New poll: Where will bwin.party's new strategy take it?
Plans to "slim fit" operations will see operator sharpen focus on regulated markets.
Bwin.party CEO Norbert Teufelberger (pictured) outlined a clear strategy for the operator last week during its full-year results announcement, explaining that he intends to “slim fit” the business by investing less in unregulated markets and focusing on “more valuable” customers.
Having spent much of the past year working on the integration of bwin’s poker players to the PartyPoker platform, 2013 looks set to be a period of consolidation with a heightened focus on regulated jurisdictions which Teufelberger said would ultimately make up 75% of the business.
In December 2012 approximately 35% of its gaming revenues came from nationally regulated markets and 38% of gaming revenues were subject to gaming taxes, compared with the figures in December 2011 that were 26% and 26% respectively.
“Our strategy is unchanged, but we are not relying on innovation alone to return our business to growth,” the CEO explained after revealing a 17% slide in overall company profits. “We are accelerating the pace of change by shifting our revenue mix towards nationally regulated and to be-regulated markets. This includes gearing up for a launch in the US, which now seems to be a more likely prospect within the next twelve months following recent events at state level.
“At the same time we are changing our approach to dotcom markets with increased focus on fewer but more valuable customers. We are simplifying our business, moving from ‘volume’ to ‘value’, which we believe will allow us to further increase our operational efficiency.”
But how much of an impact can bwin.party’s strategy have on its success in years to come?
Last year it set out a four-point plan to reverse declining poker revenues and plans to become the “clear number two” top PokerStars by merging bwin and PartyPoker liquidity, blaming regulatory ring-fencing and shrinking dot.com liquidity for disappointing revenues.
However, the operator is likely to become a major player in the future regulated US egaming market through its software partnerships with MGM and Boyd, and a decrease in investment in grey territories will lead to significant cost savings.
On the downside, the shift in strategy is also likely to dent revenues in the short term, given that markets such as Canada contribute around 3% of revenues, while a greater reliance on dot.com markets will lead to higher tax outgoings, such as in Germany (23% of bwin.party revenues) where a 5% turnover tax on all sports betting came into force last year.
Where do you think bwin.party’s new strategy take it? Vote on this week’s poll on the right-hand side of the page.