ResidentParanoid
10-10-2005, 10:59 AM
Here's my read on the Party Skins breakup:
Party is making the move because revenue growth has slowed. New player signups and hand rates are not growing, and are not keeping pace with earlier trends. At best, they are trying to increase the rate of growth, but I doubt that. To please the financial markets, they need to show continued growth in revenues.
I predict that there will be a period of increasingly intense competition between the skins, and other sites. This will actually turn out to be a good thing for most players, as fees begin to drop (through lower rake and increased bonuses). This will likely take place over a few years. The market will be fragmented for some time, with many sites, with a re-consolidation in the future, when fees have dropped low enough that it is better to go for economies of scale and combine together many of the sites and skins.
If you want a model for this, just look at how the mobile phone market was born, created some huge winners (in equipment and carriers), generated a slew of carriers, which have recently consolidated into fewer carriers with the scale to be profitable at an acceptable rate. This played out over 10 or 15 years. During this time, the mobile phone carrier business went from a growth market to a middle aged, relatively mature market with slower growth.
Party is making the move because revenue growth has slowed. New player signups and hand rates are not growing, and are not keeping pace with earlier trends. At best, they are trying to increase the rate of growth, but I doubt that. To please the financial markets, they need to show continued growth in revenues.
I predict that there will be a period of increasingly intense competition between the skins, and other sites. This will actually turn out to be a good thing for most players, as fees begin to drop (through lower rake and increased bonuses). This will likely take place over a few years. The market will be fragmented for some time, with many sites, with a re-consolidation in the future, when fees have dropped low enough that it is better to go for economies of scale and combine together many of the sites and skins.
If you want a model for this, just look at how the mobile phone market was born, created some huge winners (in equipment and carriers), generated a slew of carriers, which have recently consolidated into fewer carriers with the scale to be profitable at an acceptable rate. This played out over 10 or 15 years. During this time, the mobile phone carrier business went from a growth market to a middle aged, relatively mature market with slower growth.