Playtech Stands Firm On Conquering AsiaTisha Walden | 29 Aug 2018
Upon Playtech releasing their financial report for the first half of 2018, it was clear that business in the Asian market was under a serious amount of strain. Net profit for the firm, after adjustment, had all but plummeted a massive 38%. From €125.5 million the number now sat at a far less appealing €83.3 million.
Naturally much attention was drawn to this clear slump in profit, with many jumping to the conclusion that Playtech would be pulling out of the market entirely. But against expectations, the company has instead come out in defence of their continued involvement in the East.
In a recent interview the situation was made clearer, with explanations and more details offered. The reason for the turbulence in the market, it was revealed, was a veritable price war taking place in China. This was due to a major influx of competition, and the various new firms fighting for their own piece of the pie. Despite this, Playtech CEO Mor Weizer insisted that the situation had now stabilised. Comforting words, but perhaps not enough to distract from what the financial report had clearly already shown.
The Damage Is Done
A closer look at the financial report reveals just how bad the Asian market bloodbath was. If excluding Asia from the overall report, sales were up an extremely impressive 35%. But if taking the losses back into account, this pleasing percentage tumbles dramatically to only 6%. So why is Weizer so quick to insist that there should be continued involvement, when pulling out seems like the far smarter option?
Once again jumping in to justify his decision, Weizer simply stated that it was a challenging situation, but one that he would not be shying away from. He drew attention to the fact that the market was still young, and going through a serious period of growth. He further pointed out that only a year ago there were 5 companies operating in the region, and today that number had exploded to over 30.
As a final word, Weizer said that prices would be maintained in the region, with focus instead being on providing superior premium content. He made clear that in his opinion, the pricing structure presented by many competitors was simply not sustainable.
In other words; while Playtech remained firm, the competition would burn itself out over time. Only time will tell if this prediction is correct, and if the gamble to remain in the region pays off in the long run.