William Hill needs to keep up the pace

During the close of 2015 online gambling became a race for scale, and there really couldn’t be a worse time for William Hill to potentially stall the car. While the Paddy Power Betfair merger surged ahead during the close of the year, Hills found itself caught up in internal issues that it quickly needs to solve in 2016.

The egaming sector is littered with brands whose fall from grace was as fast as it was surprising. When it goes wrong it goes very wrong indeed. At its heart, online gambling is a simple business which relies on the benefits of scale and continued reinvestment into marketing. Any distractions, particularly around technology or management, can have major knock-on consequences.

Towards the close of the year it seemed William Hill were having issues with both. The announcement of the departure of online MD Andrew Lee, who has overseen some hugely important strategic changes and a 64% rise in revenues and 22% rise in profits in his first two years in charge, was a shock as was the troubled roll out of its biggest technology project in many years.

The two will be conflated in most people’s minds, but William Hill CEO James Henderson refused to say if Lee was jumped or was pushed when asked directly by an analyst in the trading update conference call. He did, however, go on to make a seemingly pointed series of statements about wanting to build “my team”.

Increasing Pressure

There is no doubt an increasing pressure on online to perform after a disappointing few months. Q3 results saw operating profit drop 37% and revenue fall 3% while the two years in the making Project Trafalgar project came with a more of a splutter than a bang.

The front-end cross platform HTML5 relaunch was supposed to give Hills an edge in the market and position it at the forefront of digital gambling. In time it no doubt will do so, but in the short-term it led to the type of app relaunch that gives executive teams sleepless nights. The iOS launch saw ratings drop like a stone to an average of 1.5/5 with some serious usability issues.

In a trading statement almost designed to obfuscate, William Hill announced core market revenue growth of 14% driven by 18% growth in gaming. This suggests growth of 9-10% in sportsbook, which during a period where the firm was fire fighting on mobile must seem like a win. And what’s crucial now is it uses this new platform to continue innovating rather than seeing it as an end point.

Both Betfair and Paddy Power will be looking to push hard on personalisation and front-end innovation during 2016 with the sportsbook battle for market share more brutal than ever. PokerStars’ recent Spin and Bet launch also proves competition could be coming from an ever increasing number of new sources in the coming year. Hills needs to be leading rather than following in this regard, and a new management team will quickly be feeling the pressure if things don’t go to plan.

A New Broom

Andy Lee’s interim replacement is ex-Gaming Media Group founder and CEO Crispin Nieboer, who joined Hills two years ago as a corporate development executive. Since then he’s been leading the Shoreditch tech hub and has been at the heart of a number of new innovations, according to Hills. He faces a tough job leading a disparate online team spread over several international offices.

His task won’t be helped by the resignation of another key member of the team in the shape of CTO Finbarr Joy, who joins FD Neil Cooper and sportsbook director Matt Warner on the list of senior departures. Although perhaps a clean slate in terms of management is exactly what Henderson wants at the present time. It’s certainly what he was suggesting to analysts.

And let’s not overstate the problems. Hills is still a hugely impressive firm with strengths across the board and is operating at a scale most of its rivals would dream of. It has done most of the heavy lifting in positioning itself for a platform neutral future and its gaming product looks better positioned for mobile growth than many of its rivals. But it can’t afford to lose focus.

There will be external pressure to get involved in M&A activity, and internally there will be several new executives to slide into place in key roles. Against this they face a backdrop of increasing regulatory focus and tax pressures, and the most competitive environment we’ve ever seen in the UK. As history will tell us, it can’t afford any major missteps and the next 12 months will be as important in its history as any before.