Subj: Letter from the President
To our loyal Players:
As President & COO, I want to take this opportunity to communicate candidly
about the current status of our site and our plans for moving forward in 2008
and beyond.
Since the launch of NetWinner in June of 2006, we have had the pleasure of
giving away over $1.5 million in cash and prizes to over 20,000 lucky winners.
Over that time, we have worked hard to provide new features, new ways to
win, and improve our Players’ experience.
Unfortunately, we have also spent much of our last two years attempting to
improve how we police fraudulent users who not only defraud us, but also
defraud all of our honest Players. Our most recent statistics show that over 40%
of Players redeeming for prizes have violated our Terms of Service sometime
before redemption. We are truly saddened that such a significant number of
fraudulent users have impacted our legitimate Player’s winnings and our business
at these levels.
During the last six months, we have also experienced ongoing technical and
business issues with our outsourced fulfillment provider of debit cards.
These two major issues have become virtually insurmountable in ensuring the
prompt fulfillment of prizes. As a result, we have been forced to temporarily
suspend our debit card redemption option as we pursue new options for points
and prize redemptions.
But more importantly, like many other businesses and households, we have
also been experiencing the challenges of the recent economic downturn. Together
with the tightening of credit markets, this has significantly affected our
revenue and our ability to take on additional debt required to continue to grow
our business.
These realities forced our management team and investors to make difficult
choices. We had two options: shut the company down, or make adjustments to our
business model that would allow us to move forward in new ways – with new
games, new prizes, and new ways to win. The second option would allow Players
to continue to have opportunities to win cash and prizes, and for us to remain
a destination site for casual gamers on the Web.
We have chosen to make necessary changes and move forward in new ways. But
this choice is not without consequences – both to our Players and to our
company. We are acutely aware that these changes may be unpopular with our Players
and may even cause some Players to stop playing our games. For that I
apologize personally.
But for thousands and thousands of others, we will remain one of the most
lucrative casual game sites on the Internet, continuing to give away over
$50,000 in prizes every month.
Our new model will no longer be a “rewards” based model, as many have come
to perceive it. That is, time spent on our site is not directly correlated
with an amount of money “earned”. As a casual game site, our model will be
more in line with other popular casual game sites. Players can earn instant cash
wins as always and points may be redeemed for cash and prize drawings on a
daily, weekly, and monthly basis. This levels the playing field for all our
Players and substantially limits the ability of fraudulent users to convert
points into cash.
To best address the current fraud and operational challenges I’ve outlined,
all existing redemption points for debit cards that have not been fulfilled
will be doubled and refunded into each Player’s account. For example, if an
individual redeemed 25,000 points toward a debit card, 50,000 points will be
deposited back into their account. These can now be redeemed for entries into
any of our growing list of cash and prize drawings.
By mitigating the amount of fraud we experience, we have revisited our
policies that were designed and deployed to reduce that fraud. We are now able to
dramatically increase and vary the number of daily plays allowed on our games
and provide more frequent multipliers and other new promotions with even
more new ways to win.
We have also modified our fulfillment policy moving forward. All cash daily
drawings will be fulfilled in 30 days or less, and all other prizes,
including prize drawings and instant cash wins, will be fulfilled within 60 days. We
recognize that the delays that occurred in the past were a major source of
frustration for our Players.
As we have been making strategic decisions and directions changes at our
headquarters, we have not broadly disseminated them with all of our staff and
volunteer moderators for confidential business reasons. Please understand that
our support staff performed as best they could with the information provided
them. Realizing that we have not performed as best we could in supporting our
Players’ requests, we have put new customer support processes and staff in
place to improve our relationships with our Players. Our staff can be reached
during normal business hours in the Eastern Time Zone at
support@netwinner.com.
We have made these decisions for the benefit of all our Players as well as
the employees and partners of our company. Companies must constantly adapt and
evolve as operating conditions change. It was necessary for us to do the
same.
It is our hope that these changes will create a more fair and exciting
casual game environment for our existing and future Players who come to our site.
I speak for our entire staff when I send my thanks to all our loyal Players
for their commitment and support.
Best regards,
S. Allen Dean
President & COO
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