What is the point of e-district.net?
None, so far as we can see
We wrote about e-district.net for the first time in February 2000, when the London-based leisure/community site announced its intention to list on the AIM stock market (WebTV propels e-district to financial stratosphere).
We could not understand how such a shoddy-looking site that none of us had heard of could generate so many page impressions - 100m a month! - and active users - 1m! At the time the claimed figures put it behind only the BBC and Yahoo! in ranking for UK Internet sites.
CEO and founder Stephen Laitman airily explained to us that most of the figures were generated from interactive TV in the US, and besides, the ABCe audit was coming out in a few days time, which would prove his company's claims.
Sure enough, the ABCe-certified figure was published a wee while later, but this was based upon counterfeited logfiles - allegedly (Laitman denies the charges).
In March 2000, at the height of dotcom madness, e-district raised £29.3m in its IPO, valuing a tiny 12-man business at £149m. We were astonished, but we still thought the site sucked.
In February this year, Laitman was sacked, accused of grossly inflating sales figures by raising false invoices and then, bizarrely, paying them with his own money. He denies this accusation too. The Fraud Squad is currently investigating the claims.
The new management has spent more than three quarters of a million pounds of its IPO money in legal fees fighting Laitman.
So what's left of the business, following the founder's departure? Some £10m of IPO cash is left in the kitty. And no business. But some software. The company saw sales collapse in the six months to June 20, to £2,183, more than 90 per cent less than the same period last year. And losses? These came in at a massive £2.7m.
e-district is dressing the near-to-nil sales as a strategic decision. The company used to sell banner ads but stopped doing this, strategically, so it could reposition itself. Yeah, right. What ad agency in its right mind would spend its media budget with a business whose board publicly announces that previous customer figures were inflated?
You'd think the sensible thing would be to admit incompetence and return what's left of the money to shareholders before you do any more harm with it. That's not in the game plan.
For e-district has a gamesplaying platform that is suitable for digital TV. It claims that NTL, Telewest and ITV Digital are customers. But where's the money in this? If the software is any good, then sell it to Electronics Boutique or the cablecos. Let them carry on with the development - they can afford it.
The experience of Barrysworld and Gameplay shows that online games development, especially for multiple platforms, is a money pit. And that it requires tip-top management to navigate a safe path to profitability, a task that was beyond the well-regarded management team of Barrysworld, and the poorly thought-of Gamesplay crew. And e-district?
Give the money back and give up. ®
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