Interview: Henry Birch, William Hill Online
eGaming Review met with Henry Birch, William Hill Online's new chief executive, to discuss migrating products and European expansion.
NUMEROUS FOOTBALL players have described being part of a major club as like living in a goldfish bowl, their every move and comment under intense scrutiny from fans, media and commentators. To compare William Hill Online (WHO) to a major football club is of course off the mark, but there is little doubt newly installed chief executive Henry Birch must have had similar feelings to the ones described by those sportsmen ever since his appointment was announced in October last year.
That was when William Hill chief executive Ralph Topping announced the company’s deal with Playtech “ which saw the software firm buy the affiliate companies Six Digits and Uniplay from founder Teddy Sagi for £144.5m (US$250m) and transfer them into the WHO entity in return for a 29% stake in the newly formed company.
Topping described the deal as “transformational”. Other industry sources were more cynical as they questioned how the different working cultures and difference in product focus would work as part of one of the longest-established, and traditional, bookmakers in the world. As is typical of the online gaming sector and its many-layered ownership structures, questions surrounding what the affiliate companies actually did, how they worked and how many there were, kept cropping up as the doubters kept their radars up on the deal.
For all that, WHO has ploughed on confident in its ability to recover the ground it lost in egaming to the competition and the company’s most recent results announced at the end of April seem to have proved it right. Net revenue from the William Hill Online business jumped 50% compared with the same period last year. Excluding the performance of the acquired assets, net revenue for online business was up 10% for the period. Gaming net revenue overall climbed 77% and increased approximately 13% on a pro forma basis.
And while much of the industry talk has focused on Playtech and the impact it has had on WHO’s gaming numbers, it is easy to forget the integration of the Orbis sportsbook platform that took place during the course of 2008 and went live in November.
Birch acknowledges that the company’s heritage is in sports betting and describes its online sports offering as now having a lot more “depth and breadth and functionality” and being “second to none and getting better all the time”.
Migration and integration
Nonetheless, the talk keeps on returning to Playtech and the integration of those affiliate businesses into William Hill Online. The migration and integration of the poker players from previous supplier CryptoLogic to the Playetch platform is now complete. Some six months after the deal had gone live at the start of the year. To observers, it feels like it has taken longer than anticipated, is this a fair comment?
“Gaming is slightly more complicated [to migrate than sports],” Birch says. “We wanted to make sure we got it right, it’s easy to switch platforms but it’s harder to do it right and we hadn’t set a specific date for it. We could have done it earlier on but we decided to prioritise poker ahead of casino because we already have a very healthy casino business. When we do migrate casino we’ll make even more money, but it’s not as if our casino is in dire need of migrating.”
With many migrations causing a drop in player numbers and yield, Birch says the key aim is to ensure the new platform provides users with an improved and seamless performance. As a result, WHO’s casino platform is still running CryptoLogic games alongside Playtech.
“This has allowed us to take advantage of the affiliate network that we have integrated and hit markets outside the UK where we didn’t have the language to market to. It also enables us to test drive the casino software that will be integrated properly during the course of the year,” Birch explains.
As for the clash of cultures between the former Playtech affiliates and WHO and the fact that those affiliates are highly skilled at recruiting casino and poker players but not sports punters, Birch says the activities of the two businesses have in fact been complimentary.
“The thing about the deal is that William Hill has always been strong on sports, but you could say it was weaker on gaming. So the acquisition has really beefed up its gaming division. In addition, William Hill was very strong on the UK market but didn’t have much of a footprint in Europe, this has resolved it,” Birch says.
As for the clash of working styles, Birch adds that they are in fact complimentary.
“People love to analyse and look for cracks when there are big announcements in this industry, but I haven’t seen any cracks so far,” he says. “The company in Israel is much quicker to react from an operational point of view than William Hill has been traditionally. Also, you might not have listed William Hill in the top three most dynamic companies previously, the Playtech acquisition means we’re on our way to becoming much more dynamic.”
What about the stories that WHO had to order the newly integrated company to stop all the white-label activities that it used to carry out through its subsidiary Webroute? Birch sees it differently, countering that it’s about deciding how to allocate resources to achieve major partnership deals.
“We have major resources and a big brand behind us and we prioritise what emphasis we are going to place on them. If we are going to look for partnership deals, then we’re better off looking for major partners in gaming and media than we are doing small white label deals in secondary markets,” he explains.
As for the type of partners WHO might go for as non-UK markets continue to look at regulating the sector, it is fair to assume that it will be going up against the likes of PartyGaming and Playtech in competing for tie-ups with major media, broadcasting or other such groups. Birch sees it in more straightforward terms: “It’s a fairly simple equation. You probably get greater penetration if you have a big partner such as a media group. But you have to decide whether you’re happy splitting that revenue or going it alone depending on the market.”
While that is no doubt true, William Hill has already pulled out of the land-based ventures it had undertaken in Italy and Spain with the Spanish group Codere. Did it underestimate the competition there?
“Those projects were retail-based, but really the problem was that it was sub-scale in terms of being able to get outlets set up. We could have made a business out of them but it would have required more investment and we felt it would be better placed elsewhere,” Birch says.
Online expansion
As a result, William Hill will go for European expansion via the pure online route. What will be the keys to succeeding on the Continent?
“How regulation pans out will be key,” Birch says. “Products “ having the right sports offered to punters, and good marketing: working with partners or having to get it right if we decide to go it alone. Some operators have already agreed sponsorship and marketing deals: is it too early to make such moves? We’re not worried about that and it won’t necessarily be the key to succeeding.”
As for changing company names or making the brand more Euro-friendly by including the word “bet’ into the brand, Birch doesn’t think it will make a huge difference in attracting European customers. “I’m no brand expert but if you look at a lot of the major brands such as Google, Häagen-Dazs and so on, they don’t always tell you what they do. Some brands are more evocative than others, but one thing that shouldn’t be forgotten is people know the UK has a strong betting heritage and brands like William Hill have more brand equity than many realise and are seen as prestigious and trustworthy and people are comfortable betting with them.”
But for the time being at least, the rest of 2009 will be about integrating the former Playtech companies into WHO. Indeed, “there has been an enormous amount of change”, agrees Birch, with the online division of the firm changing platforms for key products. Even then, he has kept his sense of humour and admits that “if you were choosing a year to switch platforms you might not have chosen this one (“¦)”, but the company “certainly isn’t short of ambition” and still expects to grow in this challenging environment, he adds.
As eGaming Review commented at the time of group chief executive Ralph Topping’s appointment back in February last year, it is good for the sector as a whole that one of its main operators has a focused and successful online division; recent results and company activity would seem to show William Hill Online is on the right track.
This article first appeared in the June edition of eGaming Review.