888 results analysis

Listed gaming firm 888 announced a 39% drop in profits in the first half of 2010 with poker by far the worst performer in a period where bingo and casino bothed showed revenue growth.

888 CEO Gigi Levy said the drop in profits was a result in part of R&D spend on its new poker and casino platforms and on an increased marketing spend, but he was forced to address the 25% drop in poker revenues.

'Trading was impacted by the ongoing deterioration of online poker,' Levy said in a statement referring to the drop to $19.6 million in poker operating income from $26.2 million in the previous year.

In the same period casino, bingo and emerging offerings rose compared to the previous year, leaving poker as a stand-out black mark for 888.

'Industry sources reported that the number of daily average ring game players fell by approximately 25% during the period January to July [and] this was further exacerbated by the World Cup in June,' Levy added.

'Our decline was roughly in line with general online poker trends but we have taken steps to address it.'

888 has sinced introduced a revamped poker platform with a much improved interface and nascent social networking links and Levy said the new platform had seen an 'increase of more than 15% in revenue in August.'

He added there have also been some 'reassuring poker KPIs' in the second half of the year so far, although 888's poker still lags a long way behind some of its key rivals.

888 appear to be pinning a lot of hopes on its foray into social networking, which comes on the back of its acquisition of Mytpoia last year.

The deal saw the firm acquire a social networking poker game, Pacific Poker, and a real-time multiplayer mobile Poker application available for iPhone, Android, BlackBerry, Windows Mobile and J2ME handsets.

'Access to this new gaming audience provides a number of cross-selling opportunities, and ensures that we are at the forefront of what is expected to be a key trend in the habits of consumers in the online gaming industry,' Levy said.

Along with the social networking moves, 888 has made a cautious start in the French market with a joint venture deal with Microgaming and it cautioned the returns would not be immediate.

'Whilst these developments [in regulated Europe and the US] will create future opportunities they will take time and investment to come to fruition,' Levy said.

'This is a critical transformation of our industry, and one which we feel will be very beneficial for large operators like 888.'