Future profitability in the online poker industry - A case study of 24hPoker -

Abstract

Executive summary During the previous years, poker played on the internet has grown rapidly and companies operating in the industry have made large profits. Although, recently different signs indicates that the industry may face problems in the future. Increased costs, stagnation in the main markets as well as regulatory changes are all problems that have been evident for the companies operating in the industry.

This thesis investigates the requirements needed to reach profitability in the industry and if 24hPoker, listed on the OMX, fulfil these requirements. Theoretical findings together with empirical material gathered from interviews have been linked and resulted in a branch analysis of the online poker industry. The branch analysis has been combined with the analysis of 24hPoker and has given a statement about the company’s future possibilities as well as a valuation of the company.

The analysis of the industry has shown that some of the most important requirements for a company operating in the online poker industry are high player liquidity, large marketing resources, a user-friendly software and good customer support. The outcome of the thesis is that 24hPoker has what is required for future profitability, mainly because they act both as a gaming operator and a service provider. The part where 24hPoker act as a gaming operator is predicted to be the most important part for the company in the future, mainly because this product is more competitive compared to its rivals than the service provider part which will be more difficult to profile. The share value of 24hPoker is estimated to be slightly undervalued.