http://peterbirks.livejournal.com/ ([identity profile] peterbirks.livejournal.com) wrote in [personal profile] peterbirks 2005-11-22 07:32 am (UTC)

Re: Hi/Lo & Empire

Yes, why would Empire be risking legal action if everything else was rosy? CEOs will never, ever, say "oh well, that's it then. We're fucked". They will paint optimistic pictures up until the famous phrase "seeking strategic alternatives" appears. In the UK, an insurer/reinsurer called Goshawk is an excellent example of this. It basically went belly-up last week, although its shares are still quoted because some value can be extracted from it as it is slowly run down into extinction. And yet, only a few months ago the (very) well-paid boss was optimistic that the turner had been corned.

Empire was badly, badly hurt by the Party move. I reckon we might be looking at a legal claim in the hundreds of millions. If Party was willing to buy the guys off with an over-the-top bid, then silence might have reigned.

I know too little of Empire's casino ops to comment on their viability or not, but I think that the company must expect profits to be slashed by 80% or so without poker income. Everything else from Empire is bluster.

The market (and a few of the people at the poker companies) still has a wrong-headed view of the online poker playing customer. They think in terms of "brands", "loyalty" and all the old paradigms from consumer goods and services (seeing a poker web site as something like a hotel chain, or an airline).

Now, WE all know why a large number of heavy players shifted to Empire, but, at least initially, the market did not. In no other business is the question "how many stupid people are also using this service?" an important one.

Party obviously does get it now (although I think they should have kept the four-max table rule -- increasing it to 10-max was very short-termist), and will keep pushing and pushing for new players. It knows that these players will go broke, and in an attempt to stop the multi-tablers getting too much of it, they introduced the sidebet and the Blackjack.

Eventually the "new player" well will run dry, and then you get the "get old players back" marketing campaign (marketing people, remember, are stupid. It's a law. Bill Hicks had them sussed). Already we are seeing some signs of this. My guess is that we will soon have rakeback by any other name.

PJ

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