “accelerate our market entry”, said the company this morning.
The development studio, already operating as part of the company’s Win Interactive subsidiary based in Eastern Europe, will develop new content to be rolled out across mobile platforms, social media channels such as Facebook and its own standalone Win.com platform, as well as drawing upon the company’s existing portfolio.
Social sports betting, casino, poker and bingo applications will be launched within the next 24 months, operating on a ‘freemium’ business model, whereby revenue is generated based on the sale of virtual credits for users to advance in the games, as well as purchase virtual gifts and other consumables.
bwin.party has also assumed several B2B contracts through the acquisitions of Velasco and Orneon, so Win Interactive will continue to provide products and services to these third parties.
The first applications will go live this summer.
bwin.party co-CEOs Jim Ryan (pictured) and Norbert Teufelberger said: “We are focused on building a meaningful stand-alone enterprise that will operate outside our core real money gaming business but which will benefit from the Group’s significant resources and assets.”
The company said that it would accrue additional costs in 2012 or 2013 of €5m-€10m but said “we believe we can deliver attractive returns in the medium term through relatively modest investment and relatively modest investment, funded from operating cashflow over the next 18 months.”
Announcing the strategy back in March, Teufelberger admitted he had “underestimated” how powerful social gaming would become, 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%.
The company however decided to develop its own business due to the large valuations being placed on existing social gaming businessses, “valuations we are not willing to pay”, Teufelberger admitted. US machine giant recently paid a huge US$500m for Facebook social casino business DoubleDown Casino.
bwin.party said the social gaming team it had assembled had been behind the development of successful Facebook casino Slotomania, the parent company of which, Playtika, was acquired in full by Caesars’ Interactive Entertainment late last year for US$220m.
Prior to merging with PartyGaming to form bwin.party, bwin in September 2009 purchased a majority stake in Dutch Massive Multiplayer Online Game (MMOG) business United Games, allowing simultaneous users to play role-playing and fantasy games across the internet via computers and consoles like the Sony PlayStation 3, Microsoft’s Xbox 360 and Nintendo Wii. Thc company has also since developed a number of social gaming products.
