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Michael Katz
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Close follower of Social Media and Gaming stocks. Offers Social Media consultancy for startups all over the world providing advice on all aspects of marketing, user acquisition and retention.
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  • Will Bwin.Party Become A Victim Of Regulated Markets?

    The Bwin.party (BPTY.L) share price has dropped 10% from the start of trading on Monday, May 20th to the close of trading on Friday, May 24th. The first quarter of 2013 saw a decrease in revenues of 17% for the online gaming giant. At the time of writing, the share price was 131.40 down from 146.00 at the start of the week.

    (click to enlarge)

    Is this just a temporary setback or have too many factors changed in the world of real money online gaming?

    While waiting for regulation to be implemented in the US, has the regulation in Europe been too tough for the online gaming operator?

    In the midst of this, there is still no grand announcements of the new product launch which was a result of the joint venture between Bwin.party (BPTY.L) and Zynga (NASDAQ:ZNGA).

    There are currently three major factors affecting the performance and subsequent share price:

    1. Abiding to the regulation laid down in territories where gaming is legal while effectively marketing the product to new players and retaining existing players.

    2. The law in the US has yet to be finalized despite much speculation.

    3. The success of the joint venture with Zynga.

    The legal playing field has certainly narrowed for many gaming operators. In a recent announcement, Bwin.party have declared a cut in its operation in order to focus on territories where regulation is clear. This rules out the potential to market its gaming products to approximately 20 countries where the gaming laws are simply too unclear to navigate.

    Before the Bwin merger with Party Gaming, sports betting was the company's core business. However, wagering on sports events in Germany, one of Bwin's biggest markets, fell by 52% leading to a 31% fall in the amount of wagering to €749.2m year-on-year. A new 5% 'turnover tax in Germany has also lowered the net profits.

    Bwin.party are now gearing up to launch a number of branded solutions in New Jersey once the US market opens up. However, the US market place will be hugely competitive. The brand name of Bwin.party will be going head-to-head with the likes of MGM and other known, land based casinos. Ten years ago, Party Poker was a big brand in the US. This was mainly due to its sponsorship deal with WPT. Will the US market still remember the name of Party Poker since their doors closed to the US market almost seven years ago?

    On May 21st, Bwin.party made transactions in which the company bought its own shares. Could this be the start of a management buy-back?

    In April, Zynga shares rose 15% on the back of the awaited launch of ZyngaPlusPoker and ZyngaPlusCasino in the UK. This was the resultant product of the Bwin.party, Zynga joint venture. Despite the hype of being the first social real money gaming application to be launched by Zynga, it became known after launch that these products are only available via download from the Zynga website. The launch date on Facebook is still unknown.

    In short, Bwin.party shares will probably continue to fall based on current performance. Once a product is launched in the US, it is likely expected for the shares to rise just based on the speculation alone.

    The fundamental analysis based on a large reported loss in quarter one of 2013 is largely reflected by the dip in share price. The additional element of being in an industry which is heavily affected by ongoing regulation and taxation, also gives way for a fair amount of uncertainty regarding the future of the company.

    Since the online gaming industry came under the scrutiny of regulators, the industry has suffered. Whether or not regulators will ease up to allow the business, specifically the marketing aspects, to recover will only unravel as time continues.

    There also seems to be large comparisons between the Binary Options industry of 2013 and the online gaming industry of 2006. There are currently very few fully regulated binary options brokers in the US and little regulation in place to govern the industry. Many gaming operators are looking at adding Binary Options Platforms to their portfolio. If Bwin.party were to add this and become regulated in the US, there could be a much awaited change in fortune for the company.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    May 29 9:07 AM | Link | Comment!
  • JP Morgan And The Shareholders Interests

    Ahead of tomorrow's eagerly anticipated shareholder meeting, many JP Morgan Chase (NYSE:JPM) shareholders are likely reconsidering a move to either get rid of Chairman and CEO Jamie Dimon, or to halve his role and its accompanying power.

    There has been much speculation on the future of the JP Morgan executives based on the 'London Whale' incident in which a JP Morgan trader, Bruno Iksil managed to wipe out $6.2bn due to hedge trading in order to minimize risks last April.

    Despite the losses of the past, JP Morgan Chase is currently reporting a record 52 week high with a rising share price at 52.21 at the time of writing this article. If Jamie Dimon's role were to change as a result of the meeting, shareholders could face a drop in the price due to an uncertain and unknown future as the bank would enter into uncharted territory.

    Dimon, 57 is recorded to be the highest paid bank CEO, receiving a $23m pay package for the 2011 fiscal year. It has also been reported that his ties to the White House run very deep. When US President, Barack Obama was asked a question on the television show 'The View' regarding the London Whale incident his reply was

    "first of all, JP Morgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we've got."

    First quarter profits of JP Morgan have been reported at $6.5bn and retail banking deposits rose 10%. If Jamie Dimon is either replaced or removed from either of his two current roles, shareholders could and probably would be just as displeased with the outcome.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    May 20 10:20 AM | Link | Comment!
  • Are Zynga's Patents Worth A Dime?

    As the clock ticks down to Zynga's (NASDAQ:ZNGA) earnings call later today, there has been much speculation about the flurry of patents that Zynga has locked down over the past year. But do these patents really give a solid security blanket to the company developing the product behind the patent or do they just stand in the way of innovation?

    Will Zynga really pursue any and every new innovation of technology with an underlying claim of copyright?

    In August last year, it was reported in the Wall Street Journal that Walker Digital filed around 30 suits targeting hundreds of companies. This was done after Jay Walker, owner of Walker Digital had not received the asking price for his portfolio of patents. Among the companies targeted were Zynga, Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN). It was also reported that the case was dismissed four days after re-assigning 33 of those patents to Zynga, even though the actual patent referred to in the lawsuit was not re-assigned to Zynga. The term used for enforcing patents for profit is "patent trolling". Surely Zynga will not become a patent trolling business. The details of the Walker Digital patent reassignment have never become public knowledge.

    Google, Dell (NASDAQ:DELL), Facebook (NASDAQ:FB), Redhat, Zynga, Homeaway(NASDAQ:AWAY), Intuit (NASDAQ:INTU) and Rackspace (NYSE:RAX) filed an amicus brief against Alice Corporation at the end of 2012. This was done based on the notion that the patents filed by Alice Corp were too vague. Additionally, the brief contained language which ensured future patents be written in very specific language concerning the actual idea behind the patent. The brief quotes "Abstract patents are a plague in the high tech sector".

    The brief then continues by distinguishing all of the patents filed by Zynga, Google, Facebook etc. from the patent that they are attempting to tear apart by claiming that to make a valid case for a patent , the patent need to contain the following elements:

    · Add steps that are conventional or obvious

    · Add non-specific steps that don't limit the claim's scope

    · Limit ideas to only to a particular technological environment, like a computer

    · Add insufficient information to a claim and don't specify a specific machine an idea is performed on

    Last Friday saw the US Patent Office issue a preliminary notice overturning the famous 'Steve Jobs' patent, describing multi touch on-screen technology. Although not the final outcome as Apple has two months to appeal, it marks a huge turnaround in the world of patent law.

    So, back to the original question of the 50 plus patents currently filed by Zynga. Are they actually worth a dime or will future loopholes always be found in the interest of innovation which will declare today's patent as tomorrow's 'abstract'?

    Feb 06 3:01 AM | Link | Comment!
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