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Intertain Problems with UK Online Bingo Market

INTERTAIN COULD FIND THE U.K. ONLINE BINGO MARKET A TOUGH PROPOSITION
 
Low-spend demographic and lots of competition.
 
Expanding successfully into the UK online bingo market could present some difficulties for Canadian operator Intertain, the Financial Times suggested in a weekend article.
 
Intertains new chief executive, industry veteran Andrew McIver, is managing the companies switch to the London stock market in October, using the companies GBP 375 million Jackpotjoy brand to spearhead its further expansion in the UK market, and claiming that Jackpotjoy is already the biggest online bingo site in the UK sector, with around 3 million players.
 
Jackpotjoy currently delivers most of Intertains revenue, and the group hopes that the move to London will enhance investor perceptions.
 
The FT points out that there are challenges ahead that include a relatively small niche market in the UK worth around GBP130 million in revenues (the overall online gambling market in Britain is worth GBP 3.6 billion). And whilst the online bingo market is growing, it is not doing so as fast as the rest of the online gambling sector.
 
Online bingo punters tend to be women in their thirties who are generally low-rollers, spending only a few pounds whilst using social networking facilities, the article suggests...and there are hundreds of sites from which they can choose.
 
McIver told the FT that his strategy for success in the vertical was “More people, more games, more interest and bigger jackpots”, persuading players to also use side games, but he acknowledged that it is expensive to acquire players and not hard to lose them.
 
McIvers comments appear to resonate with those of Eitan Boyd of Stride Gaming, who was also interviewed by the FT for the piece.
 
“You need a lot of nets in the water to catch more fish,” he said, relating that many smaller bingo operators went to the wall following the introduction of the UK governments p.o.c. tax regime.
 
Stride benefitted from that, gobbling up 96 bingo brands last year alone and now commanding a tenth of the UK online bingo market, with rising revenues and a strong share price (up 84 percent since the operator floated on the LSE last year)
 
McIver would be happy if Intertain performs as well with investors, and this is achievable, given its 30 percent market share and high profit margins, the FT comments....but it cautions that the group also carries a debt burden of Cdn$384 million following its past aggressive acquisitions strategy.



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