NETPLAY TV (NPT)

Previous Stock Tip

These companies are all previous recommendations from the Red Hot Portfolio that I have subsequently recommended and then sold from the portfolio at a later date. By no means are these companies intended to be buy recommendations for you to go out and invest money towards their shares. For the opportunity to start making serious money from the recommendations I am making now, just start your no obligation trial!

NETPLAY TV (NPT): Delays to Big Box Bingo - Oct 2007

RHPS Recommendation - SELL

Netplay’s Live Roulette game took £15m of gross bets in August, allowing it to make a maiden monthly profit of £100,000. However, Netplay must increase its development spend for Big Box Bingo from £300,000 to around £1m and does not expect to see a profit contribution from it this year. First mover advantage could be crucial in this competitive industry. So SELL.

NETPLAY TV (NPT): Buy limit raised - Jul 2007

RHPS Recommendation - BUY

Netplay is now taking gross bets of £7m per month for Live Roulette, while ticket sales for the PlayMonday charity lottery are ahead of expectations. Now that it has launched Big Box Bingo, I have pushed my buy limit up to 40p.

NETPLAY TV (NPT): Jun 2007

RHPS Recommendation - BUY

Netplay is closing down its mobile content provider Mchex, thus aborting losses that are running at about £25,000 per month. This will leave it free to concentrate on its exciting interactive gaming business.

NETPLAY TV (NPT): This little stock could be the next Who Wants to be a Millionaire? - May 2007

RHPS Recommendation - BUY

Over three million UK citizens regularly play bingo, and half of them have a problem. That is because they are also smokers, and new legislation means that from 1 July the simple enjoyment of a gasper while listening out for the cry of “clickety click”, or “Burlington Bertie” will be lost forever. This is already proving disastrous for operators of bingo halls. Rank has already seen a 15% fall in revenue from its Scottish bingo halls, where the ban was introduced last year, and such is its pessimism for the business south of the border that it is already starting to close down its bingo clubs in England.

Fortune and fame…

But if you are a bingo player who likes a fag, don’t despair. Coming to a TV near you this summer will be Big Box Bingo. This will enable you to play your favourite game from the comfort of your own sofa, surrounded by as much cigarette smoke as you like. This is what you will have to do. First of all, look out for the bingo cards that will be distributed free in newspapers and magazines. Then make a call to register yourself as a player, and buy additional cards, which will cost 25p each. Then tune into the Big Box Bingo TV channel. When you are ready to play, make another call which will take just 10 seconds, and you will immediately be participating in the game. Mark the numbers on your card as they are called out. And if you are the lucky winner, your name will be flashed up on the TV screen and you will get a call from the producer. Fortune and fame – it could be as easy as that.

Key to this is your mobile phone. More than 20% of people who own a TV set say that they would like to play along with TV game shows. Most interactive TV shows require you to use the Red Button on your remote control, but most people either don’t have this connected or don’t know how to use it. It is much easier to communicate via a mobile phone, especially as there are other advantages such as the fact that the payment for participation in games can be added to your phone bill. But from the point of view of game show promoters the biggest reason for using the mobile handset as the means of interactive gaming is that in many countries a mobile is all that anyone has. In countries like China consumers are going straight from having no phone to having a mobile. In fact, there are already more mobile phones in the world than fixed line connections, and those who have never had a fixed line connection will surely never get one.

Gross profit of £1.25m and prize fund of £8m…

Mobile phone owners also have a television. There are 1.5bn TV sets in the world, and sitting in front of the box still beats sitting in front of the PC as a way of passing the evening. It is the technology that is available today that is giving NetPlay TV the chance to grow a very exciting business. It is responsible for Big Box Bingo, and the economics of this business look very enticing. Assume that 50,000 players each month are prepared to commit £50 to playing Bingo. As winnings are typically reinvested, the amount of money staked multiplies four-fold so that £200 is the actual amount of money “played through” each month by each player. That equates to total monthly revenue for the game of £10m. The cost of producing the TV programme is £500,000 and credit card fees, for those who choose to pay for their participation this way, take £150,000. Allow NetPlay TV a £1.25m gross profit and this still leaves a prize fund of £8m. This is a huge sum, and such a headline grabber that NetPlay’s Chairman and Chief Executive Martin Higginson quite reasonably describes Big Box Bingo as “the next Who Wants to be a Millionaire?

£6.9m of bets…

Bingo, which is known as keno overseas, is a game with universal appeal. So is roulette, and Higginson also has plans for fans of the spinning wheel. At the end of last year NetPlay acquired Vegas 247 Limited and Vegas 247 Broadcasting Ltd, which broadcast live roulette on Sky Channel 847 and www.liveroulette.com. Without any advertising this business already has over 5,000 players, and in March took £6.9m of bets – double the figure of last December. But the new regulations governing the gaming industry will permit TV advertising from September, so there is every reason to expect this rate of growth to continue and probably to accelerate.

What attracts players to these particular roulette channels is that they are the only ones to offer a real, televised, spin on a real wheel, and not on a computer generated model. This not only makes it far closer to the genuine casino experience but also removes any suspicion that the game could be fixed. This summer promoters will be able to advertise on TV, and NetPlay TV is preparing a marketing campaign. It is also applying its expertise in mobile communication and payments. This works in a similar way to Big Box Bingo. Marketing is done through inserts in traditional print media. Customers then register with a call centre and open an account. They tune into the TV channel and then place their bets via their mobile handset. What makes the experience so close to the real thing is that they can see their own chip on the roulette table, on the screen in front of them. The wheel spins, and any winnings are deposited into the customer’s account.

Mouth-watering economics…

Again the economics of this are mouth-watering. Assuming that each player commits £240 per month, and again this cash is recycled as players reinvest their winnings. With the “table” taking a margin of 2.7% then, after betting duty, the game needs only 5,360 players to cover the £120,000 monthly cost of running the channel. Given that the channel is already attracting these numbers of players the potential for incremental profit is enormous.  

NetPlay TV has emerged out of a company called Stream Group. Last year the strategy of the company was completely changed, the former directors departed and Higginson, who owns 17.75% of the shares, took over. Higginson, a serial entrepreneur, believes that he has created the ideal structure to capitalise on modern technology, the revised regulation of the UK gaming industry, and the global impulse to gamble. Netplay currently has a sizeable mobile telephony dicision but is looking to offload this as part of its reinvention.

RHPS Verdict: When I met Higginson last month he was full of enthusiasm for his latest venture. The annual results at the end of last month revealed the rapid growth of Live Roulette while Big Box Bingo, which should be launched later this year, has all the elements of a real money-spinner. This is a new, and therefore risky, situation. But your chances of success are a whole lot higher than a lucky spin of the roulette wheel. BUY

To take advantage of the recommendations RHPS is making today, start your no obligation trial now!

The figures refer to the past and past performance is not a reliable indicator of future results. The past recommendation highlighted here is a small company share.By their nature, such investments can be relatively illiquid and, as a result, hard to trade. This makes such shares more risky than other investments. Please seek independent financial advice if necessary. These figures do not include the bid-offer spread, unless otherwise stated. Since the service began on 01/12/98 running through to 31/07/07, the average overall performance of the shares recommended is up 19.91%.All gains exclude dividend payments and dealing costs, unless otherwise stated. Profits from share dealing are a form of income and subject to taxation. Levels and bases of, and reliefs from, taxation are subject to change, and depend on individual circumstances. Full portfolio available on request. Fleet Street Publications Ltd is authorised and regulated by the Financial Services Authority. FSA No. 115234.

www.fsa.gov.uk