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

[Uglyowl]

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The NL fullgames are full of cigarstore indians

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Reminds me of a Seinfeld episode on the other night.

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

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They have said this is worse than it used to be, it was in their mid-quarter update on their website.

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

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Party has had to offer more reloads, due to more competition in the industry (see mid-quarter update). It used to be quarterly on average and is now monthly.

[Uglyowl]

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

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Historical rate has been 34.0% for players staying active after 6 months of sign-up. The January 2005 sign-up rate was at 29.1% staying active after 6 months.

[Kablooie]

I long ago gave up trying to figure out precisely what it is americans actually mean when they use the word socialist, but let it suffice that the Manchester Guardian is one of the few independently owned newspapers of this world, and generally does a pretty good job of accurate reporting.

The problem i see with the party IPO, and it stands out a mile from their figures, is that they're not actually investing in their business. Yes, they have an incredible ROI, and very little capital costs; the flipside of that is that their software is pathetic, and their technical support is very badly trained. Which is why their costs are so low. In the meantime pokerstars is dumping money on their fpp tournaments, regularly has over 60,000 online - which given that you can't 8 & 12 table on their site, probably means they have more actual players now than party does. Their technical support is amazing, & they actually have stuff in their online store that you want. When pokerstars starts losing customers, i'll worry about the future of online poker.

Party Investors on the other hand, have way overpaid for some rather bad software, an incredibly incompetent marketing group, and an extremely fickle customer base - it'll be interesting to see if anyone there can figure that out quickly enough to fix things - but personally i wouldn't put my money on it.

[jman220]

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I long ago gave up trying to figure out precisely what it is americans actually mean when they use the word socialist, but let it suffice that the Manchester Guardian is one of the few independently owned newspapers of this world, and generally does a pretty good job of accurate reporting.

The problem i see with the party IPO, and it stands out a mile from their figures, is that they're not actually investing in their business. Yes, they have an incredible ROI, and very little capital costs; the flipside of that is that their software is pathetic, and their technical support is very badly trained. Which is why their costs are so low. In the meantime pokerstars is dumping money on their fpp tournaments, regularly has over 60,000 online - which given that you can't 8 & 12 table on their site, probably means they have more actual players now than party does. Their technical support is amazing, & they actually have stuff in their online store that you want. When pokerstars starts losing customers, i'll worry about the future of online poker.

Party Investors on the other hand, have way overpaid for some rather bad software, an incredibly incompetent marketing group, and an extremely fickle customer base - it'll be interesting to see if anyone there can figure that out quickly enough to fix things - but personally i wouldn't put my money on it.

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I do believe that this describes the situation perfectly. Now if pokerstars only had rakebback.

[Neil Stevens]

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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.

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But they are still growing. They're just not going to keep growing geometrically. If growth stocks are those that grow geometrically, then anyone who thought Party Poker was a growht stock, knowing its size, was an idiot.

[BradleyT]

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The problem i see with the party IPO, and it stands out a mile from their figures, is that they're not actually investing in their business.

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Wrong. Haven't you seen the commercials from 2002 that they're re-running now?

[LVGamb00ler]

I think it's only natural that the retention rate declines over time. During the earlier stages of a 'new' technology/opportunity/fad/trend, the 'early adopters' come from the pool of real enthusiasts. This group of people are more likely to be retained as customers as long as they are reasonably satisfied. Those who come later are perhaps more casual users and more fickle. Just my .03c (inflation ya know!)

G'luck all,
LVGamb00ler

[HesseJam]

My take:

I also agree that retention rates will decline. I also agree that 30% retention for 6 months seems to be a good result. Is igned up with about 20 sites over that time. At about 10 sites I played only 1 month (bonus), if at all. I am a regular player at 7 sites.

The average amount of dead money per hand will decline over time. For every semi pro multitabler at 1/2 with a 50000 hands per month at a win rate of 2BB/100 you'll need 10-15 fish who donk off $500 per month. Fish tend to die, multitablers tend to live on. So, the population multitablers will automatically grow grow as long as the games stay good. Fish will have to be replaced at a higher rate than 10-15 to 1.
I do not think that the growth of the fish population was in line with the proliferation of multitablers in the recent 6-9 months.

The question is how this affects turnover of games played. The successful multitablers will see a decline of profit but they will continue playing. The influx of fish will not be affected by this. The problem will be the mediocre players whos profit will be too small or who will be turning into losing players. They might lose interest in continue playing.

Why the profit "warning" by Party? a) growth is slower as anticipated. b) Income per player went down.

a) overall growth of the market did not decline as much as Party's. This means that Party has lost some of its attractiveness compared to its competitors. This is a natural development/ correction to last year when Party was blowing away its competition. Party will need to step up big time here to remain the juggernaut in the business.

b)Income per player went down from about $18 to $17 per month. This is a good result if you take into account that Party jacked up its bonus frequency and installed the Players Club Program. Party will have to do more here to keep its edge. In my opinion, too much money is sunk with the strategy of handing out bonuses across the board. In my case, Party has lost big time dollars since I still play 1/2 and only if I get a bonus. So, they probably lost about $60 per month on me. Additionally, I took about $30 per month from other players, ie, away from the tables. They would have been better of without me.

What will we see in the next months?

At the moment, the biggest negative factor to their profitability are the successful low-limit multitablers. They win -> they take money off the tables that could have been turned eventually into rake.

The volume of hands played by winning players is rising -> the games get tighter -> the Party atmosphere is deteriorating (less chat banter) -> mediocre players lose interest -> eventually fish lose interest because atmosphere is too serious.

Most of them do not play at Party but under rakeback plan at a skin -> they deteriorate the games and Party cannot even cash in their rake.

I think that Party will come up with a strategy to crowd out/ isolate the multitablers. We've seen the first step: the beginners tables. More steps will likely follow. I would look into limiting the number of hands at the lower limits per player per month. This would loosen up the games a bit and force players to move up faster and thereby balancing better the competition at all levels. I would also come up with a high volume rakeback plan (20% if more than 3000 hands played, 28% if more than 7000 hands played, 35% if more than 10000 hands played) to dry up the skins. I think this would be the most effective weapon to retain players at their site.

[mackthefork]

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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.

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Good post, you are almost certainly bang on.

Mack

[DamitBob]

I agree with CardCounter. Throw in the lack of interest in affiliates also. There are some very strong reps that are pushing smaller sites and its working. Noble is a good example. They got a huge buyout after 10 months in business from Empire. The next day they (Sept 1st) are rolling with Titan Poker using all the same aggressive sales reps that built Noble. I can't believe they didn't make the Noble guys sign a non-compete clause.

My Titan rep emails and supports me. Empire? I get a form letter once a month (broken english). Same story with Party.

Absolute is another that understands marketing and will grow and continue to take bites out of the Party/skins clowns.