Rapid TV News analyses the changing nature of TV. One way it does is this to organise round tables among key industry figures to help get a sense of the trends and issues they believe are important at the sharp end of the business.
They recently looked at the way in which the TV and gaming and gambling industries are working together and in some cases forming partnerships. Here’s how the round table was framed : ‘Over the past few years we have seen an enormous change in the relationship between the broadcast and gambling worlds. Regulation in Europe is now starting to change radically, presenting barriers and opportunities to existing or would be operators. In the UK advertising gambling services has been permitted on TV for some time, and with the shift in Ofcom’s licensing to recognise gambling as Teleshopping we now have clearer opportunity for broadcasters and gambling operators to work together to bring new transactional revenue generating content to TV audiences’.
Cashcade’s very own Mark Segal, our Finance Director, went along to join the discussion which you can see here.
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]]>PartyGaming is proposing to merge with bwin to create the clear market leader in online gaming with leading positions in poker, sports betting, casino and bingo. Cashcade, which joined the PartyGaming Group in July 2009, looks forward to the opportunities that this merger will create. For more information about the proposed merger, please go here.
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]]>Innovation in the UK online gambling market is moving so fast that even the most tried-and-tested practices are being abandoned to build valuable new niches.
Affiliates have long been a crucial aspect of marketing for entrepreneurs entering the burgeoning online bingo space. However, one start-up is taking a different route to market, believing that affiliates aren’t necessary.
Tryst Bingo is a new offering that will be keeping all of its marketing in-house and is relying on some of the more cutting-edge social marketing techniques, such as Facebook, to build its player base.
To those outside of the industry this may not sound particularly significant. However, in the world of online gambling it’s the equivalent of a FMCG company launching a new product without using TV advertising.
The new game is being launched by Fatbronze Ltd. The company’s Barry Smead explains the thinking behind the plan : “Starting a business whereby you give away lifetime player revenue is not in the interests of the company. We intend to reinvest our revenue not give it to affiliates. Fatbronze Ltd mission is to provide online gamers with the best choice of games and player experience this can only come from continued investment.”
Developed using a skin from Cashcade, and using the 888/Dragonfish software, Smead is confident that, with the many years gaming industry experience behind it, Tryst will be able to achieve a strong presence in the market place.
The site’s name was conceived when researching dictionary terms for having a good time and meeting new people. “Tryst; a meeting of two lovers” – the player and the game. However, it’s evidently a meeting to which affiliates aren’t welcome. What do you think? Can a new company succeed without affiliates?
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]]>The Economist magazine this week carries a special report on gambling and the rapid pace of innovation in the industry. ‘In the past ten years gambling has changed more than in the previous seventy’, the respected global business journal notes. This innovation helped to power the global legal gambling market to a value of $335bn in 2009, with just over $26bn, or eight per cent, coming from online.
Some of the changes The Economist highlights include: the rise of televised poker tournaments, such as PartyGaming’s World Poker Tour, taking the game to new mainstream audiences; gambling exchanges’ revolutionary affect on horse racing; and more recently Las Vegas’ ‘fightback’ including the launch of Wynn and Sands resorts in burgeoning Asian markets like Macau.
However, as with many other industries, the digital revolution has had the most profound affect and The Economist sees the area offering the greatest future opportunity. ‘It’s not just professional poker that has changed out of recognition in the past decade but all forms of gambling worldwide. The reason has been simple: for the first time anyone who wants to gamble and has an internet connection can do so.’
The Economist’s report gives a summary of the various aspects of online gambling, including the status of UIEGA, the changing views of European governments and the affects of gambling exchanges on horseracing. Online is also driving much of industry’s innovation. ‘As for the disruption from online gambling, it can prove highly creative,’ the report adds. That’s certainly the case in online bingo, one of the fastest growing areas of online gambling. New innovative games are launched regularly, such as Rollover Bingo, a ‘free lotto‘ game marketed by Cashcade Ltd, where players who buy tickets are automatically entered into syndicates for the UK’s National Lottery.
The Economist report ends in praise for the UK’s regulatory approach to the industry. ‘Britain seems to have found the right balance between paternalism and permissiveness, recognising that people who wish to gamble will do so, particularly today when all they need is a computer, a broadband connection and a credit card. Ensuring they are not cheated requires regulation, rigorous oversight and a commitment to an open and competitive market. All of these things are to the good.’ A view that we at Perfect Storm feel is critical to the industry’s ongoing success and growing ability to contribute to UK PLC.
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]]>Consolidation is the buzz word in the industry nowadays. Gone are the guys in small teams who work hard and are all committed to driving revenue 12 months each year. We now see a culture where year-end profit is more important as it increases the attraction of a sale.
I wrote an article 5 months ago questioning whether the niche could be profitable and today the question is still at the forefront of my thoughts. After all, how many times can one reinvent the wheel? In any case, it’s just online bingo, isn’t it?
Twiddling your thumbs throughout October, November and December does not breed a committed and involved work force but might drum up the interest of a bigger player in the pool of gaming companies.
With consolidation comes power. Such large companies have ultimate say over how they treat partners. The slide in control becomes more and more weighted as the company gets larger. How much do Amazon pay their affiliates? The answer is next to zero. eBay? The same…
It’s only a matter of time before this happens in gaming and it has actually already started with the likes of Cashcade cutting their affiliates down to a flat rate of 25% – gone are the days of 35% and even 40% affiliates. Some operators have countered this with even more aggressive affiliate promotions and it took no more than 10 minutes from Cashcade’s news breaking to the industry than for Costa Bingo to announce a month long flurry of 50% revenue share. I wonder though that if Costa Bingo were the size of Foxy Bingo, how likely we would have been to see this reaction as opposed to one of a me-too reply.
So, how can the small guy survive? From an affiliate point of view, it is certainly difficult. Perhaps too from an operator stand point…
…as the offline marketing budgets just can’t even be remotely comparable to those of the mammoth Cashcade or Wink Bingo. This is not industry specific though as copycat brands will always struggle in an established marketplace.
My worry though is that even niche brands who try something different will still be swallowed up because they struggle to communicate their point of difference to the masses. Niche or no niche, it’s difficult to grow organically because of the powerhouses of an industry. For an affiliate, is it just about ranking 2nd in Google for every brand term? For an operator, is it just about spending more than the rest on television advertising? For the sake of this young industry, I hope the answer is ‘no’ for both. I hope there are new, fresh and exciting ideas that can be born on both sides of the fence that are rewarded with growth and market share.
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]]>With the industry becoming more and more monopolistic, can a niche online bingo site survive?
Everyone reading this has been part of the online bingo boom over the last few years and it is interesting to see the industry evolve in a similar way to other industries. The sector is perhaps in consolidation, albeit however slow consolidation because of the size of the acquisitions that need to take place.
Arguably dominated by Foxy Bingo, Cheeky Bingo, Tombola, Gala Bingo and Wink Bingo, can the marketplace support a mid level site? Everyone is looking for a point of difference but how different can bingo be? Software, charity, customer service, promotions…once inside the room you are playing bingo. Why go to a skin when the monsters of the industry are bigger than an entire network of skins?
Online bingo has proven to be very profitable. With hard work, head count can remain low and media spends targeted. There are big brand sites knocking on Foxy’s front door but I wonder if sites outside even the top 15 are sustainable. If the customer service of Perfect Bingo was markedly and publicly better than Foxy’s, I would be inclined to try it out. However if the promotions, redeposit bonuses and cashier were permanently stronger at Foxy Bingo, they would win my long term business.
Despite being in consolidation, the number of high quality sites in the market, in my opinion, remains lower than 20, perhaps even lower than 10. Would a reasonable market outlook second that there is space for an Olympic finalist but not necessarily a new Olympic champion (still quite a feat for an athlete!)? Perhaps a site with a marketable niche or perhaps simply a well run sole website that knows its players inside out. The site would struggle with SEO in the short run and would have to rely on other sources of traffic, but as revenues increase down the road, this could be addressed. As TV spends in 2010 look to set new records for the sector, will the big boys merely mop up all the players/small sites out there?
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]]>The important matter of whether Google can lawfully allow advertisers to use its AdWords service to bid on keywords that are registered trade marks ought to have become a lot clearer as a result of a much anticipated opinion of the Advocate General of the European Court of Justice, Poiares Maduro. This article is a summary of the opinion for non-lawyers. In order to keep it short, we assume you have a good understanding of Google AdWords and the issues surrounding the service.
Brand owners have been keen to stop bidding on their trade marks by their competitors for keywords. But does the use of keywords corresponding to trade marks constitute an infringement of those trade marks? Over time and in different parts of the World, Google has altered its policies and has more recently allowed bidding on these keywords. This has led to court proceedings all over Europe, including those in England between Interflora and Marks & Spencer. The French courts were the first to pass issues to the European Court of Justice and it is these that the Advocate General considers. In short, the Advocate General’s opinion is that Google and advertisers do not commit trade mark infringement; neither by allowing advertisers to select keywords that are registered trade marks nor…
…by displaying advertisements triggered by AdWords. The opinion is essentially reached by breaking down and analysing two component parts of AdWords – firstly selection of AdWords (the transaction between the advertiser and Google, which the consumer never sees) and secondly the display of advertisements by Google. He reached this opinion through analysing at length a series of questions. For the purpose of this briefing we will just look at the key issues:
i) Selecting – A key finding is that keywords themselves are internal to AdWords and only concern Google and the advertiser. When keywords are selected by advertisers there is no product or service being sold to the general public, and therefore the use is not one in relation to the goods or services of the brand owner. The process is internal to AdWords. As a result, Google has not committed a trade mark infringement by allowing advertisers to select, in AdWords, keywords corresponding to trade marks. The Advocate General noted that in the traditional example of use of a trade mark in advertising, a link is established between the trade mark and the good or service sold to the general public. This happens, for example, when the advertiser advertises on a billboard his goods under the trade mark. However, the service being sold here and to which the use of the keywords corresponding to the trade marks is linked is simply to Google’s own service, AdWords. In the Advocate General’s opinion, the selection of keywords is not a commercial activity and not in the course of trade. Advertisers will select keywords for many legitimate purposes ranging from giving a history of a brand to product reviews. He did find that there was a link between the keywords selected and advertised sites that sell products which are identical or similar to those covered by the trade mark. But he did not think that such a link would constitute a trade mark infringement: consumers would not be confused as to the origin of goods or services. People will make judgements based on the text of the advertisement.
ii) Displaying – The Advocate General’s opinion is that neither the display of advertisements, nor the display of natural search results, in response to keywords that correspond to trade marks, leads to a risk of confusion as to the origin of the advertised goods and services. Neither affect the essential function of a trade mark, which is to guarantee the origin of goods and services. Again, therefore, there is no infringement. He says consumers will only make an assessment as to the origin of the goods and services on the basis of the wording of the advertisement or by leaving Google and visiting sites. So, none of this limits the possibility that the text of the advertisements, which the consumer sees, or the sites to which they are taken may themselves infringe through themselves using the trade marks. Essentially, the Advocate General acknowledges that consumers are savvy; they will not normally be confused by AdWords or natural search results. David Hansel’s own simple bricks and mortar analogy for this is the long established practice of “ambush marketing”, where a brand owner’s attempts to promote its brand are effectively hijacked by a competitor. This might be through a sports shoe manufacturer putting up advertising hoardings along the route of a race being sponsored by a rival brand owner. Similarly Dixons has recently been using advertising on the Underground to leverage off consumer awareness of Selfridges, but doing so without infringing Selfridges rights. Yes, there is a link being made, but this does not go as far as to infringe rights, and so it is not one that the law will stop. Even in relation to trade marks that have a particularly strong reputation, e.g. those of Louis Vuitton, the Advocate General says that the brand owner cannot wholly limit or exclude any other use of their trade marks. The public has the right to be able to access information about trade marks from sites other than the trade mark owner’s. He gives the instance of a website describing the history of Louis Vuitton as being perfectly legitimate. Thus trade marks may, he says, be legitimately be used in product review and price comparison sites. This will often be used, for example, by a price comparison website buying AdWords relating to non-participating insurers with links from the Google results to a page on the comparison site headed something like “About Direct Line”.
iii) Google’s liability – The Advocate General says that both Google’s search engine and AdWords constitute “information society services”. A service provider seeking to benefit from a liability exemption under the E-Commerce Directive must remain neutral as regards the information they carry or host. Whilst Google is a neutral information vehicle applying objective criteria in order to generate the most relevant sites to the keywords entered, that is not the case with Adwords where Google has a direct financial interest in internet users clicking on the sponsored links. As a result, the liability exemption for hosts provided for in the E-Commerce Directive does not apply to the content featured in AdWords. Google cannot claim protection in relation to Adwords under the safe harbour exemption from liability offered by the E-Commerce Directive. However the Advocate General puts the onus on the trade mark holder to prove specific instances of illegal damage to their trade marks.
iv) The opinion in context – Over the years substantial returns have been made from “brand-squatting” in the paid search space. Affiliates spotted that the cost per click (“CPC”) rate payable to search engines for branded keywords (e.g. “Interflora”) were much lower than for generic keywords (e.g. “flowers”). Therefore they were very profitably able to convert this into cost per action (“CPA”) revenues. The people who effectively paid for this were brand owners and advertisers. This included the case where brand owners allowed their own affiliates to bid on their own brands as keywords, and rewarded the affiliates for it. Indeed, some brand owners have encouraged their own affiliates to bid on the brand with a view to crowding out those promoting competitive brands. All this can, as Interflora complain, dramatically push up the CPC cost, and for brand owners create costs that would otherwise not exist.
On the face of it this opinion will lead to increased revenues for Google, as competition for keywords will enable anyone to bid on trade-marked brands. In practice, however, in many industries gentlemen’s agreements have been reached so that brand owners agree not to compete against each other. Is this anti-competitive? We do not think so. We are already seeing changes to how businesses uses AdWords – and how they allow their affiliates to use it. Moreover, does AdWords provide the best value for money in targetting customers? What about new ways of interacting with consumers (by which we don’t just mean Twitter!) .
Overall this opinion is good news for Google. It will continue to earn substantial revenues through allowing anyone to bid on keywords that are registered trade marks. From a brand owner’s point of view, the ruling will allow less well known competitors to continue to piggyback on the back of their trade marks. In these current economic times this may prove difficult with already stretched margins. As is often the case, the law is moving slowly. The Advocate General’s opinion is not law, the decision is not expected until early next year. This opinion is important and it is likely to be followed (although the Court may reach a different decision in about 10% of cases). In the meantime business will continue to evolve. Even if the Court does follow this opinion, this should not be seen as the final word on third parties using AdWords to bid on trade marks. In part this is due to the fact that the questions that the opinion looks at are mainly concerned with the activities of Google. It will be very interesting to see what happens when the Court gives its final decision at the beginning of next year. It will also be interesting to see what happens when a case concerned more with the activities of the advertiser – as with Interflora v Marks & Spencer – is finally decided.
We can understand why he breaks up of the process between Google allowing the advertiser to select and then Google displaying advertisements to consumers. But is this helpful – might it not be somewhat artificial and is the process not better looked at as a whole? We are some way from the definitive legal ruling on AdWords – and by the time we have it the methods of digital advertising will most likely have significantly changed. For now, marketeers will continue to use AdWords as an effective advertising tool. For brand owners, we believe the emphasis needs to be not on suing people, but on controlling their interaction with consumers through doing deals that promote and target the positioning of their brands.
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]]>We are delighted to be able to announce that Cashcade Ltd has joined forces with PartyGaming PLC.
As well as offering an absolutely first-class gaming experience for our 2.2 million registered players, our success has been achieved with an amazing team here at Foxy Towers, and innovative marketing campaigns that have built some of the best recognised brands in the UK. Not just in our sector, but across all categories. As reported by the independent Bingoport.co.uk, we have been consistently hosting over 2500 average daily concurrent users in 7 online bingo networks in the 3 months to June 30, 2009. Making us the nation’s favourite!
The deal with PartyGaming is all about the future and how we build our products and business in a highly innovative, rapidly-expanding global market. This development will include two key areas, both of which will be made possible by today’s news. Firstly, whilst maintaining our UK position, we will be well-placed to enter international markets, as they open up around the world. Secondly, with the synergies of a larger company we will be able to help deliver great bingo propositions on managed service deals with Intralot and Cirsa.
This acquisition brings a huge amount to both companies. As we all know, bingo is a fast growing market. H2 Gambling Capital estimate that the global online bingo market was…
…worth $1.5bn of gross gaming yield in 2008 and that this will increase to $2.5bn by 2012. Indeed, in the UK, where we are proud to be the market leader, online bingo is estimated to be worth $410m in 2008 or 27% of the global market.
Speaking about the deal, our very own Patrick Southon, Cashcade MD and my long-time business partner, said, “This is an exciting day for Cashcade and we are delighted to join the PartyGaming organisation. We believe there is a substantial opportunity to leverage our existing business now that we are part of the world’s leading online gaming company.”
As for the immediate future, it’s business as usual for everyone at Cashcade. We have targets to meet and great incentives to grow the business as rapidly as we have been to date. And, vitally, there will be no difference for players. They can remain confident that as part of a FTSE-250 company their play is even more secure than ever.
Onwards and upwards!
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]]>“WHO says Europe cannot produce internet giants?”, asks this week’s Economist, in an analysis of the online gambling industry and the trends driving its development in different markets around the world.
The business magazine’s central point is that, “governments would do far better to offer punters and online-gambling firms a safe, legal but regulated market”. Which, as we have highlighted on this blog, is exactly what has happened in the UK, creating many opportunities along the way. However, the respected journal notes, that is not the trend in…
…many major markets including the US, Germany and the Netherlands that have sought to close down online gambling operators. All of which has only resulted in driving, “the reputable internet gambling firms to friendlier shores and has pushed those Americans most determined to bet—the very people who are the most vulnerable to gambling’s excesses—to place their wagers in the murkier bits of the internet.”
The Economist notes that, “with its love of horse racing, sports and casinos, and its world-beating technology industry, America ought to be the natural home of this burgeoning field. But it has arrested industry entrepreneurs and ordered banks to halt payments to online-gambling firms.” Of course, many people in the US are keen to reverse this approach and the associated UIEGA legislation. However, with President Obama’s attention elsewhere, it may all be too little, too late for the US to play-catch-up with European, and specifically UK-based, companies such as BetFair.
However, the EU itself remains split as to the best way to legislate around the online gambling industry. “In theory there is a single market, but in practice only 13 of the European Union’s 27 member states approve of online gambling. Seven countries restrict it to gambling monopolies owned or licensed by the state, and another seven have followed the Americans and attempted to outlaw it.” That said, the European Commission seems keen to drive Europe’s advantage forward. In June, it lobbied against US regulation, claiming that restrictions on European online-gambling firms break World Trade Organisation rules.
Controversially, The Economist questions that the reason for governments to legislate against the industry is not, as often cited, to protect vulnerable customers, but to secure revenues from state-approved gambling monopolies, including lotteries. “The policy of many of the EU member states towards online gambling seems to be motivated more by protection of the public purse than by protection of the public,” says Leighton Vaughan Williams of the Betting Research Unit at Nottingham Business School.
“Trying to stem this tide is pointless”, The Economist argues, and the depleted state of current public finances on both sides of the pond makes opening up national markets more likely as the industry grows. The gross profit from online betting in Europe is thought to be about €3.5 billion ($5 billion) a year and the tax revenue from such a profitable new industry is likely to sway the legislators views eventually.
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]]>The blogosphere is always full of great discussion about new business models for the internet. Recently the launch of Chris ‘Long Tail’ Anderson’s latest book “Free: The Future of a Radical Price” has been the focus of discussion for many heavyweight commentators, including Malcom ‘Tipping Point’ Gladwell, Seth ‘Purple Cow’ Godin, Fred ‘AVC’ Wilson and John Gapper, the FT’s Chief Business Commentator.
The discussion, and sometimes disagreement, has focused around the central concept of Anderson’s new book, which is that the best way to build a business on the web is to give products and services away for free. Anderson argues this has become possible because the cost of creating additional bits and bytes is close-to-zero and that the best way to gain people’s attention is something-for-nothing.
In what may prove to be a well-worked PR move, Malcom Gladwell, the acclaimed author,…
…argued that Anderson had got it all wrong. Which lit the fire under an online debate that ran and ran, until it eventually came back to so-called ‘freemium’ services. A concept supported by the respected VC and Twitter investor Fred Wilson, where a limited service is given away at no charge, and then upgrades and additional products are offered for a fee. Wilson cites Facebook as an example of the effectiveness of the approach. Having built up a huge global audience of 250m by offering a free service, the company is now building significant revenues from the sale of virtual gifts and applications, along with advertising.
But it’s not just technology where Free is winning the day. Bloomberg suggests that, “Michael Jackson would have moonwalked his way out of some of his millions of dollars of debt next week with the first of 50 sold-out concerts at London’s 02 Arena.” This is because, the article notes, concerts and merchandise have become the main revenue generators for artists. The music itself, distributed for free via Youtube and Spotify, is now merely a way to create awareness. In fact, the live performance market raked in $21.6 billion in 2008, an increase of 54 percent in three years. All of which appears to hint at a “changing of the guard,” reversing the model where bands would tour at a loss to sell CDs.
As it happens the freemium model is exactly the approach we have been using within our latest offering Cheeky Bingo, where people can play for free (yep and win prizes!) but are also offered the option of trading up to a different online forum, where they pay-to-play. We have found people really like this freemium service because they appreciate trying something out before they sign-up. However, with so many people playing, the free game can be a frenetic experience. So many people, having liked what they see, have chosen to spend a small amount to move into a more relaxed online forum, with some extra features.
In fact, this has worked so well that it was recognised at the Online Bingo Summit with a prize for innovation. And it was quickly imitated, which as we all know is the sincerest form of flattery!
As you may have gathered, one job for this Perfect Storm blog is to showcase the online gambling industry and its innovative, entrepreneurial nature to the rest of the world. And it seems we are well ahead of the curve when it comes to the Freemium concept. While the blogosphere talks, we act!
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