eGaming Review January 2014 - Page 31

Size matters Even when compared to its closest competitors, the most striking thing about bet365 is its size. The Stoke-based operator, named number one in eGaming Review’s Power 50 list for the fourth year running, is flying both at home and abroad and is showing absolutely no sign of slowing down. Its competition has had to watch as bet365’s unwavering focus has driven profits and revenues to new heights. In the year ended 31 March 2013, operating profits soared to £179m and amounts wagered grew 57% to almost £20bn. The latter figure is larger than William Hill and Ladbrokes, two of its largest competitors, combined, and almost four times Paddy Power’s. And that’s against the backdrop of the rest of the MONEY TALKS HOW BET365 SIZES UP COMPARED TON CLOSEST COMPETITORS NB:Bet365 figures relate to year ended 31 March 2013; William Hill relates to year ended 31 January 2013; Paddy Power relates to year ended 31 December 2012 KEY BET365 WILLIAM HILL (ONLINE) PADDY POWER (ONLINE) FY REVENUE FY PROFIT BALANCE SHEET top tier, growing rapidly themselves having invested heavily in product and marketing in an attempt to compete with bet365. But can anyone really hope to catch up with egaming’s number one, or will the biggest just keep getting bigger? For bet365, the blueprint for growth is and always has been relatively simple. Product and customer service come before anything else. This, coupled with shrewd marketing and a keen eye on efficiency, has proved to be a winning formula since the company moved online back in 2000. In recent years it has built a market-leading product range, but co-CEO Denise Coates is happy to admit that sportsbook is what bet365 is all about, and that unlike at its competitors, gaming is treated as a subsidiary business. Much of the success from sports is down to sticking to tighter margins than most, at around 3-4% compared to 8-10%. This attempt to be as close to best price as possible as often as possible means bet365 runs a low margin, higher volume business as a result – hence the headline-grabbing turnover figures. And while all gaming content is sourced from third party suppliers, the bet365 sportsbook is famously entirely in-house, enabling the operator to implement regular improvements and innovations where others have struggled. The scale and challenge of that facility should not be underestimated – William Hill famously attempted to swap to an in-house sportsbook model a few years ago and failed – but it is clearly paying off. Investment during 2013 has seen the in-play betting product evolve with the addition of a ‘multi-view’ function, allowing customers to see an overview of in-play events, and to tailor the view of their own in-play markets. It has also invested heavily in live streaming capabilities with the number of events streamed now exceeding 40,000 a year – an ever-larger number of which are available on mobile devices. That’s not to say gaming isn’t a hugely important part of the business. While the 25% of overall revenues it contributes might be far smaller than some of its rivals, in cash terms it is an enormously profitable operation. However, as others have increasingly seen the cross-selling of sportsbook customers into the higher margin casino and slots games as the Holy Grail of egaming success, bet365 takes a more cautious approach. The reason, says Coates, is the danger of diluting what has been the operator’s lead product since day one. “We have always acknowledged that our absolute strength is in sports,” she says. “We don’t want to be too aggressive with our cross-selling as we don’t want to upset or put off our sportsbook customers. We try to do it in way which is not going to damage that relationship or feel like we’re pushing too hard on them. You’ve got to look at what works for your 29 P R O F I L E B E T 365 timeframes and then ensure you execute swiftly and precisely. This is what we try and do, and I believe this is what helps motivate everyone – seeing ideas making the live platform quickly from their inception,” she says.