Blood, sweat, tears, and caffeine

After the gold rush

Building excitement

On your marks

E is for ethics

Starting over

Time to join the grown ups

Analyze this!

What do developers

Germany inches

IQL diversifies

The Poker Channel

Tote goes to Orbis

Balls to win

Losing pounds for pounds

Poker Share re-surfaces

Sweden first with state owned poker

Industry News

Unfamiliar Answer

Small successes

 

The Poker Channel

What is the nature of the business?
The Poker Channel is the world’s first TV channel dedicated to poker, broadcast in 8 million UK homes and attracting around 800,000 unique viewers every month.

Who is the management behind the business?
Crispin Nieboer, founder and chief executive, began his career at Rothschilds before working for the UK’s two biggest TV broadcasters – British Sky Broadcasting and Granada.  Head of programming is James Hopkins, formerly the producer of poker and rugby union at Sky Sports.  Chairman and investor is Justin Byam Shaw, who founded and ran the Legion Group before selling it to Matra Hachette in 1995.

What market is it aiming at?
Nieboer: “The channel attracts poker enthusiasts across all demographics, but typically viewers are 80% male, aged 18-44 and from the middle income bracket.”

What was the hardest part of the process?
“Three things.  One: managing launch.  Two: regulatory, with two separate set of regulations to cope with, both broadcast and gambling.  Three: commercial flexibility.  As ‘first mover’ there are inevitably many unknowns, with a need to maintain commercial flexibility as we learn what’s working and what’s not.”
 
What is the USP?
Key USP is that we are the world’s first dedicated TV channel, attracting egaming enthusiasts 24/7, broadcasting in an increasing range of European territories.

Website:  www.pokerchannel.com.uk

Panel verdict:
Evan Hoff:  “I’m bullish on this one because TV is now a proven medium for delivering new players.  While not entirely the same, the World Series of Poker and the World Poker Tournament have massive audiences and the inflexion point in Party Gaming’s growth was its sponsorship of the World Poker Tournament, so I’m sure there will be interest from advertisers, particularly given the Poker Channel’s European focus.
      “On the downside, while I acknowledge its not the same content, there is now quite a lot of poker on TV, and they will have to compete quite hard for eyeballs.  Management is passionate and experienced, so I’m sure they’£ give it a full go.”

Regional focus

Success in a cold climate

Scandinavia is used to punching above its weight in the egaming world, and the signs are positive for the region’s continued development.  Jake Pollard reports.

Is egaming in Scandinavia a bigger phenomenon than in other parts of the world?  It is fair to say not many observers would have predicted the sector’s seemingly unstoppable rise in the region.  But then again, few predicted online poker would become the worldwide phenomenon it has.

      Various factors have contributed to the continuing popularity of egaming  in Scandinavia, with Sweden in particular leading the way in terms of owning and operating many egaming names that have gone on to bigger and better things in the wider online gaming world.
      Broadly speaking, the main factors that have brought egaming to such high levels popularity among the Scandinavian general public are innovation, dynamism, relatively low population levels, high education levels, strong infrastructure and technological expertise.

Put the success in context

There factors may not be that revealing to seasoned observers, but it is worth remembering some basic figures.  The population of the region as a whole stands at around 20 million, larger swathes  of the countries are unlimited, and the state operators have done as much as they can to prevent private sports-betting and gaming operators from developing their businesses.

      In a sense, necessity has been the mother of invention for many companies from that part of world.  As Petter Nylander of Unibet says, their small size and population meant looking beyond their own borders and traveling long distances to do business was a given from early on.
      The scale and growth levels achieved by many Scandinavian egaming companies speak volumes for the quality, ambition and drive of the managements behind them.  It seems it is about more than the oft-repeated  comment of the weather being so bad, that there was not much else for Scandinavians to do than gamble online.

Quick off the mark

As the likes of Nylander, Anders Holmgren of Betsson and Christian Rajter of Expekt suggest, Swedes and Scandinavians in general have always been very quick to pick up on new technologies and gain the knowledge needed to develop large-scale businesses, whether one is talking about civil engineering, automotive manufacturing or telecommunications equipment.


      When it comes to egaming, the birth of the internet effectively paved the way for the crop of egaming operators to come out of the region.  From web development and programming to transaction processing to graphic design, the region threw up many budding  entrepreneurs and technical wizards who subsequently set up agencies and service shops to exploit the opportunities in terms of ecommerce that the internet opened up.
      Hence, the late 1990s saw the launches of many of the online poker and sports-betting sites that now dominate the Scandinavian egaming landscape.

Historic foundations

But if the internet is one half of the equation, then there are other factors which account for the figures that see the main Scandinavian –owned operators claiming between 250,000 and 900,000 registered customers.


      Winding the clock back to the 1970s and 1980s, the impact of state-sponsored betting and gambling should not be underestimated.  As state TV channels educated the public with regular shows promoting the state operators’ products, the concepts of betting and gambling were quickly understood by the watching public.
      Then there is the prevalence of both the English football which meant the majority of Swedes, Finns, Danes and Norwegians speak excellent English and also found it easy to get their heads around gaming and betting terminology.

“From web development and programming to transaction
processing to graphic design, the region threw up many
budding entrepreneurs and technical wizards”

Waking the giant

With this existing enthusiasm for a punt, the private operators who came up on the back of the dotcom wave quickly spotted the opportunity to exploit what turned out to be a sleeping giant.  The way they did this, in common with other private operators in other European countries, was by offering betting and gaming products with better odds and higher pay-out rates than those offered by the monopolies.  This acted as their springboard to reach the status they currently enjoy, and it is hard to see legislation or anything else preventing them from continuing on their ascendancy.
      In common with many egaming markets, Scandinavia has plenty of room left to grow.  But the key to doing this will be to develop quality, novel products that will enable operators to find new growth.


      With a  highly educated and knowledgeable player base, new entrants will have their work cut out as they attempt to get the most out of experienced punters.  Of course, marketing will play an important part in raising awareness, as will media exposure, which is why sponsored poker shows on TV and affiliate deals with mainstream magazines will continue to be popular.
      But do the indigenous operators have a distinct advantage over the likes of Ladbrokes or Gamebookers?  They would say so, as they address their original markets in their mother tongues and benefit from a long-standing presence in the region.

Consolidation moves

As for the widespread talk of industry consolidation, it has already occurred to a certain extent, although it is arguably nowhere near the final picture.  Only the BetanWin acquisition of Ongame at the end of 2005 has been momentous enough to make people stand up and take notice.
      As Svenska Spel’s grip on its operating monopoly gradually loosens over the coming years thanks to changes in European law, the Scandinavia –focused private operators – including Svenska Spel itself perhaps – will be waiting to share the spoils of the shake out.
      The Scandinavian market is a culture ingrained with a “mix of Anglophile humour and Germanic efficiency”, as one commentator joked.  Overall, the Nordic markets are already well-developed and without doubt will continue to grow.  It is up to the operators to provide gaming and betting products that have the quality and innovation to attract  an already willing audience.
      While some major non-Scandinavian operators have been working the region for a number of years and are relatively well-known to punters, the smaller ones will have to work hard to find their niche and make their mark there.

Europe-wide

 When asked whether the Scandinavian-owned operators can become truly pan-European in their scale, they will counter, not without justification, that  they already are.  And they will continue developing their business ancestors followed before them.
      This will mean heading to Eastern Europe and further east towards Russia, the former republics of the Soviet Union, and the Middle East, while others will carry on targeting other parts of Europe through acquisitions, marketing and sponsorship.


      But whatever route is followed, as these pages suggest, it is a fair guess that the Scandinavians will continue to punch above their weight on a global scale.

Chief executive views: Petter Nylander, Unibet

The Scandinavian market can be grown further by targeting more user groups – on the whole it is still young men playing online.  If you look at the general population, eight out of 10 Scandinavians gamble at least once a year so all ages and both sexes gamble.  Most egaming products are biased towards men, so there is still a lot of potential.  It’s a matter of targeting the products better to different demographics.
      And for the core products we believe southern Europe is five years behind northern Europe, so we are exporting what we learned in Scandinavia to those parts of Europe.  The picture is still promising and we are present in markets totaling 500 million people.  To some extent we want to replicate what we have achieved in Scandinavia.
      Swedes and Scandinavians have always been early adopters of new technology.  So we are working off high levels of adoption and then came broadband and the same patterns occurred.  People trust the whole infrastructure and technology.  The combination of those societal patterns and the strong culture of gambling that already existed in the country have created the high adoption levels of online gaming.
      Gambling culture is strong across the whole region and the state monopolies have been marketing their products very aggressively and working with state TV channels for many years, so the public is educated when it comes to betting and gambling.  And with the monopolies’ payback levels being so low it was easy to compete.

      Nowadays it is a bit late to enter the region and it’s hard to compete on price because everything is already in place: the odds, margins are where they should be, and Scandinavians are happy with the current suppliers.  As the first private operators came in and offered better products than the state monopoly, the punters took up the products quickly and enthusiastically so early-mover advantage was very important.  Now there are too many ‘me too’ products.
      Being Scandinavian-owned is a clear advantage in the short term.  The market is all about recognition and understanding the culture.  However in the medium to long term it will be about product and marketing quality.
      The fact that Svenska Spel has been aggressive in marketing its products online has actually built up trust in the internet so that it has turned helped us to a certain extent.  Even though Svenska Spel’s online poker product is an abuse of its monopoly, 80% of its revenue is still done offline and should be placed into context.
      As in most consumer industries there will be five or six brands that will control 80% of the market.  There are a lot of late movers and the big players will get bigger and the monopoly will erode eventually and we will see new demographics taking up egaming, as long as the products offered are relevant.
      Finland and Norway however are very different.  Finland is a tough market and the media owners are close to the politicians so they don’t dare do anything to make them angry.  The situations is similar in Norway.

Christian Rajter, Expekt

The rise of the egaming industry in Scandinavia has to do with a lot of converging factors: we have a strong history of gambling and betting with the state monopolies providing both horseracing and sports betting.  Our background in casino or poker games wasn’t that strong, but Scandinavians are keen on trying new things, and added to our very good infrastructure and broadband penetration, the switch to online gaming was always logical.
      The interesting thing is the state operators across the region are aiming to become like us.  Svenska Spel has launched an online poker room and soon enough it will launch an online poker room and son enough it will launch online casino products.  The monopolies have to copy the private operators because they can see they are losing ground every day.  Their product offerings and business  models eventually will be just like ours, although they will still have poor pay-out rates.  The look and feel will be the same but the actual products will not be.
      In Scandinavia, Expekt is the market leader.  We offer products in 24 languages and now probably do more business outside the Nordic countries than in the region as we continue to establish markets.  Out ambition is to be in all the European markets by the end of this year.
      The way we plan to do this is by offering a mix of localized solutions to each market to go with out Expekt templates.  We obviously believe we have to adapt and develop our attitudes and ways of working to suit each country we target, but at the same time we don’t go as far as changing our brand name.
      Scandinavia is not a big market in terms of populations; Sweden has only nine million people.  One of the challenges is to keep our market-leading position.  More operators are focusing on the region, and while our reputation and history give us an advantage, competition is coming in by the dozen so dealing with it effectively will be one of the major challenges..

      Keeping it clean will be another challenge: many small operators are looking at the Scandinavian poker market and thinking they can break into it.  It is important we ensure people don’t just look to make money quickly and abuse the market.  Even though we have proved doubters wrong time and again, we have to proved doubters wrong time and again, we have to protect our reputation, especially when it comes to the state monopoly and the legislators.
      The market is all about saturation, there are many operators vying for space, so to be successful  you have to head abroad to develop the business.  There will also be mergers and acquisitions, the good operators will be bought out and the others will be pushed out.
      Expekt has no interest in listing and there are clear advantages about not being public.  We know what we need to know about our competitors and even last year not that many people knew about us but we were still one of the leaders in the Nordic markets.  Out profile has risen more this year but we don’t have to reveal anything we don’t want to and we are still flexible and can change direction whenever we want.
      We have got to where we are now through organic growth.  We don’t feel we need to buy or merge with anyone, so why changes something that has worked for us so far?

Luke Brill at Gamebookers

Luke Brill, marketing director at Gamebookers, explains how his company intends to exploits the Scandinavian market.

The Scandinavian market is very competitive.  Companies such as Expekt and Unibet plus foreign companies such as Bet365 and Ladbrokes are all doing some aggressive campaigns in the market.  So it is a difficult market in which to get a good foothold.  However, with our local knowledge and some aggressive offers and innovative marketing campaigns we feel we will appeal to the local punters.  Scandinavia-owned operators are prepared to invest significantly in marketing and are always seeking new ways to attract punters, either through aggressive campaigns or by introducing new products.  The Gamebookers offer is very strong and we have a lot of creative talent in our marketing team that continues to come up with unique and strong campaigns that we feel will appeal.

Anders Holmgren, Betsson

Before the online revolution we already had a strong gambling culture so when it happened it was a practical and easy step for most Swedes and Scandinavians.  Sweden can also be viewed as the bigger brother in the region so when it picks upon a trend it tends to spread from there to the other countries. And whether it is operating traditional economies or egaming ones, it’s case of putting into practice all the knowledge and skills learned through our educations system.
      The main Scandinavian egaming operators have got to that size because straight away they think on an international scale.  As opposed to the US, which has such a massive internal market that US-focused operators don’t need to think outside of it to make good money, we have to adapt to all the different cultures in Europe to grow our brands.  Even in Scandinavia alone, the cultures and environments have big differences and we are very aware of this.
      I think 80% of Swedish people have gambled or bet offline during the course of a year, so one of the most important things to do to grow our businesses is to transfer all this activity online.
      A lot of ideas and new developments are  coming out of Scandinavia, but there are only 20 million people in the region so it is important to keep the technical innovation going to keep the products fresh and appealing.  Nordics are more susceptible and likely to pick up on them first and then it would hopefully trickle down to countries such as Germany, Poland and further south after that.


      Also we are smaller and it’s the old analogy of the small ship being able to turn around quicker and be more flexible than the heavy industries and large organizations.  Whenever we do something we incorporate the fact that we will have to look outside our borders to expand.  That’s how we will take this forward and compete with the major  European operators from the UK or elsewhere.  When people ask me about being taken over the only acquisition of a Scandinavian operator, as far as I know, is that of Ongame by BetandWin.
      In reality it has been the other way round, Unibet acquired MrMookmar and is expanding strongly in Southern Europe.  Betsson is also looking across Europe and while some of the major listed operators can always acquire a Scandinavian outfit, I think the Scandinavian companies have a chance of getting even bigger and acquiring more operators if the management is aggressive enough.
      It could actually work the other way, where we do like the lcelandics and buy companies five times bigger than ourselves.  Sweden is famous for its entrepreneurial spirit and we have to be because we are so small we have to be dynamic.
      The majority of the growth in Scandinavia comes from offline activities at the moment.  The key will be to bring that money online.  But I don’t think the consolidation of Scandinavian –focused operators has started yet because even though the market is maturing it hasn’t saturated yet and when it does it will be when companies start talking to each other.
      Growth and relaxing of the legal situation will help in equal measure, but when companies have problems really growing the market and their turnovers through marketing and internal growth, which isn’t happening at the moment, is when we will see more consolidation.  There is still plenty of growth, which isn’t happening at the moment, is when we will see more consolidation.  There is still plenty of growth and the purchase on Ongame was probably more of a strategic move by BetandWin.  Ongame has good growth and good cashflow and the geographic fit is excellent.
      In Sweden Betsson is ahead of Ladbrokes and after Unibet and Expekt.  Internationally we have just started getting into eastern European and middle Eastern countries which have much larger population than the Nordic countries.  That is where we intend to build on our foundations and push our growt

 

 

 

 

 

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