bwin.party reveal cost of Foxy Bingo sign-up offers

Play Foxy Bingo

The group’s latest interim management statement and Q1 2013 key performance indicators shed some light on that question, and it’s always interesting to see data straight from the source, and which is required to be presented without bias so shareholders can interpret it accurately.

In their statement, bwin.party say: “The phasing of our Foxy Bingo marketing campaigns meant that new-player sign-ups increased by 34% versus the previous quarter and by 6% year-on-year.

“However, the associated bonus costs that tend to precede the full revenue benefit contributed to a 9% fall in revenue year-on-year.”

The problem is fairly self-explanatory: a large number of new members, all playing with a significant amount of bonus credit, lead to costs that must be paid for by Foxy Bingo using its income from existing members.

As the balance tips towards an ever-greater number of new members – such as just after a big television advertising campaign, for instance – that means a larger amount of bonus credit to cover the cost of, which is why revenues at Foxy Bingo are down compared with a year ago.

Despite this, bwin.party say Foxy “continues to command a market-leading position” and helped them to average daily bingo revenues of €140,000 in the six weeks to May 12th, a figure which again is down slightly from €157,800 in Q1 2013.

Norbert Teufelberger, chief executive officer of bwin.party, says: “The drop in revenue in Q1 reflects our tactical shift from ‘volume’ to ‘value’ that we announced at the time of the full-year results, as well as lower-than-expected player activity in poker and casino following the dotcom migration in December 2012.”

This ‘migration’ saw the group transition to a single technology platform at the end of last year, and early indications are that it will continue to have a visible effect on bwin.party’s financial performance for some time to come.

However, with the group’s flagship online bingo site still holding strong at the head of the UK market, and promotional activities helping to explain away short-term volatility in Foxy Bingo’s revenues, it is likely that investors in bwin.party as a whole will see the latest results as encouraging for the medium term to come.