Big brands redefining online poker

The days where a small online poker site could strike it big and become a billion dollar company may now be a relic of a bygone era.

With Yahoo! entering the market and the World Poker Tour Online migrating to a better network, it appears success in the online poker industry depends on having big, trusted brands with vast resources.

"Brands are king," WPT founder and CEO Steven Lipscomb said. "I'd be surprised if there were any more of the so called no-name sites that can open up in the international market and build a strong presence. With brands like Yahoo! and the World Poker Tour moving into a space, already occupied by the likes of Party Poker, PokerStars and Full Tilt, the amount of money and resources it would take to build a recognizable site becomes too prohibitive."

PartyGaming CEO Mitch Garber of said three years ago that the real competition begins once the Internet giants (like Yahoo!) enter the arena. Other industry leaders, like Bodog Entertainment, one of the first online casino sites to build up a recognizable brand, have been planning for this moment for some time.

"This has been my prediction for a while," Bodog Founder and CEO Calvin Ayre said. "That portals like Google or Yahoo would eventually be in online gaming. This is why we have the business model we do where we offer a unique combination of proprietary entertainment that is hard for others to copy."

And Ayre and Garber had better be prepared. When Yahoo! launched its poker site last month, it threw down the gauntlet and challenged the top sites on the Net.

"The established gaming sites such as Party Gaming and 888 will be concerned and if they are not, they should be," Yahoo! spokesperson C.J. Stanley said. "There is a movement away from established gaming brands to traditional brands that already have strong distribution channels and own customer databases. The success of sites such as Butlin's Bingo and Lastminute.com gaming are real evidence of the shape of things to come."

Database power

Not only are these large brands entering the market, they're revolutionizing the way online gaming business is done. Rather than building sites from the ground up like 888.com, PartyGaming, and PokerStars, Yahoo! and WPT Online are joining smaller, established networks and using their own databases and brand power to bring in new players.

Yahoo! signed with the powerful UK-based online gaming operator St. Minver, joining the smaller, yet steady International Poker Network (IPN). Similarly, WPT Online signed with Cryptologic, a smaller network, but one that's on the rise.

The WPT's new home, Cryptologic, is the 10th largest poker network according to www.pokersitescout.com. Yahoo!'s new network, St. Minver's IPN, is ranked 11th. Both networks have hovered around an average of 2,000 to 2,400 peak players per week. Those numbers represent one-fourth of the players that patronize sites like PokerStars, Party Poker and Full Tilt daily, but it's a solid start for companies with nearly unlimited resources.

Current industry leaders are acknowledging the trend, but not panicking. PokerStars spokesperson Matt Marcus said the company he represents plans to continue "business as usual," while Ayre believes there are plenty of ways to compete.

"For Bodog, it's not about combating (for) these players; it's about concentrating on our own business and defining our position as one of the most innovative entertainment providers on the web," Ayre said. "I do, however, welcome other enterprises that can help us in our efforts to bring the online gaming industry out of the shadows and into the mainstream spotlight."

Passing on affiliates

Before PartyGaming, 888 and PokerStars become recognizable brands through television and print advertising; these sites relied heavily on affiliate programs and affiliates to deliver new players.

Yahoo! does not have plans to start an affiliate program. Instead, Yahoo! plans to convert the players from their extensive free-money gaming areas, one of their most customer-rich products. This formula has a precedent. Yahoo!'s real-money bingo game became profitable without affiliates, Stanley said.

"The launch sees the portal meeting the needs of its expanding audience and is in response to demand for an entertaining and fun product within a safe playing environment," Stanley said. "Yahoo! U.K. already has a number of products under their gaming umbrella and launching poker is simply an extension of their offering

Lipscomb also said his company does not plan to rely on affiliate programs. WPT Online will receive extensive exposure during television broadcasts of the World Poker Tour. Lipscomb believes this type of exposure along with unique qualifiers into the popular land-based WPT events will help the WPT Online grow quickly.

"We have a unique place in the poker space," Lipscomb said. "Internationally, we're like (the) FIFA (of poker)."

Whether the move away from the time-tested affiliate program draw will prove to be a success remains to be seen.

"It should be interesting…" Ayre said.