Bwin.party bets big on social gaming service
GAMBLING site bwin.party yesterday announced plans to invest up to $50m (£32m) in social gaming over the next two years as it hopes to gain a role in the sector’s “spectacular growth story”.
As part of the strategy it revealed an agreement to pay $23m to Velasco and Orneon to buy out the contracts of around 300 software developers and establish its own in-house games studio called “Win”.
“What previously was an interesting internet phenomenon has become a large commercial marketplace, one that now is worth billions of dollars each year,” the firm said.
Social gaming involves interactive games that are played against other users and often piggyback on existing social networks such as Facebook.
Although generally free, the games can be highly profitable because a small number of heavy users choose to buy online credits to add additional features or accelerate their progress through the game.
Analyst Nick Batram of Peel Hunt told City A.M. that bwin.party had “put together a pretty impressive team” of experienced operators to run the division. “I like their approach and they’ve got lots of cash. But only time will tell whether they can turn that $50m investment into a significant business.”
However he raised concerns that governments could attempt to restrain the booming market: “Social gaming is not regulated in anything like the same way that hard money gaming is. Some countries may look at social gaming and tax it in some form or another.”
Bwin.party said it expected its first social gaming product to launch this summer and that the new strategy will result in €5-10m (£4-8m) of additional costs in 2012 and 2013.
Shares closed down 2.5 per cent.