Bwin.party will be undertaking a series of major changes in the coming months: that’s the message emanating from the company’s HQ following another set of disappointing financial results.Â After publishing a breakdown of the company’s latest financial downswing, bwin.party Chief Executive Norbert Teufelberger explained that a new structure is needed if the company wants to thrive in the modern gaming market.
Earlier this month, a string of management changes were made in an attempt to simplify the company’s chain of command; but, according to Teufelberger, this is only the tip of the iceberg.Â If bwin.party is to improve its commercial performance, Teufelberger believes the company needs to adopt “alternative financing and corporate structures in order to create additional value”.
Aside from management changes, bwin.party will be looking to switch its corporate focus to a brand-led approach.Â In practical terms, this means bwin will become the B2C brand in Europe and derive support from brands such as Foxy Bingo. In contrast, the company’s US axis will operate under the WPT and party brands with more focus on poker provisions in emerging markets.
The main reason for splintering the company in this way is to “open up the possibility of alternative financing structures in the future,” according to Teufelberger.
Although bwin.party’s 52-week low of 79.00 pence per share is being touted as the main driver behind the call for change, Teufelberger admitted that Amaya Gaming’s purchase of the Rational Group (PokerStars’ parent company) has caused an industry shift.
“Bwin.party should be prepared to play an active role in any future reshaping of the industry if further value can be delivered,” said Teufelberger of the new igaming landscape.
To help balance the books and consolidate the company as a whole, bwin.party will be looking to raise â‚¬40 million ($52,544,400) through the sale of its payment processing business, Kalixa, once it reaches a certain revenue target.Â Furthermore, a series of cost-cutting initiatives will be rolled out across various areas of the company, including staff, marketing and, significantly, online poker affiliates.
Although this won’t directly affect players at the felt, it could impact on the number of internal and external promotions offered by PartyPoker in the coming months.Â Moreover, PartyPoker New Jersey could also see a reduction in advertising and tournament- based promotions following continued financial losses in the US.
Overall, Teufelberger wants to see his company switch from a product-led business to a brand-led entity.
“We need to leverage our brands, expand mobile footprints and improve CRM process. What we have lost is being a really great operator,” Teufelberger explained.
Bwin.party’s 2014 Balance Sheet
During the first six months of 2014, bwin.party’s online poker axis saw a 31 percent drop in revenue from â‚¬63.9 million (2013) to â‚¬44.1 million.Â In terms of adjusted earnings, this equates to a â‚¬1.4 million loss which contrasts with a â‚¬7.2 million profit seen during the same period in 2013.
Although much of this loss has been attributed to the company’s New Jersey operations, poker has been the worst performing vertical across bwin.party in 2014 due to a 4 percent drop in player sign-ups and an 11 percent fall in daily activity.