Opinion: Market gorilla in the midst of change
Mick d'Ancona, independent consultant to the gambling industry, casts his eye over Playtech's recent acquisitions.
Playtech has had a busy few months.
Subsequent to its November 2011 placement of £100m of shares to fund acquisitions and new ventures, it announced the purchases of Ash Gaming and Geneity. Add in past acquisitions of GTS, Virtue Fusion and Mobenga, and Playtech seems unstoppable. Maybe.
GTECH went on a similar shopping spree in 2007/08, but undeniably it took far too long to integrate the various constituent parts, by which time the novelty had worn off. It is also debatable whether all of the acquisitions were from the “A-list” in the first place, nor was it entirely clear what market G2 was intended to target.
The picture is, of course, slightly different for Playtech. Already one of the gorillas in the interactive market, it has a history of swift, aggressive and generally successful execution, and its acquisition list is high calibre.
The question is, having now got all of these pieces, what best to do with them?
Leave them to their own devices and roll them out when sales cycles and RFP responses dictate, or immediately go for a deep level of integration (technical, operational and cultural)? Too much integration, and the benefit of buying smaller organisations is diminished, but too little and opportunities for further dominance will go begging.
Playtech has ticked a very large box in its partnership with William Hill, showing that as an organisation it can offer value beyond content and high-volume transactional systems.
However, all of these recent acquisitions are firmly in the part of the architectural map labelled “bet capture”, so there is a danger that they simply add to what is already available, rather than genuinely extending capabilities beyond the reach of competitors.
Never mind delivering obvious upside through Ash’s games fully integrated into the Virtue Fusion bingo client, Playtech now has an opportunity to solve seemingly intractable problems such as cross-vertical bonusing and it won’t deliver by being half-hearted.
As a public company, Playtech will be judged not just on profits, but also on growth. Its recent acquisitions are well positioned to facilitate the latter, but only if carefully nurtured and imbued with a clear brand and technology strategy.
It should also not underestimate the market’s scepticism about the efficacy and implications of such integrations, nor the amount of management focus they require, and it may have to show some of its softer side to keep the troops happy.
However, having committed the best part of £100m, it would be surprising if Playtech simply kept it simple. I, for one, will be watching with interest.