What’s Wrong with Public Companies in the Online Gaming Industry?

Calvin Ayre
Calvin Ayre
March 11, 2010
14 Comments

publiccompaniesarelameI was on the record since the early 2000’s as saying that privately owned corporate structures are better for the on-line gaming industry than a public structure. I was on a panel with a few executives during the GIGSE conference in Montreal in spring 2006. During my debate I stuck to my position that the flexibility of a private structure gave advantages to private companies and was accused of over stating the size of Bodog (remember I was on the cover of Forbes Billionaires issue a few months earlier) or some such other logic on what my real agenda was.

Less than 6 months later all the public companies, including the ones I was debating with, were out of the US market, one was in fact already shut down. Now, this caused a lot of pain to a lot of people, but the reason I am writing this article is because I am now reading these same companies complaining that the private companies like Poker Stars, Full Tilt (and the soon to be launched European based Bodog Poker Network, run by respected former OnGame CEO Patrik Selin) are somehow competing unfairly by not leaving the US market….what? Lets back up to the previous paragraph, had I not been warning them for years that they had the wrong structure and now that its proven to them, instead of admitting that the structure was wrong, they want to blame their problems on guys who have the right structure….now that’s funny.

The real problem the public companies have is not just the private companies (their complaining is now proving that they all agree with me related to the US market by the way), it’s that this same issue is inherent in all other markets. They are all still the big lumbering inflexible beasts they were before and they are all still in an industry that rewards flexibility. But its even worse than this. The same boring competency that you need to sell to the public markets in order to maximize your stock values, well its fucking boring and it makes your brand the same way doesn’t it. Maybe Party should consider changing their name to “40 Winks Gaming” or “Blue Hair Gaming” to get more on brand with how they operate.

I don’t think I have anything to prove to anyone given how many times I have been right in predicting how this industry will unfold, but I am again going to go on the record as saying the existing public companies, with all the fussing around about mergers and other such things that waste time and energy, are going to be slowly passed by aggressive private companies who are nimble and have fun exciting brands. The strongest structure of them all might ultimately be the distributed private company brand licensing model run by bodogbrand.com. It’s already allowed the bodog brand to be the only one in the world that is in every major market in every major channel. Lets see.

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Tags: Article, Bodog Brand, Calvin Ayre, Patrik Selin
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  • frogtoes

    Calvin

    I have worked for both private and public gaming companies and there is a difference. While I agree with you about the flexibility of public companies in the online gaming sector. If you take away the ability for the private company to assess their own risk reward when choosing territories where they want to operate there is to me a bigger difference. That difference is people, the reason why the online gaming industry became so successful in my opinion is simple, behind every successful brand there was a bunch of young creative like minded indivuduals all working towards a common goal. Making money and a desire to belong to something successful. Everybody wore different hats and everybody got a well rounded understanding of the business. More importantly everybody had ideas and the ability to voice those ideas at the top table. These guys understood that if the business did well they would do well. There was a common cause and next to zero obstacles and they were set for success. From my experience public company employess are looking for a job not a lifestyle and not a sense of loyalty or belonging. This is instilled in them from the top down within the companies.
    My opinion of public gaming companies especially in Europe is that they are purley a commoditised offering, no soul, they all look the same with different colours, they all use the same software, they all offer the same range of promotions, they dare not stand out from the crowd. Everything is safe and boring. Where is the fun and excitement? If i take an example of Paddypower and go back to when they were doing really thoughtful and creative marketing such as boy and the girl on the bench with the wandering hand and their was odds on where it was going. What changed? Paddypower got bigger and more corporate so it got less understanding of the controversial marketing that made them successful in the first place. There is no coincidence. Europe is screaming out for a aspirational balls to the wall brand to break the monotony of the commoditised noise from the “safe brigade”. While gaming companies are full of marketers, they pretty much all think with the same thought process. Even if they dont and had some really creative and well thought out plans to differentiate themselves from the competition, would they be able to sell it up the ladder, I doubt it.
    Please dont get me wrong I am not knocking public companies as I said I worked for one for years but what I am saying is that while all of the main operators compete in the commoditised noise there is an opportunity for an aspirational, lifestyle brand to enter the market and gain ground quicker than their public counterparts. For a simple reason, people aspire and naturally gravitate towards what they perceive to be their inner reflection of what they would like themselves to be, if you can offer a service that is comparable or better than the commoditised competition where is the decision for the customer?
    While flexibility is key to opportunity, free thinking creative and motivated people are the key to success. Pubic or private, woudlnt you agree?

  • http://CalvinAyre.com Calvin Ayre

    Froggy….I entirely agree with you. The free thinking and motivation are all related to the concept of flexibility I am discussing. They are basically other ways of looking at the same thing.

    I have stated in previous articles that public companies lose their soul so I can sure say I agree with you on this also.

    The argument for going public is owner liquidity (they can sell out) or raising capital. You do not need capital if you are well run and private and the owners selling out stock is never good for moral. Then on top you have all the other restrictions that come with being public.

  • http://www.facebook.com/rebeccaliggero Rebecca Liggero

    I was at that GIGSE panel in '06, and I will never forget the long conversation you and I had about public vs. private companies later that night in Montreal, Calvin! Your predictions were spot on.

  • Frank

    This is awesome.

  • Sharon Hicks

    I agree with you when you say private companies are way more nimble, however, private companies have to report to a board of directors – public companies don't always have to and run the risk of being less reputable.

  • http://CalvinAyre.com Calvin Ayre

    Sharon….its the other pay around. Public companies report to boards (and worse with other minority shareholder provisions)…Private companies are usually run by the owner and make decisions with lightning speed.

    On the issue of reputation. I already proved pre 2006 that a strong brand will beat a public company for trust every day of the week.

  • Sharon Hicks

    I agree with you when you say private companies are way more nimble, however, private companies have to report to a board of directors – public companies don't always have to and run the risk of being less reputable.

  • http://CalvinAyre.com Calvin Ayre

    Sharon….its the other pay around. Public companies report to boards (and worse with other minority shareholder provisions)…Private companies are usually run by the owner and make decisions with lightning speed.

    On the issue of reputation. I already proved pre 2006 that a strong brand will beat a public company for trust every day of the week.

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