I think the main reason for the drop are to be found in the following sentence from the Q2 report:
“As expected, whilst the online gaming market and poker in particular continues to show strong year on year growth, the rate of growth is continuing to moderate. As it does so, the Group will continue to adapt its marketing strategy and infrastructure to provide greater focus on customer retention and player value.”
This means falling growth rate and probably higher costs to keep the market share (bonuses and advertisement). The market share fell from 54% to 51%.
The yield per active player day fell from $18,7 to $17.
From the q2 report:
“The rapid growth in new sign-ups, most of which are believed to have been more casual players, together with increasing competitive pressures which prompted an increase in the level of customer bonuses netted from revenue, meant that there was a consequent impact on yield per active player day which was down 7% compared with the same period in 2004 to $17.8 (2004: $19.2).”
The costs from customer acquisition increased 250% to 52 million dollar, and the costs to affiliates increased 131% to 45,1 million dollar.
“As mentioned above, the increasingly competitive nature of the poker market, which is now estimated to have over 300 poker rooms worldwide, meant that a substantial increase in the level of investment in a variety of marketing initiatives, in particular offline advertising campaigns and campaigns with our affiliates, were put in place during the first half. Whilst customer bad debts as well as other customer bonuses fell as a proportion of revenue, overall distribution costs increased to 29.9% of revenues (2004: 23.3%) in line with our expectations.
Overall, customer acquisition costs in poker (including bonuses which are netted from revenue) have continued to rise to $286 per new real money sign-up for non-affiliate sources which is 125% higher than during the same period last year.”
http://www.partygaming.com/images/interim_results_fy2005_06_09_05.pdf