The Mighty Have Fallen

This week I was going to cover the elements of football betting that I meant to discuss last week, but couldn’t because I spent too long beating up accumulators. That will now have to wait. Yesterday, for the first time in 15 years (apparently), PokerStars was nudged from its market leading perch. In my gambling world that is highly newsworthy.

Before I get into my Stars-bashing groove, it’s only fair that I get the story straight. The top spot they surrendered was for number-of-players-concurrently-sat-down-in-cash-games. It’s a very niche way to rank the success of a business, and not one that truly reflects market position.

In tournaments and sub-genres of poker (in which they’ve innovated and cross-sold fairly relentlessly for years), I’ve no doubt they still have a healthy position as top poker dog.

In addition, they made the hard, but probably correct, decision to reduce the number of tables a player can join to just four. It used to be a ludicrous, enjoyment-ruining twenty-four. In making that change they chased off a lot of their highest volume winning players.

So there’s a degree of self-sabotage here, with a view to developing a healthier eco-system. Imagine the Forestry Commission slaughtering all the big mean grey squirrels so that the pretty little red squirrels can thrive. It’s like that, but with $400M of cost savings.

The schadenfreude then, needs to be tempered and kept in perspective. This news is only indicative that PokerStars is not the unstoppable 70% market share mammoth that it used to be, and that the trajectory is downwards. I’m going to talk about why I think that has happened.

Full disclosure; I was inspired to write this by reading the perspective of former PokerStars branding supremo and author Chris Herd, who concludes that their travails all stem from fundamental errors of marketing strategy. And, I have to say, I completely agree.

In this blog I tend to lean on my gambling, psychology and data chops, but I have a degree in marketing and ten years professional experience under my belt, so I feel like I’m on sturdy enough ground here. While there are lots of contributing factors to PokerStars’ woes, they can all be traced back to failures of identity.

They forgot who they were, what they did well, and what made them great.

I wasn’t always a fan of the branding decisions PokerStars made during Chris’s tenure, and regrettably at times, I may well even have been a tiny thorn in his side. But I have enormous respect for the authenticity of the vision he and his team developed, and their dedication to upholding the values they identified. Because of their work, PokerStars knew who they were and pursued it not just diligently, but ruthlessly.

Like many of the old school staff, I was reluctant to accept the move away from the astral connotation of ‘Stars’ towards the celebrity/sporty interpretation. Promotions like the Astronomer Freerolls and Battle of the Planets (my big break) lingered long after they should have been overhauled to fit the new theme.

The change from the original PokerStars software skin to the new Black theme should have been enough to persuade the doubters – the improvement was enormous. Likewise, the replacement of the ugly script-font logo with the punchy and stylish red spade. At the time though, I described it in an internal focus group as “a bit communist-y”.

I can own up to those defensive, prideful mistakes now, but to this day I’m not keen on “Find the Poker Star in You” or “We Are Poker”. The latter I think inadvertently led to some of the company’s decline. It bred an arrogance and complacency that we were bigger than, or at least synonymous with, the game that made us.

It’s a small but dangerous shift from being laser-focused on poker, to acting like you are poker. There were lots of areas of the game yet to conquer (e.g. WSOP had much bigger live prize pools, Zynga had far more players), but in that one change of mindset, victory was declared, and some of the focus was lost.

If I had to pinpoint the start of the decline though, I’d say it was the acquisition of Full Tilt. I love that Isai wanted to make the poker community financially whole, but there was also an insidious end game at work.

The transaction was, at least in part, designed to curry favour and settle issues with the US Department of Justice. Those objectives were borne out of a desire to re-enter the States and lubricate the licensing process in other legalised markets. In turn, those were moves necessary to increase company value. That only matters if you’re looking to sell up.

The Full Tilt acquisition meant there were now two brands under one umbrella with two very different sets of values. To preserve harmony and focus, they needed to be integrated or jettisoned. Instead, they were given the leeway to compete, differentiate and resist. The relationship between arch-rivals was understandably toxic and began to poison the company culture.

There came a point not long after that when the Scheinbergs knew they would need to step aside for the company to progress. With a precedent set for value-boosting expansion, it was only a short mental step to adding casino games. That would be the easiest way to pump the sale price in the short term.

Sub-par products for casino and sportsbook were hurriedly bolted on (and many new sub-par staff were hired), and by then, the crucial poker focus that Chris describes, was utterly lost. Again, I agree with him that, with the right brand strategy, the transition could have been made and the identity of the company preserved.

Within the tight brand guidelines, the hard-earned reputation for excellent software and customer focus would have been respected, and those new products would have been delivered right. Crucially, the additional time it took would have allowed for the implementation of a coherent and evolved brand strategy.

That alternative journey is totally speculative, and I admit it would have been a challenging time. The old PokerStars though, survived and thrived through several black swan events. I feel Chris and his team could have navigated the choppy waters. But now PokerStars sucks and they are #2. And that sucks.

Bobby’s Bets

My big investment in German-speaking football nations is currently looking good as Austria and Switzerland are through the groups. I feel confident Germany will get the point they need to follow them tonight.

England are looking rubbish but my £10 sweepstake pick are still in with a shot. At least Sterling was good enough to nod home with my £5 any time goalscorer bet on him.

I thoroughly enjoyed Rahm’s rampage on US Open Sunday, and I had a little £2 E/W value dabble on a Molinari while he was -2 on Day 1. He was never really close after that, so £4 poorly spent.