Are Network Operators A Core Problem In Rakeback?

eGaming Review had a pretty interesting guest blog post by Tom Galanis, director, GameOn Affiliates. Basically, his premise was that the problem with rakeback has less to do with the affiliates and the players and has everything to do with the operators. His position is that basically the rooms are the ones who have turned everything into a sign-up bonus bonanza and avoided other marketing efforts thus making everything ONLY about the money. I’m paraphrasing so if I’m a little off in that summary someone please feel free to correct me.

I probably agree with Galanis about 75% of the way but have to give him some space on the other 25% because of the article length limits at eGaming Review’s blog. He might have better explained that other 25% and had me fully on board.

Basically, the part where I disagree is that it sounds like he’s saying it’s an either or thing. Either you compete aggressively on bonuses and such or you do social media. That may not have been his intent but it was how I read it.

I recently discussed some similar views in my post about bwin purchasing a MMOG site. Major portions of the losing players in poker play predominately for entertainment. The industry, in general, hasn’t caught on to that fact. They still market primarily to the transient player base who are heavily influenced by which site has the best rakeback or the best bonus offers.

For instance, Bodog Network’s recent claim they have solved the rakeback problem really did nothing to help sites on their network recruit casual players. Their product offers little or nothing to distinguish it from the hundreds of other online poker sites. They have not created a hook or USP (unique selling point) that differentiates their licensees in an already crowded marketplace.

No site is standing up and taking a bold new approach. They are either happy with the current business model or too scared to do something different. The rooms at the top of the heap obviously have no problem with the current environment. All of the industry consolidation is benefiting them and they continue to grow. But the middle and lower rooms seem too scared to actually try anything innovative. They keep trying to offer what has become a commodity product, which means that they only thing they have to compete with is price.

So in that respect Galanis is dead on. If you’re a poker site on a network you’re very limited to how you can differentiate yourself from any other site on that same network. Changing the color of the felt on the table really isn’t a USP. And most networks have a limited API for the licensees to build off of so basically all you have left to stand out is your marketing efforts. And since the biggest rooms like Stars and Tilt can outspend you a hundred times over you’re forced to resort to more desperate tactics like huge signup bonuses and rakeback.

Nothing is going to get resolved however until the industry quits viewing rakeback as a good vs. evil question and starts viewing it as a predictable response to market conditions.

Photocred to chrischappelear