PokerStars Acquisitions a Death Knell to Affiliates?
Neil Mitchell of eGaming Review Online this week wrote an interesting piece regarding the number one online poker room, PokerStars, recent purchase of various poker news portals.
"Is this the start of an increase in such activity across the board?" he asks.
Gambling911.com is learning that next week's i-Gaming Affiliate Super Show in Prague will include discussions between various affiliate Web portals and online gambling operators related to potential acquisition deals.
"With affiliates unwilling to adopt a revenue share-based model as standard, and instead increasingly opting for CPA, tenancy or hybrid deals, operators have created a Frankenstein's monster of their own that is gradually eating into their profits.
"As with any other industry, operating costs (staff, technology, offices) always go up, but unlike other industries, the cutthroat world of the operator has ensured that payments to affiliates have always been high - the competition between operators is so fierce that if an affiliate doesn't get the payment structure they want from one, then they will find it from another."
"If the purchase of these portals is an attempt to control the beast, then it will have massive implications for affiliates."
Mitchell suggests that buying up poker and other gambling related portals means that they control traffic to their websites at massively reduced costs.
The top companies now realize the value of search and, as such, have incorporated news blogs into their own sites, many of which get picked up in Google and Bing. One of PokerStars acquired websites in particular, PokerPages.com, performs relatively well in search.
Mitchell concludes:
"With the operators also controlling the affiliate sites, the costs come down - their affiliate payments are reduced, and with fewer affiliates they won't need so many account managers, instead diverting this money into SEO, PPC and technology in countries with cheaper overheads.
"Ultimately there will be few affiliates left in the gaming sector, and operators will be able to run a much more efficient ship at a much greater profit. Which, at the end of the day, is what business is for.
"This shift in tactical approach by PokerStars is just the beginning of what will be a massive consolidation.
"Instead of the operators competing against each other for players, they will be competing against each other for the source of those players."
Note: Gambling911.com will be attending the upcoming i-Gaming Affiliate Super Show in Prague. Contact us here
Christopher Costigan, Gambling911.com Publisher
