How PokerStars Can Be Challenged
THE WEEKLY SHUFFLE, 2013-08-25, by TwoGunLast week's shuffle was about why PokerStars became the dominant leader in the online poker sphere. Conventional wisdom would have you believe that there's pretty much no chance this goes away, and PokerStars should be top dog for a long time to come. Quite frankly, conventional wisdom is likely correct too! Nevertheless, Party Poker seemed invincible when it was on top too...and now they're fifth in terms of online liquidity according to PokerScout.com.
I don't expect PokerStars to fall on its face like Party did, but PokerStars could be challenged in the future if certain things fall into place. Let's detail how it could happen:
Full Tilt Poker
First, it should be stated that any serious challenger to PokerStars completely blew it by failing to buy up Full Tilt Poker on the cheap when they had the chance. Other sites probably expected Full Tilt to just go under and that they would just soak up any of their players. They were wrong.
Fortunately for the bankrolls of many poker players, PokerStars was the white knight and bought Full Tilt for pennies on the dollar and has been making players whole. Non-US players received their money a long time ago and it appears even US players will receive their money soon.
Not only did PokerStars put a fence around their dominant position by buying the second largest poker site, they also boosted their brand by being the savior of many poker players bankrolls. Had Party Poker done this (and they likely had the financial capability since they merged with Bwin), they could have given themselves a shot at taking on PokerStars. Instead, they let the opportunity slip through the cracks and allowed PokerStars to once again prove why they are top dog in the industry.
Targeted Overlays and Guaranteed Events
One method of player acquisition and retention that has worked well in the US daily fantasy market is by having a mega event that is advertised heavily. This method has catapulted Draftkings to being the second largest site after just being started a little over a year ago.
For example, if a poker site advertised a million dollar tournament (similar to the PokerStars Sunday Million), it could draw some attention. If it went bigger and did a two to five million dollar event, it would have a bigger splash. Most likely, the tournament would overlay, which would mean the site is actually putting up money for the tournament. Players would have a much higher chance of winning money.
In short, if one of these companies (and keep in mind, they are publicly traded and have a lot of cash on hand) just dug into its war chest and put up a huge tournament, say $5 million, advertised it heavily knowing that it would overlay, it may make some headwinds in the poker world. It would give people a reason to not just associate tournaments with PokerStars and would be a major marketing coup for the site. It would be a gamble for sure to see if it could bring in players for the long term, but combined with some of the other ideas I'll get to, it may just work.
Go All-in On Being Fish Friendly
One gripe we've continually with onlie poker rooms is how little effor they make to protect casual players from getting eaten alive. The core of the problem happened when poker rooms became public companies. Due to the rush to show an increase in revenue, they let sharks play in as many games as possible and made no effort to decrease the shark/fish ratio.
Long-term, keeping the games soft allows your poker room to grow. This has been shown in spades by Bovada's poker room. While it accepts US poker players (and hence we do not recommend it), one thing I respect about them is their focus on keeping their games soft. They do this in a few ways, including keeping the cash games anonymous (so player tracking software does not work). Over the past couple of years, they have catapulted to be the #1 US-focused poker site, and they're now not too far behind 888 Poker and others in terms of player liquidity.
If, combined with a mega tournament that likely overlays, a poker site made a major, major effort to keep the games soft, they could set the stage to grow. Not only would they have a major infusion of players from the mega event, they would keep the players since the games would be soft. A few techniques they would employ:
-Limit players to a maximum of 3 cash games tables (preferably just 2)
-Keep cash games anonymous so player tracking/notes do not work
-Keep the rewards system very focused on individual players, and give more rewards to the losing players (some sites already do this).
Legal US Poker
Outside of Nevada and New Jersey, legal US online poker may be awhile. However, as it expands into other states, especially a large one like California, it could potentially shake up the online poker market. It's likely that PokerStars will be shut out of the US market for awhile, so if a site is able to pool US liquidity with international players (also another longshot), it can help build itself to challenge PokerStars.
There's a lot of ifs involved in this scenario. Poker must expand in the US and somewhat soon, poker rooms will need to be able to combine the US traffic with the international, and a poker site will need to have enough of this to challenge PokerStars in some way.
Do I think PokerStars will remain the dominant poker site for the next 5-10 yes. Definitely. However, it's not impossible for another site to challenge them. I don't think any of these sites have the gusto to take the necessary steps to do so, and I'm not even sure if they do this that it will be successful. However, with an intense marketing effort focused on one premier tournament that will likely overlay, a focus on building a fish-friendly ecology, and a little luck with the US, it's possible
The Weekly Shuffle is our Sunday column with our observations and commentary on the poker world. Have an idea for an article? Leave a suggestion on the feedback page.
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