Two Plus Two Older Archives - At Party: January 2005 sign-ups, less than 30% still play there(+more

Two Plus Two Older Archives (http://archives2.twoplustwo.com/index.php)

- Internet Gambling (http://archives2.twoplustwo.com/forumdisplay.php?f=26)

- - At Party: January 2005 sign-ups, less than 30% still play there(+more (http://archives2.twoplustwo.com/showthread.php?t=335273)

At Party: January 2005 sign-ups, less than 30% still play there(+more

http://observer.guardian.co.uk/business/story/0,6903,1567101,00.html

Online poker deals punters a bad hand

For three months it was the hottest deal in town. So, asks Heather Connon, what went wrong with PartyGaming?

Sunday September 11, 2005
The Observer

There were 27 pages of risk warnings in the prospectus for the flotation of PartyGaming, the online poker company, covering everything from the threat of regulation in the US to the prospect of its directors being jailed.
But none mentioned the risk that, just three months after flotation, the directors would discover its growth rate was slowing and that the amount it was making from each poker player was falling.

PartyGaming was supposed to be the hottest growth story around. True, no one was promising the market could continue to grow at the 366 per cent achieved last year, nor even the 100 per cent predicted by industry analysts this one.

But the profits warning breaks what one banker describes as rule number one of new issues: make sure the first announcement after the float does not disappoint. 'In fact,' he adds, 'rules two three and four are exactly the same.'

The profits warning dealt an equally savage blow to the reputation of DresdnerKleinwortWasserstein, the investment bank that brought PartyGaming to the market. Its own analyst, previously one of the most bullish about the company's prospects, made the most swingeing cuts in forecasts, slashing 12 per cent off next year's figures and 25 per cent off the following year's.

The reaction was predictably savage: the shares plunged by a third, crashing below the 116p issue price; and those who had warned that the flotation was flaky were quick to say I told you so.

'It is a wake-up call to investors,' says Gavin Oldham of the Share Centre - who is doubly sore having highlighted it as a short-term punt just a week ago, despite having warned about the risks ahead of the flotation. 'Online poker is just a fad and growth had to come to a halt.'

'PartyGaming is one of the more extreme examples of the low-quality IPOs (initial public offering) that were launched earlier this year,' says Threadneedle, the fund manager, which shunned the issue.

The company, clearly shocked at the City's reaction, was working flat out to repair the damage. First came the explanation: the US's World Series Poker - apparently the third most watched sport on American television, which usually leads to a spurt of new sign-ups - was six weeks later than usual this year.

This can hardly have been a surprise, however, and rivals such as Sportingbet, which rushed out a trading statement to reassure its investors everything was fine, do not seem to have been affected by the change in timing.

Next came the justification for the lack of warning about the importance of the World Series in its prospectus. While Marks and Spencer and Unilever can predict, with reasonable accuracy, what their customers will want in the next month, the pace of change in online gaming is so fast that working out how many new players would sign up, never mind how much they will spend, is extremely difficult.

But that begs the question of why, if it is really so hard to predict even three months into the future, the business was being publicly floated at all. It raises the suspicion that its owners - Ruth Parasol, Russ DeLeon, Anuraj Dikshit and Vikrant Bhargada - who made £1 billion between them from the sale of less than a quarter of the business, were keen to sell out while the going was good.

Finally, there was the promise to do much better in the future, with the introduction of new games next year - although no details were forthcoming for fear of alerting competitors - and techniques for analysing its player base to ensure that it concentrates on those that will be most lucrative.

The industry is certainly young; as little as three years ago, online gambling was virtually unheard of. Today there are more than 200 internet poker sites, and 10 times as many other ways of gambling, ranging from casinos through slot machines to blackjack. And, as the growth statistics show, there has been plenty of interest.

That may continue: while a fifth of the travel industry has already migrated to the internet, only 5 per cent of gaming is currently carried out online.

But PartyGaming's own figures show how hard it is to keep the punters interested: its results show that fewer than three in every 10 of the customers it signed in January are still around in June. Analysts think the attrition rate could get worse still, as ordinary punters realise that.

'A couple of thousand expert poker players are winning loads of money from the thousands who are just not very good at it,' says Greg Feehely, leisure analyst at Altium Securities. 'They will wise up and go and put their money on the horses or play an online casino game.'

He thinks that PartyGaming's travails do not necessarily spell disaster for the rest of the industry. Its business relies much more heavily on poker than rivals such as Sportingbet, and it is much more exposed to the US, where on-line gaming is comparatively well-established.

Rival 888.com will be hoping the rest of the City shares his view. It formally announced its intention to float last week and is currently making presentations to investors to determine the final issue price and valuation of the company.

Its business is mainly online casinos, where growth has been much more pedestrian at 10 per cent or so a year. And, with punters fully aware that the chances of winning depend on the spin of the ball rather than the expertise of your poker opponent, its customers may prove rather more loyal.

Hugh Sergeant, a fund manager with SG Asset Management, thinks PartyGaming's problems may partly be due to the distractions of working on a float.

'These kinds of companies are lean in management and in a fast-moving industry. The IPO process itself can lead to problems,' he says.

But he thinks 888.com should still be able to float - if the price is right. One investment banker said the company had been pitching itself at a 20 per cent discount to PartyGaming. After last week's price collapse, that will make it cheaper still - but possibly too cheap for the owners to want to sell. There are no certainties in this business.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

[ QUOTE ]
I've been saying this for months.

[/ QUOTE ]

I've been saying this for years.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

I have been saying this for about a year that the games were going to be like the Paradise games of 2000. For the most part I think I have been right. During the day the Party games are getting worse and worse. The NL fullgames are full of cigarstore indians and the limit games are full of rocks who are scared of playing anything but AK off on a raise. The dead money is drying up...... [img]/images/graemlins/blush.gif[/img] [img]/images/graemlins/confused.gif[/img]

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

If this article is any indication, the growth-rate obsessives still dominate the landscape of investing.

Party probably deserves this. Without knowing the answer, I'd expect that the Party IPO hyped up the "rapid growth" angle, thus ensuring that any slip in such a growth rate would result in bearishness and articles such as this.

If I were Party, my float would have been based on this premise: "Whether the online poker market grows or shrinks, we intend to be the dominant force in the industry. Our costs are low and margins/profit astoundingly high. Will will pay dividends to our ownership (i.e. the stockholders) so that you share in our success as well as our small risks."

Of course, this explains why I enjoyed my 12 to 15% Canroy dividends back in 2003 and 2004.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

So let's get this straight: A large, thriving, successful business doesn't keep growing exponentially, and now it's doomed?

The losing players are going to decide to quit losing money, by moving it to guaranteed losing gambles?

Getting out of Party Poker now is like folding every AA to a bet on the flop in Hold'em, because you think someone got a set. You're just seeing monsters that aren't there.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
I have been saying this for about a year that the games were going to be like the Paradise games of 2000. For the most part I think I have been right.

[/ QUOTE ]

I have been saying this for decades.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
'They will wise up and go and put their money on the horses or play an online casino game.'

[/ QUOTE ]

Yes, this is what the wise will do I'm sure. They'll have much more fun losing their money on huge -EV games like that.

Then of course, they'll have to come back to poker where they can at least use their own personal skill to determine their results.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

The NL players do........ [img]/images/graemlins/grin.gif[/img]

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
Yes, this is what the wise will do I'm sure. They'll have much more fun losing their money on huge -EV games like that.

Then of course, they'll have to come back to poker where they can at least use their own personal skill to determine their results.

[/ QUOTE ]

There is a fine point that many people still don't get. When a guy plays a casino game online, he is at -EV, but he doesn't have eight tables of that -EV attacking him at once.

When you have thousands of proficient poker players playing four to eight tables each, the money is sucked out of the bad players at an extremely fast rate.

As the data from this article indicates, there aren't enough bad players entering the game to offset the proficient multitabling players.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
'A couple of thousand expert poker players are winning loads of money from the thousands who are just not very good at it,' says Greg Feehely, leisure analyst at Altium Securities. 'They will wise up and go and put their money on the horses or play an online casino game.'

[/ QUOTE ]

What difference is this analyst actually suggesting exists between online poker and other forms of online betting?

Assuming what this analyst says is true about the "long-run," this is certainly not true about the short run, as anyone who has had downswings while infrequent players win at the table can attest.

I could put it like this:

'A couple of HUNDRED CASINOS are winning loads of money from the thousands who play, whether they are good or not at it,' so should have said Greg Feehely, leisure analyst at Altium Securities. 'They will wise up and go and put their money on ???????.'

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]

There is a fine point that many people still don't get. When a guy plays a casino game online, he is at -EV, but he doesn't have eight tables of that -EV attacking him at once.

[/ QUOTE ]

Rarely will an infrequent casual player play 2+ tables, let alone the eight you've conjured up for your example.

To further devalue your comparison, at any casino game, casual players often kelly-bet or increase their bets at a whim. Thus, potentially losing money at an exponentially faster rate than flat-betting.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

Maybe the DOOM SWITCH that poker sites are mandated to have costs too much money, so the blackjack and slots sites will do better?

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
Rarely will an infrequent casual player play 2+ tables, let alone the eight you've conjured up for your example.

[/ QUOTE ]

I wasn't talking about the infrequent casual player playing eight tables.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

When an IPO is floated, it means the greedy are getting greedier. As a player, I don't need Party to grow - I need it to stay as is. If idiots choose to gamble on the stock market, that's their problem - they're actually bigger suckers than the fish.
With the price of gas going up people are going to be staying home and we can expect online gaming to boom.
I have over a million hands in my Pokertracker and one statistic never changes: 40% winners, 60% losers more or less. And that's why limit poker is so enticing.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
[ QUOTE ]
I've been saying this for months.

[/ QUOTE ]

I've been saying this for years.

[/ QUOTE ]
I've been saying "Duh!"

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

[ QUOTE ]
But PartyGaming's own figures show how hard it is to keep the punters interested: its results show that fewer than three in every 10 of the customers it signed in January are still around in June. Analysts think the attrition rate could get worse still ...

[/ QUOTE ]

Has their been any previous data that suggests the attrition rate used to be lower than 70%/6 months.

30% of new players surviving 6 months doesn't sound bad.

chez

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

I think Dikshit and whoever his advisors are were geniuses in their timing of the IPO. Their only mistake was not to sell 49% of the company and net 2 Bill instead of 25% and 1 Bill.

We probably are going to see a couple things in order to placate the new minority owners. I think the rake increase in short handed was one. It is an immediate increase in profitability. Unfortunately for us there will be efforts to increase Party's profitability across the board. Fortunately, there will also be increased effort to bring in new players.

Games will get tighter and more difficult to beat as the growth of the industry slows. Fewer TAGs will be profitable and will get "real jobs". As the growth rate stabilizes there will become an equilibrium of TAGs who will be able to beat the game and new fish arriving daily to support them.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
So let's get this straight: A large, thriving, successful business doesn't keep growing exponentially, and now it's doomed?

[/ QUOTE ]

Of course not. But what it is NOT is a growth stock, as it was touted. Anyone could see that, but the question remains how long will it take until the owners become fully vested.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

[ QUOTE ]
and techniques for analysing its player base to ensure that it concentrates on those that will be most lucrative.

[/ QUOTE ]

Apparently Party has already started this as shown by the account specific bonuses this month. I've stepped up my cover play a little in order to try and get a better bonus next month. Hopefully they won't figure out that they've never made a dime off of me.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

i dont like this. if pp starts to crumble, less reloads!

" Unfortunately for us there will be efforts to increase Party's profitability across the board. "

All Party grinders will get pinched. It had to happen. The choice is to feed your BR or the stockholders. Guess which one Dikshit will choose?

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

Did anybody ever think that bad customer service, buggy software, service interruptions, and increased rake *might*, maybe, just have a little something to do with it?
[img]/images/graemlins/confused.gif[/img]

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

'Offset'? Multitabling good players still pay rake, right?

"When a guy plays a casino game online, he is at -EV, but he doesn't have eight tables of that -EV attacking him at once."
This is nonsensical. That's not a fine point, it's irrelevant. Why would any indvidual infrequent player care how many other tables that grinder on the button is playing?

Also, the starting comment is ridiculous. At least with poker you can get better, why would someone realize "Crap, I'm getting my ass handed to me by these guys. I should go play blackajack"

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
[ QUOTE ]
'A couple of thousand expert poker players are winning loads of money from the hundreds of thousands who are just not very good at it,' says Greg Feehely, leisure analyst at Altium Securities. 'They will wise up and go and put their money on the horses or play an online casino game.'

[/ QUOTE ]

This stuck out.

[/ QUOTE ]

Fixed His Article.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
[ QUOTE ]
'A couple of thousand expert poker players are winning loads of money from the thousands who are just not very good at it,' says Greg Feehely, leisure analyst at Altium Securities. 'They will wise up and go and put their money on the horses or play an online casino game.'

[/ QUOTE ]

the bolded part is very false and misleading

[/ QUOTE ]

i agree.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
So let's get this straight: A large, thriving, successful business doesn't keep growing exponentially, and now it's doomed?

The losing players are going to decide to quit losing money, by moving it to guaranteed losing gambles?

Getting out of Party Poker now is like folding every AA to a bet on the flop in Hold'em, because you think someone got a set. You're just seeing monsters that aren't there.

[/ QUOTE ]

if the stock was being valued based on huge growth and that growth slows down significantly then the stock will fall significantly. doesn't mean the business is doomed but you will lose money if you buy overvalued stocks.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

This stuck out for me...

[ QUOTE ]
That may continue: while a fifth of the travel industry has already migrated to the internet, only 5 per cent of gaming is currently carried out online.

[/ QUOTE ]

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

[ QUOTE ]
i dont like this. if pp starts to crumble, less reloads

[/ QUOTE ]

Actually, it may mean more reloads as they attempt to retain customers. Heck when they were trying to build the player base they used to pay us 10% interest a year(paid monthly) on our average daily balance and all they required was 200 hands per month.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more

What is a punter?

(I don't speak english. Well like they speak in England, anyway. [img]/images/graemlins/wink.gif[/img])

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
Did anybody ever think that bad customer service, buggy software, service interruptions, and increased rake *might*, maybe, just have a little something to do with it?
[img]/images/graemlins/confused.gif[/img]

[/ QUOTE ]

I left PP months ago for those very reasons. And I'm a winning player. About a week ago they sent me an email saying that if I don't return to play regularly before 9/30, my Players Club Points would be forfeited. They were also nice enough to give me the choice of logging in to redeem them before that date if I didn't want to lose those "points you have played so hard to earn!" [img]/images/graemlins/grin.gif[/img]

Well guess what Party Poker. I don't respond to threats, and I don't need your bullshit as long as PokerStars is around.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

Ummm, this is from the guardian, of course. Taking financial advise from a socialist is like taking medical advice from Dr. Kevorkian.

In all seriousness, though, if everybody is so convinced that Party is going under, why doesn't everybody put their money where their collective mouths are and sell Party stock short? I'm not saying it won't happen, but I fail to give much credence to anybody who pontificates about the future of the stock market without monetizing his or her beliefs in some way.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
The NL fullgames are full of cigarstore indians

[/ QUOTE ]

Sorry, what does this mean? I don't get the reference.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
I fail to give much credence to anybody who pontificates about the future of the stock market without monetizing his or her beliefs in some way.

[/ QUOTE ]
I fail to give much credence to most of those whose profession is monetizing their beliefs in the market.

Re: At Party: January 2005 sign-ups, less than 30% still play there(+

[ QUOTE ]
[ QUOTE ]
The NL fullgames are full of cigarstore indians

[/ QUOTE ]

Sorry, what does this mean? I don't get the reference.

[/ QUOTE ]

The smoke shop I go to buy cigs at is owned by people of Indian descent and they're always on a laptop (but not sure if they're playing poker).

Re: At Party: January 2005 sign-ups, less than 30% still play there(+more