Gaming VC Annual Report 2006
CHIEF EXECUTIVE’S REVIEW
I am delighted to be in a position to give my ˘rst statement as Chief Executive since my appointment on
1 March 2007. In this report I would like to give you an insight into the challenges the Group currently
faces and what our objectives will be in the coming year in taking the business forward.
Notwithstanding more encouraging announcements by the EU Commission on the regulatory
environment surrounding online gaming in Germany, diversi˘cation into other European markets is
the key strategic objective for Gaming VC during the next twelve months. The Group is con˘dent that it
will obtain a gaming licence in Italy in Q2 2007 which will permit the introduction of a sportsbook. The
Group envisages a subsequent launch of bingo and tournament poker. Opportunities are also being
looked at to secure licences or to enter new territories enabling diversi˘cation into new markets outside
Germany. No investment will be made in any new market until a comprehensive business plan and
experienced local executives are in place.
The Group’s German customer base has been built by means of off-line direct mail marketing and this
marketing strategy has remained the core marketing strategy in recruiting new customers.
Ongoing, other marketing channels will be targeted which are expected to lower the Group’s customer
acquisition costs. Accordingly, direct mail marketing will be used on a smaller scale for retention
purposes for our established higher value German customers. However, new recruitment channels
focusing on online and af˘liate marketing will make our marketing more ef˘cient and are more suited to
an online business.
This change in focus to concentrate more on online marketing will require different marketing skills from
those that have been required in the past and recruitment has commenced to effectively implement this
The change in strategy from direct mail to online marketing, with a dedicated marketing team
possessing the skills to implement the revised strategy, is expected to improve the growth prospects of
Gaming VC and materially improve marketing ef˘ciency.
Customer Retention Management (CRM) will also have an increased focus ongoing in the business. The
gaming industry is maturing and the levels of sophistication employed to maintain and work the existing
customer database is increasing all the time. To improve in this area, work has also started to recruit the
necessary expertise and to invest in the most appropriate tools to implement effective CRM. It is
expected that these actions will increase lifetime values and reduce attrition, both critical areas for online
gaming operations as the market matures and focus increases on maintaining the existing customer
As well as diversifying geographically during the new ˘nancial year there will be diversi˘cation in terms of
Gaming VC’s product range. A strategic review is being carried out to ensure that the Group is operating
on the optimal platform for its business requirements and we will be looking to offer an increased range
of gaming products, including ˘xed odds games and bingo, and explore the possibility of launching a
sportsbook in conjunction with our entry into new markets.
2006 2005 % Change
New registrations 52,774 32,840 61%
New depositing customers 22,916 18,023 27%
Daily average revenue o105,091 o109,907 (4.4%)
Total revenue o38,358,324 o40,116,120 (4.4%)
Casino revenues fell by 4% despite new depositing customers increasing by 27% year-on-year. This
reŁects a disappointing third quarter and a high-staking account in December 2006 which reduced that
month’s revenue by C0.3 million which was subsequently recovered in January 2007. This trend
highlights the issues with our marketing strategy over the last twelve months where direct mail
marketing and CRM efforts not deliver growth in total volumes despite an increase in depositing