SEGA Poker Room Launches

Dan over at Pokerati.com posted a news bit about SEGA’s new poker room. Unfortunately, since it’s closed to US and Japanese players you can’t even view the site if you’re coming from one of those countries. Fortunately, being in Thailand I can access the site (yeah Thailand!) so I thought I would post a screenshot so people can check it out.

I also was thinking about how something like this changes the playing field in the online poker space. I think there are a few important things to consider:

• A big brand name that is trusted by consumers like SEGA can use their existing marketing infrastructure to reach players at a lower cost per acquisition than most traditional poker rooms.
• SEGA understands providing an entertaining experience. Sonic the Hedgehog is just one example of how they’ve brought entertainment joy to millions of video game players. Since the vast majority of players play for entertainment SEGA would have a leg up on existing poker rooms who tend to think about the game from an advanced player perspective.

At the moment SEGA Poker is on the iPoker network which does limit what they can do. They can’t make any sort of major changes to the software or integrate in any new features but it should give them an idea about the poker market. Just as many are speculating that Harrah’s opening an online card room in Europe is simply a ploy to get their ducks in a row for when the US market opens, SEGA too could be putting its toe in the water to get a feel for how to later exploit a legalized and regulated US market.

Way back in the day, when I used to work at eToys.com, the CEO Toby Lenk would often say that Toys R Us was not our competition. They were so handicapped in old world thinking that eToys would overtake them as the biggest toy retailer in the world before they could react. Our real competition was Amazon. They move fast and they learn their lessons quickly. If they wanted to get into the toy market they would easily gain huge market share very quickly.

Likewise, everyone in online poker seems to look around at other poker companies for their competition. But if a major shakeup in the market comes I would put money on that disruptive force coming from somewhere way, way outside today’s current lineup of poker sites. It could be someone like SEGA who can put out XBox, Playstation, Nintendo, Wii, iPhone, PC, etc versions of your poker software and reach customers current online poker sites can’t even imagine having access to. Can you imagine a poker site that had all of the interactivity of a console game?

I’ve never really understood why online poker companies continue to focus on doing the same thing over and over. I’ve always wondered why they weren’t at the big video gaming expos or advertising in markets that have the same demographic as their current player base. Instead they all advertise in the same magazines, the same poker television shows, and at the same conferences.

If you do that then everyone is going to have the same cost of acquisition and all anyone needs to do to win the war is to outspend their competitors. Not surprisingly, Full Tilt Poker and PokerStars are doing exactly that and are crushing their competitors who can’t afford to go toe to toe with them. But instead of exploring alternative and cheaper ways to acquire new customers most of the poker sites are sitting around complaining how unfair it is.

This is a multi-billion dollar a year business but when you look around at the leadership of most poker sites you wouldn’t know it looking at the resumes. I don’t mean that as an insult to anyone in the industry because I know a lot of talented and bright people but you don’t run across too many people who were poached from top marketing and advertising firms (though there are a select few). No, I’m not talking about a guy who worked as a copyeditor at Satchi & Satchi. I’m talking about senior level executive who has run major successful campaigns for worldwide brands.

If the likes of Harrah’s or SEGA moves into the online poker space with any sort of seriousness you can expect that they’re going to be put their best and brightest people behind it. And those are just the names of two companies who have shown their hand. There could be several other deep-pocketed companies out there who are discussing entering the online poker market and using their existing business to claw their way into the top ranks.

If smaller poker sites are hurting now, just wait because it’s only going to get worse if some of these new arrivals start deciding to throw some serious cash and resources at online poker.