Column: A boardroom transformation

The online poker industry needs a serious shake-up. Revenues are in decline, margins are poor, networks have slowed down or even stopped software development and operators with multiple products have ceased investment in what was formerly a profitable vertical. It is time for radical change.

However, operators on a network cannot push forward that change. An operator on a standard poker network has so little control over revenue-impacting projects that they are forced to follow the network’s strategies for software development and marketing regulations.

Even well-intentioned networks and operators will occasionally find themselves in conflict over priorities and strategies, and, with the way networks are currently structured, the networks will almost always win. This is exacerbated in cases where the network provider operates or owns a poker brand on their network, with an obvious conflict of interest.

The radical change that this industry sorely needs must come from the networks themselves.

When we launched our Network Management Board (NMB), that change was put into action. The NMB puts the operators in the driver’s seat for the first time in the history of online poker.

The NMB controls three major aspects of the Microgaming Poker Network (MPN): promotional policies and penalties; the development roadmap; and the operational running of the network. The operational running includes defining a better player valuation model (to allocate greater value to recreational players who tend to lose and rake little), formulating strong marketing rules (to encourage optimal marketing strategies among operators), directing spend on network promotions and optimising tournament schedules, rake structure and game offering.

Board structure

Initially, the NMB will be made up of representatives from Microgaming, Ladbrokes, NordicBet and Unibet. An independent chairman and industry experts will also be present at every meeting to consult on ecology (the balance of recreational and professional players, with a larger proportion of recreational players being optimal), product, industry trends and growth strategies.

Participation in the NMB is not exclusive. Any operator on the network who meets the joining criteria will find a seat on the NMB. Operators will be asked to join based on size, compliance with network marketing rules and the successful completion of an audit that ensures operators are conducting business practices that promote a healthy network ecology.

The first meeting of the NMB took place in early November, and quarterly meetings will follow. The formation of the board is part of a larger project to transform the Microgaming Poker Network to one in which all operators contribute to the success of one another and to the network as a whole.

Operators on the MPN are finding themselves in a new environment, one in which operators that work to acquire contributing players will receive greater revenue for those players, player valuation metrics are questioned and corrected, strict network policies are enforced, and new player acquisitions are rewarded.

Aligned priorities

Over the past six months the average monthly value of a player on the MPN has increased by more than 15% due to product innovation, strong network policing and the contract termination of operators who do not share in the vision of an ecologically healthy network.

Further increases in player value are inevitable as additional measures to protect recreational players and extend lifetime values are put in place.

Operators running poker brands on networks in the online poker industry face many challenges today, such as the current regulatory climate and subsequent splintering of liquidity, increased competition from other operators, internal priorities and resources, decreased margins from operator in-fighting, and perceived affiliate strength within the market.

Change is needed to ensure long-term profitability, and poker networks are the only companies able to enact that change.

In the current environment, poker operator and network priorities are not necessarily aligned and operators are not in a position where they are able to steer the networks or, often, even have a say. That has to change.

This article appears in the January print edition of eGaming Review. To subscribe, click here.