Internet gaming software company Playtech Cyprus Ltd. (AIM:PTEC) has never concealed its hope that Asia will be the company’s growth engine. Even before the US market was closed to the company, it prepared to penetrate the Asian market by developing customized games for both Japan and China. Europe, which replaced the US as the company’s primary source of revenue, has not been neglected either, even though the company seems to be dreaming more in Chinese, Korean and Japanese rather than in French, Italian or Spanish, or even in German.
Last Friday, “Reuters” quoted Playtech vice chairman Avigur Zmora as saying that the firm was looking to buy up rivals to bolster its position in Europe. “We are looking for the opportunity and when the opportunity is there we usually move very quickly,” he told the news agency by phone from Israel. “We think that this is the right time to prepare the company to be almost the only alternative out there,” he said.
Playtech’s second quarter revenue from Europe rose 33% compared with the corresponding quarter of 2006, amounting to 71% of total revenue. Part of the growth came from the acquisition of Tribeca Tables Europe Ltd., which was completed in March. For the sake of comparison, there was no revenue from the Asia-Pacific region, and they accounted for a fifth of total revenue. It seems that Playtech management has decided to refocus on Europe and delay its penetration of Asia, albeit that is not how they present the case.
“Reuters” notes, “In Europe Playtech competes against Swedish firms Boss Media AB (SAX:BOSS) and Net Entertainment AB (SAX:NET-B), while it also comes up against Cryptologic Ltd. (LSE:CRP; Nasdaq:CRYP; TSX:CRY, CXY) and privately owned Microgaming.” Boss Media has a market cap of $119 million, Cryptologic has a market cap of $287 million, and Net Entertainment has a market cap of $99 million.
Zmora told “Reuters”, “I don’t think there will be a financial problem, our competitors in Europe are now relatively small in market value and are usually cash rich. We haven’t yet concluded what should be the right opportunity or who should be the first target for us.” He added that tumbling global stock markets were making potential deals cheaper.
Zmora added, “What is happening at the moment in the markets is working in our favor... People see there shares slumping whether it’s related to their business or not.” He said the Playtech would also look to added sports betting software to its product offering as it looks to make itself a one-stop-shop for online gambling technology. “We want to have a sportbook offer to give the whole suit of services to our licensees. We want to be ready for the change of regulations and when that happens all the key players (gambling firms) will go to shop for software.”
Until Playtech can develop sports betting programs, the company continues to expand its gaming market share. The company announced that it would “provide PKR.com with a bespoke online casino which will further enhance the next generation poker room’s already rich and diverse player experience by providing access to a variety of market leading casino games.” PKR Ltd. is the world’s largest provider of 3D poker games; its collaboration with Playtech will enable it to enter the casino gaming industry for the first time.
Published by Globes [online], Israel business news - www.globes.co.il - on August 13, 2007
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