Playtech announces social gaming and mobile software deal

Agreement with Skywind Holdings Limited will provide a wide range of both social gaming and real money software, focussed on the social gaming market and strengthening the company’s mobile capability.

In a stock exchange announcement Tuesday, online gambling software developer Playtech plc announced the completion of its software agreement with Skywind Holdings Limited, which it says will provide it with a wide range of both social gaming software and real money software, primarily focussed on the rapidly expanding social gaming market, but strengthening the company’s mobile gaming product range.

The company statement explains: “Social gaming has experienced significant growth over the last two years and is now a multi-billion dollar market with revenues generated in a number of ways, including the real money purchase by end users of social currency such as Facebook credits.

“Playtech has been monitoring developments in the social gaming arena closely, analysing a number of ways to enter the market. Current licensees and third party brand owners are seeking to leverage their online gambling assets and skills into this attractive model. The software licence agreement provides the Company with access to a broad range of social gaming platforms and products in addition to complementary real money products giving Playtech a unique position in the market.

“The Directors believe that the combination of Playtech’s wide distribution channels, expertise in content development, backend and online marketing capabilities and the broad range of products licensed under the software licence agreement will position the Group as the leading B2B provider to the social gaming market. Playtech will have the ability to offer cross platform capabilities for a full suite of products, including social casino, poker, bingo and rummy.

“These platforms and products are already deployed in a fast growing B2C social gaming operation with over 1.5 million monthly active users (MAU) combined and includes brands such as Slotsfarm and Raminoz. The incorporation of such an offering into the Company’s core B2B business model will provide the potential for building a significant new stream of additional earnings to Playtech.”

The announcement reveals that the agreement includes exclusive access to significant complementary real money software which will supplement its existing market offering, particularly in relation to mobile casino and poker.

It underlines the importance Playtech directors have attributed to the mobile channel and its potential for growth.

The software licence agreement gives Playtech access to more than 150 developers whose primary focus is on social gaming solutions and real money mobile software. The software being licensed has a proven track record  in a fast growing B2C business on both social networks and Apple App Store and comprises:

Social gaming:

* Social gaming platform including backend capabilities

* Social poker software

* Social casino and casino content software

* Social rummy software

§ Social bingo software

Real money gaming:

* Platform software including backend capabilities

* Mobile poker software (both Native (iOS and Android) and HTML5)

* Mobile casino software (both Native (iOS and Android) and HTML5)

* Rummy software

* Poker software

The licence agreement allows Playtech to use the software in its core B2B business models and any future B2C business models adopted by the company, with the real money gaming software comprising the platform, rummy and poker is being licensed on a perpetual basis, whilst the remainder of the software, principally the social gaming and real money mobile software, is being licensed for an initial three year term.

Playtech is paying a licence fee of Euro 6 million per annum plus a royalty fee of 20 percent of revenue generated through the use of the licensed software in social gaming activity. No royalties are to be paid based on revenues generated from the exclusive use of the real money software

Playtech already has a deal in motion with an established gambling operator in respect of certain of the real money software which would have an immediate impact in offsetting the overall cost of the licence, which is exclusive to Playtech, and can be extended by a further three years if desired

Teddy Sagi, Playtech’s principal shareholder, is guaranteeing the obligations of the supplier Skywind Holdings Limited through his company Brickington Trading Limited.

The deal also permits the supplier to use Playtech’s games content and gaming software in its B2C social gaming business on a royalty free basis, subject to consent of third party brand owners and the payment of charges in respect of branded content.

This arrangement will remain in force as long as the Skywind licence is current.

Playtech’s directors say they have identified significant potential in both the newly presented social gaming market and a cross-platform model with traditional real money gaming, with existing licensees and other third parties having expressed an interest in working with Playtech as part of their own entrance into the social gaming arena.

“With immediate effect, the Company will be devoting resources to launching a full B2B social gaming model in order to maximise the time to market advantage created by entry into the software licence agreement,” the statement advises.

“It is anticipated that such investment and overall licensing costs will produce tangible results for shareholders over the medium term.”

The stock exchange statement also includes informative notices regarding Playtech’s 10 year leases of London premises occupied by subsidiary Gaming Technology Solutions Limited, and retaining the advisory services at a nominal GBP 1 fee of principal shareholder Teddy Sagi, who holds 48.3 percent of Playtech.

Commenting on the transactions, Playtech’s chief executive, Mor Weizer, said:

“Social gaming offers exciting growth opportunities for real money gaming organisations to apply their technological and marketing expertise. The Skywind software licence delivers a cost effective entry into social gaming, expanding Playtech’s real money offering, especially its market leading mobile capabilities.

“Mobile and social gaming will lead the gaming industry’s growth and present significant opportunities for the Company. With access to a sizable and proven development team Playtech will be able to maintain its position as the leading online gaming software provider. We will offer a comprehensive and innovative solution to online gaming operators wishing to access the social gaming market and strengthen their mobile offering. Similarly we will enable social gaming companies to access a full suite of products in social and real money gaming.”

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