Crypto, 888 Extend Licensing Deal

7 October 2008

Although 888 Holdings has agreed to license 10 additional games from its competitor, CryptoLogic Ltd., officers from both corporate camps expressed that collaboration is soon to define a maturing industry.

"We're very happy with it," Gigi Levy, the chief executive of 888, said of the deal by telephone. "As the industry continues to mature, I expect that you'll see more collaboration. Historically, competitors have matured to share infrastructure, and there's no reason why our industry shouldn't be doing this."

"I think, moving forward, you're going to see the industry becoming very different, whereby competitors are going to need to become collaborators," echoed Justin Thuin, CryptoLogic's vice president of product management and business development, who also spoke to IGN by telephone.

Today's announcement follows on from a deal the two companies inked in May, whereby 888 agreed to license three of Crytpo's games: "Bejewled," "Cubis" and "Millionaire's Club." In June, the companies also crossed paths in the media after Sportech announced it had moved its casino and poker properties -- under the Littlewoods brand -- from CryptoLogic's platform to 888's.

Mr. Thouin, who joined Crypto in July 2003, said the company was "ecstatic" about the deal. He said that 888 was initially cautious about the agreement; previously, the Gibraltar operator had supplied its own software, but under the CryptoLogic deal would be paying revenue-based royalty fees.

"But the argument that we made to them that was compelling was, look, you may be paying a percentage of revenue for these games," he said, "but, one, lifetime value of your players, two, the incremental revenue you're going to make because these games are the best in the market, and, three, because players are going to play them more than the current games you have, you are going to offset the royalty fees you have to pay us."

Mr. Thouin said the company is cautiously optimistic that the deal will generate annual revenue in the millions of dollars, though he declined to speculate further on an exact amount. He said that it is incumbent on CryptoLogic to ensure its casino offering is more compelling than 888's, adding the challenge is one Crypto relishes.

Significantly, Mr. Thouin said CryptoLogic is in advanced discussions with parties whom he wouldn't identify to bolster liquidity on its formerly dominant online poker network.

"Clearly we're not happy with where we stand from a liquidity standpoint with poker," he said. "It's very different from casino -- with casino, you can differentiate yourself based upon the quality of the product and based upon entertainment factor, whereas poker is a commodity product, and it really comes down to liquidity.

"We are going to do something substantial by the end of this year to radically change and increase our liquidity," he continued. "Now, whether that's collaboration with a mix of other networks and operators, or whether that's something else, I can't tell you at this point."

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.