In an industry where it seems like most companies are currently going backwards, 888 is winning and winning emphatically. Revenue for Q1 increased by 25% percent over the same period in 2011, from $75 million to $94m and poker revenues increased by 88%. What makes these figures even more astounding is the fact that barely 18 months ago, 888 was reporting a nosedive in poker profits of 25%.
Newly installed CEO Brian Mattingley is keen to point out that this revival in fortunes is no happy accident. Mattingley, who served as deputy CEO in the period following Levy's departure, says it's all down to the firm going back to basics. 'We've gone back to B2C and it's something that I think we do very well,' he says. 'In the course of the last two years, we have developed and enhanced our software, our platform and our infrastructure.' Mattingley says that city analysts who visited the headquarters in Tel Aviv have likened the 888 machine to a pure 'economic modelling process', transcending its business as an online gaming provider. 'They were absolutely astounded at the depth of knowledge throughout', he says.
And judging by 888's US ambitions, this strength in depth is going to come in very handy. Mattingley makes no secret of the fact that as and when the US opens up, the firm is bringing its big guns to bear. 'Our chosen strategy is to hit as much market share in the US as we possibly can,' he says. 'If it goes federal, to quote my COO Itai Frieberger, it's a complete blue ocean.' Moreover 888 is uniquely positioned to take advantage of any upcoming regulation. Along with being the only online operator which has a certificate of suitability from the Nevada Gaming Commission, it has a heavy-hitting offline partner in Caesars Entertainment. InsidePoker Business talked to Mattingley to find out how the company has thrived in an environment where everyone else seems to be struggling and asks how he plans to keep the momentum going after a stellar year.
InsidePoker Business: How do you feel the business performed in 2011?
Brian Mattingley: I think quite spectacularly. I think we broke our all-time revenue figure in August last year, and every month since then we've broken one record or another. First time depositors, number of active players, the list goes on. So we've had a fabulous year and that's all down to the team who are very clearly focused on 888 and steeped in 888 history.
IPB: How has 888 turned things around in a relatively short space of time?
BM: We set about putting out a clear strategy for the team which was to make sure we only stuck to the four key products of bingo, casino, poker and sport. We made sure we appraised and looked at all our B2B contracts with a view to optimising their profitability. We concentrated on B2C, making sure we delivered absolute excellence to our customers. In the course of the last two years, we have developed and enhanced our software, our platform and our infrastructure. We've invested money in our marketing suite, Campaign Manager, in the last two years, and that's starting to come good.
IPB: What is Campaign Manager?
BM: It's an automated back office promotions and incentives management scheme which is very technologically advanced and possibly the best in the market place. It learns customer playing habits and entices them to play more.
IPB: How did 888 manage to grow its online poker business when everyone else seemed to be going backwards?
BM: First of all, I think it's because we launched Poker 6, our new poker platform in June/July 2010. In 2006 we embarked upon a strategy which was to appeal to the recreational player. We've done recruitment drives which are aimed at the casual recreational player and in poker, we have seen our business grow substantially in the last 18 months, particularly in the last year. In terms of casinos, we launched a new platform this year on the back of some startling results last year, good recruitment and incentivisation programs. Every one of our campaigns we expect to see a return on investment of at least 150% so we're almost clinical that when we try an incentive, we will track that for a period of two weeks, see what the return to cost is and if that's good we'll then roll that out. We are in essence an online gaming company but I would think moreover we're a technology-based company using analytics and specialists to analyse all our businesses to ensure we get the maximum we can out of them.
IPB: So would you say there is something Zynga-ish about the way you place emphasis on analytics?
BM: Absolutely. We have a department in Tel Aviv made up of about 40-50 people whose job is purely and simply to analyse everything about the business.
IPB: Do you think the poker industry has been too slow to use the power of analytics?
BM: I'm not going to criticise the opposition at all. The industry is learning and will continue to learn. I just think we were in a position where we were concentrating not on our core competency and when we started doing that again, we started seeing unbelievable results. This is through analytics, top-grade products and ensuring all of our networks are well policed. We're appealing to a much larger audience that are high volume and not particularly high ticket. So we don't appeal to professionals, but to people who want a bit of fun.