if rakeback is so important how come PokerStars is a major player?

[slavic]

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My point is and will always be that even with your numbers that is a lot of money.

5%-20% of revenues when you start throwing around the B word is a lot.

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I haven't looked to closely at Party's reports. I should, but just saying a Billion dollars is alot of money simpifies things too much. That Billion is a gross dollar figure and if it costs party 1.2 Billion to service that Billion, well it might as well have been 4 nickles and a happy meal.

As an invester I'm concerned that Party would have a 10% of gross revenue cost for player retention that really isn't retaining players. Once an affiliate brings the player to party, continuing to pay for that player 5 years down the road to a 3rd party is just silly. What value does the affiliate provide in this case? How can you justify that type of expenditure?

Over abd above this you will likely put together a retention plan for these customers anyway, plus you have a set cost for player aquisition. You are in effect paying for new players and paying double for old ones.

[Sniper]

Slavic... no need to fear that Mr Dikshit is going broke anytime soon... Party operates on more than 50% profit margins [img]/images/graemlins/wink.gif[/img]

The affiliate network pays off big time for party, which is why they are so protective of it!

[somapopper]

Party rakes in half dollars, stars waits till it gets to a full dollar. Also, Party takes the max rake at 60, stars takes it at 70.

So, at party, a 51 dollar pot is raked 2.50, a 61 dollar pot is raked 3

At stars, 51-69 is still just 2 dollars rake. So, if it makes you feel better you can think that for every pot in this range you're getting 15-33% rakeback.

[TheHip41]

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If rakeback is so important how come PokerStars is a major player?

I know thier rake is lower, but it is not 25% lower at most levels.

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Raymer + Moneymaker + advertising = fish

[AAAA]

If you keep bringing sites players who hit and run, they will stop paying you,or make the qualifiers so hard that you don't collect for all your players. Yet, if you bring them players who play a lot, and you take the one time deal...well the word "fool" comes to mind.

Two Plus Two was told they couldn't legally accept revenue sharing, and probably lost several million dollars in revenue until they realized they could participate in the income by raising ad rates and letting their members do the affiliate programs.

As a result, there are quite a few rich affiliates around here. Don't get me wrong, they work hard. However, most posters would have preferred to support Two Plus Two for providing the forum instead of affiliates. At least they would have preferred that until the days of rake back programs.

I doubt Two Plus Two would have ever been able to establish facilities to do rake back directly. Somehow if faced with a choice of signing up through Two Plus Two and getting no rake back or signing up through Joe Affiliate and getting 25% rake back...well, what do you think?

P.S. regarding the original question about Stars, Stars gives FPPS and Deposit Bonuses just enough to keep players coming back. Plus, tourney entry fees clear the deposit bonus more regularly than high limit games. I think there is a direct relationship for Entry Fees to bonus clearing but ring game rake is a max of one FPP per hand dealt.

[KKsuited]

Party had $400 mil in operating cashflow and almost 60% profit margin last year. That's ridiculous.

No need to worry whether Party is doing well or not.

and they on pace for about $800mil tops in Revenue according to Rueters, not to a bil yet.

[AAAA]

but what will the market do when the players at Party realize there are other sites out there?

It may be a while until they see an ad for something that interests them at another site, but if they peek in here, they certainly won't want to pay full price, or as soon as one of their friends mentions that they can get a deal someplace else people will move from Party.

Remember it is only the 10 tablers who want to play 5/10 and have game selection who care about having 1000 tables to choose from. Joe Fish just plays a couple tables max, and usually $1/$2 or maybe $2/$4, but often lower limits than that, and many sites have plenty of games at lower limits.

Actually, more and more players will be playing tourneys, and that is another reason that Stars is so successful. Tournaments are the future of poker and online poker as well. Players can budget their costs. They don't really expect to win, but they feel really great if they do! and they don't go broke so fast that they don't have any fun playing! Plus, you can play no limit, which is exciting, but not lose too much real money too fast.

When the fish realizes his $100/month goes farther at site B rather than site P, they will make a change, and getting a partypoker hat won't keep them hanging around.

[robinsons]

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As an invester I'm concerned that Party would have a 10% of gross revenue cost for player retention that really isn't retaining players. Once an affiliate brings the player to party, continuing to pay for that player 5 years down the road to a 3rd party is just silly. What value does the affiliate provide in this case? How can you justify that type of expenditure?

Over abd above this you will likely put together a retention plan for these customers anyway, plus you have a set cost for player aquisition. You are in effect paying for new players and paying double for old ones.

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The great thing about the model from party's perspective is that paying this way (% of MGR) they only pay the affiliate some of the revenue that the player generates, rather than paying $100 for someone who deposits, plays a few hands and then gets bored and cashes out. It also rewards affiliates who get players who are more likely to play a lot on the site.

[AAAA]

and if a site stops paying an affiliate, they are likely to encourage plaeyrs to go to a different site. At least most rake back affiliates have some relationship with the players, and if the site stops paying the affiliate, the player is likely to move on to another site. In the old days, affiliates had no contact with the people who signed up on their banners, and had almost no way of verifying they were getting paid correctly.

Then affiliates started giving away books or rake, so they had a reason to get an email address from the player, and could offer bonuses to players who generated a lot of income.

[partygirluk]

Vast vast majority of players don't know about rakeback. Personally, I don't play at Pokerstars specifically due to their lack of rakeback. It doesn't matter how good a player you are, rakeback has the same absolute effect and that is very large indeed.

Say I 5 table the 10/20 short. I pay $180 an hour in rake. Even at 30% rakeback I am paying $54/hr more to pay at Stars, which just isn't worth it, even more so bcs I am on way more than 30% with a variety of sites. If I ever move up to 30/60 or higher I might play a bit at stars as though rakeback becomes more important in absolute terms, it becomes less important in relative terms, so I would consider playing at Stars if I found a good game.