Poker In focus: Microgaming folds poker network January 14, 2020 | By Sean Chaffin Sean Chaffin examines Microgaming’s decision to fold its poker network and how this affects the future of online poker. It was an interesting September and October in the poker world. A monumental story surfaced when Flutter Entertainment announced the planned purchase of PokerStars to form a firm with $11bn in market capital. Flutter, formerly known as Paddy Power Betfair, runs its own poker platforms in differing markets around the world and also owns FanDuel. That deal may have more to do with sports betting than poker; but it has plenty of potential to grow online poker in a slowly-expanding US market. However, players also received some bad news when it comes to the number of online platforms. Microgaming, based in the Isle of Man and one of the largest gaming software developers in the world, announced its poker network would be shutting down in 2020. The Microgaming Poker Network (MPN), which began as Prima Poker in 2003, was one of the early forerunners of online poker’s “skin” model. As a skin network, various poker rooms make use of the company’s software while signing up their own players. Players are part of a larger network when it comes to player pools and tournaments. As of October, the network consisted of nearly 30 different poker rooms, most of which shared the same tables and tournaments, according to MPN’s website. What happened to the skin model? The skin model prospered for much of the online poker boom. As opposed to single-entity poker models like PokerStars and PartyPoker, which operate their own platforms with their own players around the world, the skin model took a business-to-business approach. MPN lagged behind some competitors, including another skin model network, Playtech’s iPoker, but had a regular pool of players among its various skins. But Unibet left the network in 2013 to go it alone and traffic dropped after that move. There were several advantages of using the skin network. For new sites using MPN, that included software that is already proven and developed, as well as an already-established pool of players to play against those it attracts itself. That saves on technology and programming costs, while the skins pay MPN to keep the hands being dealt. Networks also spend their own dollars for software to meet regulatory standards in various jurisdictions. The skin simply becomes a marketing vehicle to enable further player acquisition. The drawbacks though, mean a small number of players can hurt all involved. Skins switching networks or folding can seriously hurt network player pools, such as when Unibet bailed out. Independent poker sites can create a unique buzz and adapt to player interests and market trends where the networks and skins might not. Sites like 888Poker, PartyPoker and PokerStars all may have more brand awareness by being a single entity. Moving that brand into new markets only adds to that. Those companies also run major live tournament series to market their brand and connect with players. That includes partnering with major live tours like the World Series of Poker (888) and World Poker Tour (PartyPoker, 888). PokerStars has found success in its own live tours, such as the European Poker Tour, and campaigns like Platinum Pass. It would seem unlikely that many skins could create similar momentum in the industry. Some networks however, remain in operation and are carving out market share depending on their location. High-growth markets seem more likely to fit this model, with more players available to begin playing. “The network/skin model worked well in the boom years but MPN and iPoker have been imploding faster than anyone else since Black Friday,” poker industry insider and journalist with OnlinePokerReport.com Alex Weldon notes. “Yet you see the network/skin model currently working well in Asia with GGNetwork and IDNPoker, since that's a growth market. Basically, I think when you're B2B, you're even more sensitive to changes in the overall market than B2C competitors.” Where does Microgaming go from here? The fading of the skin model certainly will not be a massive loss for Microgaming, which has interests in numerous online gambling enterprises. That includes casino, bingo, sports betting and even land-based and live-dealer gaming offerings around the world. The company, which was founded in 1994, also has a significant slot machine portfolio of technology and branded games like Jurassic World, Game of Thrones and Playboy Gold. Its games remain popular as online gaming grows. In the US, where online gaming in states like Pennsylvania and New Jersey continue to see rapid growth, these types of games may offer Microgaming some significant potential. Microgaming CEO John Coleman acknowledged that in a news release announcing the move to shut down MPN: "The network model no longer fits with our strategic vision for poker," he said. "This is the right time to announce the closure as we focus on redistributing key resources and personnel across the business.” It seems ironic Microgaming will be focusing on other aspects of the gaming industry. Its poker product offered a turnkey solution to other gaming entities which may have focused more on other options. These operators could easily add MPN as an option to their customers. Its shuttering may mean many operators don’t find poker as important an option anymore, especially with much bigger operators in the market. “This decision is a strong sign online gambling operators just don't feel online poker is an essential part of running an online casino anymore,” online poker industry expert and analyst Michael Josem says. “As a casino operator, why risk customers losing money to other customers at the poker table, when you can have them lose money to you at the roulette table?" But he does warn: “People should be wary of drawing too many conclusions from one network closing down, as it is likely new competitors will emerge. After all, IDNPoker – the world's largest online poker network – today has more players than PokerStars and essentially no one predicted this publicly even five years ago.” Looking ahead Despite MPN’s closure, operators continue to innovate and add to their existing products. That should continue in the 2020s, as poker still remains a popular form of gaming. “It is likely online poker will continue to evolve,” Josem says. “In 2009, when the iPhone was barely two years old, few people would have predicted the vast majority of online poker would be played on mobile devices. “With increasing focus on faster, more casual games, it is likely liquidity requirements will continue to fall and make the liquidity offered by big online poker sites or big online poker networks less of a draw. This may lead to a rebalancing of the online poker industry, with a greater dispersion of players away from a big couple of monoliths – especially as a result of local regulatory changes and requirements.” Sites like Zynga, for example, offer players more of a social option when playing. Could Zynga harness its own pool of free-to-play social gaming players and create its own social gaming real-money poker offerings? A move like that could bring something completely new to the market. The site has even partnered on events and games with the World Poker Tour in the last few years. For poker players, it still may not be great news to see a network go away. This move leaves fewer choices and shows some retraction of the online sector, despite a booming live tournament poker scene. But poker still offers a large player pool looking for action. Platforms will continue to welcome those players and build a player base. While MPN may be going away, that apparently may still include Microgaming as well. "While the network will be closing, this is not the end for poker at Microgaming,” Coleman said. “Ultimately, this move will help the business as we follow a new strategic direction for the vertical, details of which will be revealed in due course.” Sean Chaffin is a freelance writer in Crandall, Texas, and senior writer for Casino Player and Strictly Slots magazines. His work appears in numerous websites and publications. Follow him on Twitter @PokerTraditions or email him at [email protected] for story assignments.