Analysis: Heavyweights fight on after mixed 2013
An intriguing mix of full-year results from William Hill, Paddy Power and Ladbrokes tell us much about where each firm is heading
Some of the industry’s biggest operators have revealed their full-year results for 2013 in the past seven days, each telling their own story of battles won and lost.
There was no great comeback at Ladbrokes despite almost a year passing since its deal with Playtech, while William Hill stumbled in gaming and Paddy Power saw its competition catch up in the mobile stakes.
There were, of course, some real highlights and signs of impressive growth. But how do these industry heavyweights stack up against each other in vital areas?
Mobile: The race in on
All of the sector’s major listed operators have been shouting from the rooftops about mobile growth, and the progress made by many over the past couple of years has indeed been rapid.
Paddy Power is always quick to point out its leading position and this week’s full-year results were no different. Its mobile net revenues increased 73% to £175m, or 45% of total revenues, which it claims are the best figures in the industry. In sports betting this number increases to a very healthy 56%.
However William Hill is not very far behind, especially in sports. The operator reported that mobile now accounts for 40% of online sportsbook wagers and set a target of 40% of gaming revenues by mid-2015. The latter, while appearing achievable given its successful casino business, represents a fair hike from the 17% over the course of 2013.
Interestingly, Betfair’s mobile sportsbook is flying. Yesterday’s Q3 figures revealed that 60% wagers came from mobile devices.
These numbers will offer Ladbrokes some hope of future mobile prosperity, and it has been making progress with its new Mobenga-powered product. It is still lagging way behind its competition, however a rise from 31% of sportsbook stakes from mobile to 35% in Q4 suggests it is getting to grips with the problem.
Sports betting: A crucial moment
These giants of the sports betting world had mixed results last year and are entering into a brutal customer acquisition battle ahead of this summer’s FIFA World Cup. William Hill’s clout in the UK market stands them in good stead given the country’s football fervour, with its sportsbook “ accounting for 48% of online revenues “ likely to thrive during the tournament.
Last year, boosted by growth of almost a third to £212.9m and an £87m contribution from Australia, Hills’ online sports betting revenues caught up with and overtook its rival Paddy Power’s global 2013 total of £287m.
While Paddys’ Australian Sportsbet business is run as a separate entity, its contribution to the group figures are hugely impressive. The company it acquired in 2009 saw revenues rise 15% to £179m, carving out more than 20% market share and piling pressure on Hills’ big-money Australian buy-in to succeed.
Over at Ladbrokes, its online sportsbook still packs a punch but revenues are heading in the wrong direction. At around £73m, a 5% decline, it is in desperate need of a World Cup-inspired boost and must get hold of some new customers this side of the tournament.
Gaming: Could do better
William Hill CEO Ralph Topping’s sentiment that it had been a bad year for gaming will have resonated in the boardrooms of his competitors. A wholesale decline in poker frustrated operators in 2013 and bingo was not much better.
Topping blamed his firm’s 3% drop in gaming revenues “ down to £233.4m “ on not having suitably strong mobile products, and it is arguably that point which saw Paddy Power buck the trend.
While Ladbrokes’ gaming revenues also fell during 2013 “ 12% to £87.6m “ Paddy Power’s grew 15% to £104m.
A plateau in William Hill’s gaming business growth is perhaps to be expected given its size. Casino “ the only gaming vertical not to see a drop in revenues “ represents 43% of online revenues, with bingo and poker representing 5% and 4% respectively. The subsequent reliance on engaging slot and table game content, especially on mobile, is growing by the month.
All three are investing heavily in the mobile platform for gaming. A key variable here is how products via Playtech and its Mobenga subsidiary perform versus in-house offerings. Ladbrokes and William Hill rely on the former for their mobile casino apps, while Paddy Power has launched two of its own during the past 18 months.
Betfair’s gaming business is also worth a mention. Having been in decline of late, gaming recorded 3% growth for the third quarter, rising to £18.5m as revenue from mobile devices trebled.