Party CFO conversation: Trip report

[Guthrie]

-PartyPoker regards the high-volume, serious gambler as an acceptable, but sub-optimal customer.

Every time I say this everyone flames me, insisting that high-volume players generate tons of rake, are hugely profitable to Party, and should be rewarded lavishly.

Any poker room prefers players who trade money amongst themselves until it all disappears down the rake hole. Any player who regularly takes money off the table is a sub-optimal customer.

[highlife]

[ QUOTE ]
-PartyPoker regards the high-volume, serious gambler as an acceptable, but sub-optimal customer.

Every time I say this everyone flames me, insisting that high-volume players generate tons of rake, are hugely profitable to Party, and should be rewarded lavishly.

Any poker room prefers players who trade money amongst themselves until it all disappears down the rake hole. Any player who regularly takes money off the table is a sub-optimal customer.

[/ QUOTE ]

What percentage of current party players are winners in the long term?

[ QUOTE ]
-PartyPoker regards the high-volume, serious gambler as an acceptable, but sub-optimal customer.

Every time I say this everyone flames me, insisting that high-volume players generate tons of rake, are hugely profitable to Party, and should be rewarded lavishly.

[/ QUOTE ]
The other problem is that they're tight on 8 tables simultaneously, and can slow the game down. These factors make tables less fun and dynamic, which is bad for retaining the majority of customers. Also, they're less likely to get involved in the other gaming products on offer (like blackjack or sidebets).

[BottlesOf]

[ QUOTE ]

-Party is genuinely surprised by the negative market reaction. They thought their obvious genius would be a big hit today.

[/ QUOTE ]

[ QUOTE ]
Party regards us primarily as a hassle, and that they see their business model as catering to an ever-rotating group of recreational gamblers.

[/ QUOTE ]

Hey Party? Wake the [censored] up.

[ QUOTE ]
Hey Party? Wake the [censored] up.

[/ QUOTE ]
The market's reacting negatively because any changes in the online poker landscape, especially sudden ones, create great uncertainty. An overnight split with the skins affecting 10s of thousands of players is a big deal. There has been talk for a long time about poker drying up, now this. Of course the stocks have dropped. It has nothing to do with how they treat their few pros, most people who would buy/sell party stock don't have that level of knowledge.

[tonypaladino]

[ QUOTE ]


But they obviously still want our rake, else why the change to allow 10 tables?

Joe

[/ QUOTE ]

Because they know some people will 10 table anyway, and they'd rather have all 10 than 4 on Party, 4 on Stars, etc

[grinin]

[ QUOTE ]
They couldn't put the skins' customers on the casino platform for whatever reason

[/ QUOTE ]
The reason is: they didn't want to because it is more profitable for them to keep all the $ rather than split it with Empire, Euro, Intertops etc. Additionally it provides product differentiation which they feel is attractive to many customers. Finally and maybe more importantly, they don't have to, because their lawyers told them that their existing contracts with the skins require them to maintain a shared "Poker" platform and do not require them to include the skins in the casino offering.

[HesseJam]

While I certainly personally welcome the 10 table-feature, I was surprised as well by that move. 7192837-tight tabling does slow the games down and creates a negative atmosphere, like some poster said above. If I had a poker site I would try to encourage moving up to higher stakes instead of adding ever more tables. This would better ensure a better balanced level of skills.

But this may be valid only long term. If we look at short term, somewhat accommodating the multitablers is very +EV for Party. It generates cash because it generates more rake. But this is not the real issue here. The real value comes from the fact that if they succeed to move the multitabling pros over to Party,
- they add insult to injury to the skins because they lose all those hands from the pros
- they get potential casino customers with some money to spend ( not all pros are immune to the gambling bug).

I think this is a move to thwart skin competition (kick'em when they're down.) In this light, it would only be logical to offer rakeback (maybe for a limited time) to speed up the migration from skins to Party.

The OP quoted the CFO calling this a genious move and I have to agree here. The skins had be free-riding Party. Party did all the marketing to get fresh meat to the games and the skins did close to nothing. Once a new player gets knowledgeable he leaves Party and goes to a skin to play under rb. So Party had to pay the cost to get new players. Most new players bust and the long term players tended to move to the skins. This just had to stop sometimes.

[MisterKing]

[ QUOTE ]
The skins had be free-riding Party. Party did all the marketing to get fresh meat to the games and the skins did close to nothing. Once a new player gets knowledgeable he leaves Party and goes to a skin to play under rb. So Party had to pay the cost to get new players. Most new players bust and the long term players tended to move to the skins. This just had to stop sometimes.

[/ QUOTE ]

Well put. The short-term success of this maneuver (and the addition of new -EV bets (such as BJ) seems assured from Party Gaming's perspective -- yield per player should rise and some high volume players will likely return to Party from the skins.

Longer-term, however, the picture seems much less clear to me and Party appears (given the information available at this moment) to be relying on low-volume recreational players. I don't see how long-term they maintain a critical mass of these players. The casino mentality will drain more money per customer, but these same customers likely have fewer $$ to spend on gambling, and will of course go broke faster than if the -EV bets like BJ weren't offered. In other words, Party seems to be banking on a constant stream of new guys with a few hundred/thousand to blow, and long-term I don't see where you find them.

Moreover, relying on recreational, low-volume players would seem to violate Malmuth's rule for successful cardrooms: "Regular players are very important to a cardroom, simply because they are the core around which the games are built. If there were no regular players, it would be almost impossible to start games, and assuming that a game could be started, it would break very quickly. Put another way, regular players — both those who play very well and those who play mainly for recreational purposes — are the "glue" that keeps the poker tables full. That is, they ensure that the drop is good." (see more in the Sept 05 2+2 InternetMag here). If Party's core business is online poker, rather than online casino gambling, then violating the principles that tend to lead to cardroom success doesn't seem to be the best approach. In other words, a possible side effect of this new emphasis on recreational players may be that the poker side of Party's operation loses market share to Stars, the X-Party Network, and the other online rooms. High volume players certainly seem to be losing a lot and gaining nearly nothing in this transition, at least based on what is currently known.

The high volume player market will, in the long-run, find a way to allocate its MGR to whatever site offers the most attractive package (soft games/rakeback/etc.), and that won't necessarily be Party, particularly if Party does a 3 to 6 month rakeback stint and then cancels it. Just my thoughts... this is all very interesting to observe.

[BottlesOf]

I know. I'm just sad. And your avatar and handle are freaking me out.