At the 2010 GiGSE iGaming conference in Montreal I talked about the need for land based casinos to move quickly and aggressively into the online space if they had any aspirations of being real players in cyberspace. The recent deal that Harrahs cut with Playdom(now Disney) signifies an important step in that direction. The deal is significant because it leverages the WSOP brand, which arguable could be the most profitable online gaming brand of all times, generating more direct and indirect revenue then any other online gaming brand to date. The problem has been that WSOP has not been a big money maker for Harrahs. Instead it has been a big money maker for iGaming brands running online tournaments to get online players to qualify for the land based tournament.
It looks like Harrahs has decided that things are about to change. They have made an interesting end run around the big traditional online poker brands such as Party Poker and Poker Stars by entering the legal online gaming business in the US. Playdom has 42 million players playing on their property. That has to get the attention of the other big online poker sites that want to get into the US market when online poker becomes legal again. Essentially, The Playdom deal expands the WSOP brand from its current online gambling audience to a broader social gaming audience.
The other interesting part of the deal is the way Harrahs will be monetizing game play. They appear to be covering all the basis with sweepstakes(alternative method of entry) payments to enter tournaments, virtual currency purchases and virtual goods sales. Do not forget that Harrahs has been in virtual currency business for some time issuing virtual currency in their Total Reward program. This could lead to an interesting tie in with virtual currency and virtual goods exchanges between Playdom and Harrahs land based casino players.
Party Poker bought WPT last year buying into the legal sweepstakes model in the US. However, I doubt if WPT has 42 million active players.
In another of my recent blogs I researched the growth of the virtual goods market. It is growing a lot faster then the traditional online gambling method of monetization. Yes, the traditional online gambling sites are currently making more then the social gaming sites. However, the virtualization trend is working against them. More and more people are flocking to the easy to play social gaming sites buying, trading and selling virtual items and currency. From the land based casino perspective more people are choosing the virtual world over the traditional physical gaming experiences.
The Harrahs’ move should get the land based casinos and online gambling sites thinking about how they should react and position themselves. First online game movers have proven to be hard to catch once they gain momentum. Zynga and Party Poker are recent examples of companies that quickly dominated their respective online game categories. The other land based casinos are no doubt the most vulnerable. Most of them have no online experience, brand, market share or expertise. They are going to have to engage in a partnership like the Harrahs Playdom deal or conduct an outright purchase of a high trafficked and well branded online property if they expect to compete in cyberspace.
Significance Of Harrahs WSOP Social Gaming Deal With Playdom Poker Room