PokerWorldNow

PurePlay Customers May Lose the Smile with Price Hike

A few weeks ago our CFO, Pete, pointed out that the PurePlay terms and conditions had their price point for a monthly membership at $24.95 rather than the seemingly industry standard of $19.99. When I checked their home page, however, the advertised price was still $19.99. Looks like their lawyers were ahead of their marketing folk because finally 2 days ago when I checked their site the price was indeed raised. They also lowered their prize pool from $150,000 back t0 $100,000.

It is bold, and perhaps desperate, for PurePlay to raise its price at this juncture, and I am not quite sure what it means. Perhaps they believe (or hope) that there is a low elacticity and that the percent decrease in demand will be less than the percent increase in the revenue generated. There is fault in this line of thinking because there are several substitutes, and competing products, for subscription poker. Users can go to SpadeClub, or one of the other handful of subscription sites, or they can take their $24.95 and play real-money online poker. I could understand their arguement to raise the price if they offered something more than the other sites, but they don’t. In fact, they offer less than SpadeClub, which has a full-fledged user community and all sorts of member benefits and promotions.

If I can figure the above out over my morning cup of coffee, I have to give them credit that they are smart enough to do the same. So, I decided to look a little deeper and think I may have figured out why they think they can raise their prices: they have added other revenue models into their product in hopes equalizing any negative impact from the decrease in demand.

• Incentive Marketing (Offer Pal): users can get play chips by submitting their email address to spammers, filling out surveys, or signing up for paid services. We tried this for a month but found that the overall cost to the customer was not worth what we were making so we removed it.
• Charge for chips: same as the above, but they can pay cold hard cash for play money chips. $20, $50, and $100 buys you 125,000, 350,000 and 800,000 in chips respectively.
• Pay-per-use of a rabbit cam: users get to see what cards would have come if the hand doesn’t go to showdown. Paid members get a certain number per month and then it is a buck per rabbit view. I gotta give it to them for the creativity on this one, but when I tried to test this product I could only use it once out of 20 hands because all of the hands went to showdown.

The expanded revenue models are analagous to the old Alaska Air commercial where passengers had to pay a quarter to recline their seat and a buck to use the rest room. In other words, PurePlay has implemented a nickel-and-dime revenue model. The first two revenue models are certainly not new to the Internet and seem to have worked well for Zynga, the Company that runs Texas Hold’em Poker on Facebook. However, there are several significant differneces between Zynga and PurePlay. First, Zynga has no other options, they don’t (and probably can’t) charge a per monthly fee. Second, users on FaceBook are accustomed to paying micro-fees or participating in incentive marketing for small rewards, like sending a friend a virtual flower, or in the case of Zynga getting 100,000 in chips. Third, Zynga has millions of monthly unique users and can therefore leverage a “freemium” model where a small percentage of the users are paying for premium type services and the rest are playing for free. From the looks of it, PurePlay gets a micro-fraction of the Zynga traffic.

As someone who runs a subscription online poker site, I understand the need to generate revenue, but I am not convinced the risk of losing customers by raising the price and adding pay-as-you-go fees will be less than the reward of increasing the bottom line. I will wait and see, but in the mean time if PurePlay customers want a better experience for a lower price, our arms are open.