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ould buying an existing online operation be the best way for chips-and-tables businesses to make their way into Internet gaming? One consultancy, the Media & Entertainment Consulting

Network (MECN), thinks so – and its ruminations make for persuasive reading.

MECN was prompted to look at the future of

mergers and acquisitions in the online gaming market by the amalgamation of Bwin with PartyGaming, which when it completes around the beginning of next year should create a 700m Euro gambling behemoth.

Interestingly, they’ll be retaining the two distinct

Operators must react quickly to market developments and needs rather than lose customers

brands. Why, then, merge? Well, Bwin’s Co-Chief Executive Norbert Teufelberger may be guilty of indulging in cliché when he says “size does indeed matter”, but for once the cliché is apposite.

“Not only shall we have the first full house for

sports betting, Poker, casino and games, together we shall be number one with respect to product portfolio, technology, development, marketing, and customers,” Teufelberger predicts. In other words, the pair will be greater than the sum of its parts.

MECN suggests that there are particular tactical

motivations for the Bwin/PartyGaming marriage, such as the need for defence against competitors moving into Poker and a requirement for scale as the firm prepares to attack the US market. But there are also broader strategic reasons that could make equal sense for many other companies in this sector, the consultancy suggests.

As the boom fades and markets mature, there’s a

need to more sensibly match resources against likely revenues. Joining forces can extract more value from organisations and technology platforms that are under-used, as well as offer economies of scale, and give gaming networks more liquidity.

Of course, it’s not as simple as taking over an

online operator, sticking a new logo on the Website and watching the bets flow in. The bricks-and-mortar firm may need to make more than one acquisition to cover the market territories, customer profiles, and gaming choices that it wants to offer. Back-end systems need to be integrated. Positioning needs to be considered carefully: how do you put the online service to work for the land-based brand without alienating the existing Internet user base?

Indeed, buying your way into online may prove to

be no simpler than setting up an entirely new operation. But it may, if MECN’s analysis is correct, be a lot less risky.


Is it time for land-based firms to look seriously at acquisitions in the online gaming sector? Barnaby Page reports

And there are opportunities for cross-selling –

Bwin and PartyGaming, for example, reckon that they share only 15 per cent of their customer base.

“Most discussions about consolidation in the

industry are about the ‘big guys’ getting together – but in reality there many more options for consolidations and mergers,” says MECN. Indeed, it reports that according to its own research, the industry considers consolidation the second most significant trend governing its near future (after regulatory liberalisation).

MECN is particularly insistent that land-based

casino operators now need to look at this route to establishing an online presence, implying that the time for big new launches from scratch may be past. “Strong offline brands that do not yet have a significant online business will have no other option for closing this gap than to acquire existing online operators,” MECN continues.

“Although acquisition is not always the cheapest

approach to achieve a comprehensive offer for a company’s customers, operators must react quickly to market developments and needs rather than lose customers by taking too long to grow organically.”

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