Bwin.party Bets $50 Million on Social Gaming
Bwin.party, the biggest gambling company online, recently announced its foray in to the world of social gaming. The group already owns popular online casino, sports betting, poker and bingo sites. With ‘Win’, a new social games studio, bwin.party hopes to maximize the opportunity offered by social gaming.
The investment
The group has invested $50 million into the social gaming venture. The funds will be used for the following:
- Establishment of ‘Win’, a new social games studio with dedicated teams for development.
- Development and release of numerous new and interesting social gaming apps.
- Up to $23 million or €18 million will go in purchasing assets from Orneon Limited and Velasco Services Inc.
From the funds allocated to Orneon Limited and Velasco Services Inc, bwin.party has already paid $17.25 million or €14 million. The assets being purchased include substantial software engineering resources and several existing business-to-business social gaming agreements. This will considerably accelerate the group’s entry into the market. Bwin.party hopes to reach its goal within the next 2 years. The company is betting on its large collection of proprietary game content and experience in analytics, customer acquisition and more to make the venture a success.
Business strategy
In a statement, bwin.party co-CEOs Norbert Teufelberger and Jim Ryan explained that the company has adopted a ‘build and partner’ strategy. The strategy gives company access to additional managerial expertise as well as resources to aid the implementation of planned expansion into the world of social gaming. They further added that social gaming is one of the fastest growing and most exciting areas of digital entertainment, which is the reason behind its inclusion in the company’s business strategy.
The company is focused on developing a meaningful and profitable standalone enterprise. Although the venture will operate outside the company’s core business of real money gambling, it will reap the benefits of the group’s substantial assets and resources. The $50 million investment will kick start the launch of Win. A studio dedicated to social gaming will boost the speed of development and marketing of not only social, but also mobile games. By 2012-2013, the company expects an impact of around 5 to 10 million euro to clean EBITDA and secure a consequential position in the market.
Social gaming potential
Having started less than half decade ago, the social gaming industry is still very young. Over the past few years it has witnessed exponential growth with the ever-increasingly popularity of social platforms like Facebook. While there are a number of other platforms for the development of social games, Facebook is the first choice because of its reach and accessibility. Although real money gambling, meaning staking something on contingency or betting on uncertain outcome, is not allowed on Facebook at present, betting games and social casinos not only exist, but also generate huge revenue. The wins in such games are virtual goods, which can’t be converted to real money.
Social gaming companies like Double Down Interactive and Zynga (developer of popular games like Zynga Poker and Farmville), which were acquired by IGT (International Game technology), have successfully launched a number of casino games on Facebook. Numerous factors like rapidly increasing convergence between social gaming and online real money casino industry, additional networking platforms and the explosion of internet enabled mobile devices together have created the perfect environment for the growth of the industry. The social gaming space is ideal for gambling operators to expand their business.
Given all these factors, it is not surprising that bwin.party co-CEOs are excited about the latest venture. In their statement they also said that the new market had a lot of potential and can deliver lucrative returns over a medium term on comparatively nominal investment. The project will be funded with the operating cash flow from coming eighteen month duration. The group has also put together a social gaming plan video. The group’s first social applications are to be launched this summer.
About bwin.party
Bwin.party is a leader in digital entertainment. It is the biggest gambling business on the internet. It was formed by a merger of 2 major online gambling companies in 2011. With the merger of PartyGaming Plc and bwin Interactive Entertainment AG in April, 2011, bwin.party digital entertainment plc, the resulting company, instantly became the biggest listed gaming company online.
The company offers 4 online gaming products – real money casino, poker, sports betting and bingo. The company reported revenue of around 700 million euros in 2009 driven by brands like PartyCasino, PartyPoker, bwin and Foxy Bingo. With its latest venture, social gaming has been added to the group’s product list. Bwin.part digital entertainment plc is listed as BPTY on the LSE (London Stock Exchange). The company has over 3000 employees. Bwin.party’s strength lies in its excellent gaming products, product delivery, investor relations, marketing experience and customer support.
