Chinese online board game and poker operator Ourgame International Holdings Limited has announced losses of RMB68.4 million for the six months to 30 June 2017 – a 190% decrease from the RMB76 million profit it generated 12 months earlier – with revenue down 34.5% year-on-year to RMB 272.3 million due to “intensified competition” and a loss of sponsorship of its World Poker Tour (WPT) brand.
However, there were some promising signs in the second quarter, which saw losses narrowing and revenue up 27.6% over the first three months of 2017.
In a filing to the Hong Kong Stock Exchange, Ourgame said, “The first half of 2017 has been a challenging period. While we continued to make progress in our eSports, mind-sports and other businesses, we encountered intensified competition and challenges in our China domestic card and board games business.
“Intense competition from new apps that provide online game room cards function, coupled with adverse payment policy changes in the company’s main mobile carrier payment partners, caused a significant negative impact to both our PC and mobile China domestic card and board game businesses, particularly in the first quarter of 2017.
“As a result, we witnessed a fairly substantial downturn in revenue and profitability in the first half of 2017.”
Ourgame operates primarily in mainland China, where it generated RMB230.1 million for the first six months of the year – down 35.3% year-on-year – while revenue elsewhere fell 29.8% outside China to RMB42.2 million. Chinese revenue for 2Q17 was RMB130.6 million, representing a 31.3% sequential increase over the RMB99.5 million generated in the first quarter.
Revenue from outside the PRC is primarily derived from Peerless Media Limited, which was acquired by Ourgame in June 2015 and is engaged in the business of television production, brand licensing, online service and tour management producing poker and online entertainment content under the WPT brand.
In regards to the WPT – one of the world’s most recognized global poker tours – Ourgame said, “In the first quarter of 2017, the sponsorship contract with one of WPT’s largest sponsors expired, resulting in WPT experiencing a drop in sponsorship revenue.
“Other than this, WPT’s other businesses remained stable and are poised to grow. WPT’s TV programs reached more than 140 million households worldwide as of 30 April 2017. With the launch of PlayWPT on iOS in the first quarter of 2017, PlayWPT’s launch is now completed and is available across PC, Android and iOS platforms and continuing to enhance and optimize the online games products to better monetize WPT’s global user base.”
The company added, “We have taken active steps to address and mitigate these challenges. We have significantly expanded our online/offline tournaments offerings, with newer WPT events and new weekly online only tournaments to attract and retain users to our platform. We have started to revamp our mobile product portfolio and incorporated more Alipay, WeChat and other third party payment options. We have also been actively streamlining and optimizing our cost structure to drive efficiency and savings. We believe that these measures are working and we are seeing recovery and improvements in the second quarter of 2017 in key impacted business areas.”
Loss attributed to equity holders of the company was RMB23.7 million in the second quarter of 2017, an improvement on the loss of RMB44.7 million in 1Q17.
The improvement was aided by a 45.8% sequential increase in revenue from its online Texas Hold’em game to RMB50.2 million, a 22.1% increase from Mahjong to RMB31.8 million and 17.9% increase from Fight the Landlord to RMB48.1 million.
“We have confidence in our business model, strategy and the progress and future of our various business platforms,” Ourgame said.
“Some of the measures we have been taking to mitigate the challenges in our China domestic card and board games business have shown signs of early results in the second quarter of 2017, but it is still in progress and we will continue to focus on execution of the business plan to further the business recovery.
“In the second half of 2017, we will explore bringing in new partners for both Zhongqi Weiye and WPT to strengthen their business and accelerate their growth.”
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