bwin.party is now focusing acquisition efforts on just 10 core European markets as part of an ongoing initiative to slash costs and build a more sustainable business model, the company’s boss revealed today.
Norbert Teufelberger (pictured) told analysts in this morning’s Q1 earnings call that the bwin and PartyPoker brand owner’s recent withdrawal of acquisition marketing spend in selected dot.com markets meant that: “Instead of acquiring new customers in more than 30 markets, we will focus now on around 10.”
As well as providing additional impetus to the company delivering post-merger synergies of €70m in 2013, the Austrian said that refocusing on retention rather than acquisition in 20 dot.com markets would also “reduce our exposure to regulatory shocks, that have had such an impact on our business over the past few years.”
Eight of the remaining 10 European markets on which the company was now concentrating acquisition efforts were already nationally regulated, said Teufelberger, with the other two, Netherlands and Germany, being treated by the company as soon-to-be-regulated territories.
In Germany, which generated 23% of group revenues last year, the bwin.party boss said he understood that the gambling representatives for each German federal state were re-examining all applications, “a process that is likely to delay the whole process.” The company said it remained optimistic of receiving one of the 20 permits available “in the event that licences are issued in a transparent and EU-compliant manner.”
Teufelberger however admitted that a consequence of the long and complex integration of the bwin and PartyGaming platforms and player bases post their 2011 merger was that bwin.party now lagged well behind its peers in the increasingly important mobile vertical.
“We are just not yet in a position in all the markets we operating in to give our customers the mobile experience they deserve today.”
bwin.party revenues fell 17% in the quarter to €180.2m. Teufelberger said several factors had taken their toll, including: “[T]he introduction of turnover-based gaming tax in German and the corresponding change to our offer, the closure of Spanish slots, and ISP blocking in Belgium.
“However, it was our shift from ‘volume to value’, together with a lower-than-expected casino and poker performance following the integration of our dot.com database, that were the main reasons behind the 17% decline in revenue versus the same period in 2012.”
Casino net revenue plunged 20% to €57.0m from €71.0m primarily reflecting reduced marketing in non-core dot.com markets, reduced cross-sell from sports betting customers following the dot.com platform migration, ISP blocking in Belgium and the closure of slots in Spain last June post-regulation. Poker NGR was down 37%.
CFO Martin Weigold said the PartyPoker owner was “aiming to get back some of that lost poker cross-sell” with the launch in June of its first wholly new product since 2009. “We lost over 30,000 a day, we’ve got back, we reckon, around a quarter of that so far.”
Article written by Peter Holmes
