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Imagine if you had a company and were offered £790m to sell it. Would you say no? The first time Empire Online was approached to sell their company they were offered £790m by Sportingbet and they said no. They followed the old saying of always refuse the first offer. They shouldn't have listened to old sayings. Love is in the air or at least it was a week ago. Empire Online was finally bought by PartyGaming on the most appropriate day of the year – Valentines Day. I say love sarcastically. This acquisition was about as pleasant as the divorce proceedings in the 80's movie War of the Roses where the husband and wife ended up dying in their attempts to one up each other. PartyGaming systematically destroyed Empire Online's value and there was little Empire could do (besides sell earlier than they did). This isn't to say that Empire shouldn't have seen the writing on the wall. In June 2005 Empire Online went public and did extremely well. Soon after that PartyGaming went public. That same month PartyGaming had a press release which stated their intention to lose their skin sites. It was a small part of a big statement, however, and could easily have been missed if you didn't read the whole thing. Empire Online should have sold as soon as this statement came out (actually they should have sold before, but they didn't know that). In the same press release PartyGaming mentioned their new platform, and the intent of moving forward with it. Now, if PartyGaming had no intention of moving forward with their skins and they had a new platform due to come out, it doesn't take a genius to figure out that they had no intention of moving the skins to the new platform. Empire, however, was too busy promoting and believing their hype to read the writing on the wall. Fall comes and the new platform from PartyGaming is released. Empire Online's platform is not updated along with PartyGaming. Why should it be? PartyGaming could make more money by taking the customers from Empire Online. Players have less reason to stay at Empire Online as they could have a better game by going directly to PartyPoker. Empire Online's profits start to plummet as they get less new customers and less returning customers to their poker rooms. Empire Online tries to curb their problems by suing PartyGaming, claiming that PartyGaming promised to update their platform along with PartPokers site. All the while this is happening they are in talks for PartyGaming to purchase Empire Online. The first offer back in June 2005 was for $400m, and then the number went down to $330m in the fall, finally this month they closed at $250m. The lawsuit was still in litigation when the final offer from PartyGaming was accepted and the claim was closed. While $250m is still not a number to sneeze at it is a fraction of the original offer they received nearly a year ago from Sportingbet and if I was an owner of Empire Online I might just be kicking myself in the ass about now. The moral of this story is, don't get greedy. Richard Segal, Chief Executive of PartyGaming, stated “This acquisition brings our skins strategy to a close and consolidates our leading position in online poker ahead of the launch of the fully-integrated, Party-branded platform. The introduction of Blackjack last October marked the beginning of our cross-selling strategy; the integrated platform will enable PartyGaming to take the cross-selling of games to a new level.” PartyGaming isn't actually buying all of Empire Online. They are simply buying the controlling share. According to their press release on February 14th: "The agreement is conditional upon the approval of EOL shareholders and PartyGaming has received irrevocable powers of attorney from EOL shareholders to the effect that their votes will be cast in favour of the necessary resolution in respect of a total of 163,999,358 EOL ordinary shares, representing approximately 56 per cent. of the issued share capital of EOL." What does all of this mean for Empire Online's players? They can probably expect more spam. "PartyGaming has agreed to acquire the business, assets, player databases and intellectual property relating to EmpirePoker and AceClub.com, including the EmpirePoker brand and the EmpirePoker website." However, with that spam will be access to the best reputed multi-player poker platform online. PartyGaming isn't the only company in the online poker sector buying and consolidating the field. Austrian based betting site BetandWin is buying out the Ongame poker network for $500m. Now that the consolidation of the industry has started further shrinkage of the gaming field should continue in theory. However, SkyBet has announced that they are launching a stand-alone poker platform in 2006, which will be developed by Orbis's Openbet software. Soon there will be panoply of big players in the online poker room arena which is why so many poker rooms and casinos are combining their efforts. I see the future of online gambling and it's an all-in-one solution, a department store of gambling so to speak. Players will be able to enter one site for all of their gambling needs, be they sports book, casino, or multi-player poker room. The big companies with different specialties will start strategic alliances in order to combine their strengths and bring the most pull. It's not just about pulling players from other sites. It's about expanding your customer base. Most of the people interested in poker in the United States and United Kingdom are playing already. It's time for online poker to branch out to the rest of the world. Especially now, with the future of online gambling in the United States is at risk of being shot dead by the Republicans. Most big poker rooms will probably go the way of PartyGaming and either kill or buy their white labels and skins. Why pay someone else to compete with their main brand when they could be pulling in that money themselves? Posted on: February 28, 2006
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