I have been doing a lot of research lately, regarding subscription based service versus real money sites, in particular, poker sites. Basically, a subscription based service charges users a monthly fee and in return they get to compete in daily free roll tournaments to win real money. A pay money site, on the other hand, lets users deposit money and then gamble with that money. There are advantages and disadvantages to both approaches, which I will describe here.
A subscription based service is limited to a monthly amount, lets say 20$ a month, and can make no more money off of each user beyond that. A pay site doesn't have such limit, and would supposedly make a lot more. There are a lot of gambling addicts out there that can spend a considerable amount each month. However, after more research, I find this might not be the case.
Pay sites average about $120 net gaming revenue each quarter, from poker players (published financial statements of leading gaming providers). A subscription based site charging $20 a month would only get $60 dollars in comparison, which is half that amount. However, the advantage of a subscription based site comes to light when you consider member conversion and retention.
For a subscription based site to make the same amount of income, they would have to convert traffic at least 101% more than a pay site. This is certainly possible, because it is a lot easier to sell a monthly subscription than it is to get people to start playing for real money, especially new players. Also, a subscription based service has the chance for more retention, because a monthly subscription can go on for a long time before the user actually cancels. Many users never cancel. On a pay site, the players don't get their deposit bonuses after their first deposit, and many will go to other sites instead of reloading their account at their current site. The players don't have to worry about losing all of their money on a subscription site, and thus their loss is limited to the monthly fee they pay to use the software. A subscription site also does not have to pay out first deposit bonuses, which helps the bottom line a great deal.
Downsides to subscription based sites include not being able to cross sell to sports and casino sites, which tend to gross over $450 per real money player. On the other hand, subscription sites are able to have an easier time taking US players because subscription sites are legal; people are paying to use an upgraded version of the software, and not actually placing any wagers. This is a tremendous advantage not just over pay sites that don't accept US players, but also over pay sites that do, because it is still a hassle for US players to both deposit and withdraw their money from these sites. Many pay sites require users to use money orders and wait several days before getting any of their money in or out. A subscription based service is also a great alternative for current and old US gambling sites to be able to get market share while waiting for laws to change to their favor, which could take years.
A subscription based service is limited to a monthly amount, lets say 20$ a month, and can make no more money off of each user beyond that. A pay site doesn't have such limit, and would supposedly make a lot more. There are a lot of gambling addicts out there that can spend a considerable amount each month. However, after more research, I find this might not be the case.
Pay sites average about $120 net gaming revenue each quarter, from poker players (published financial statements of leading gaming providers). A subscription based site charging $20 a month would only get $60 dollars in comparison, which is half that amount. However, the advantage of a subscription based site comes to light when you consider member conversion and retention.
For a subscription based site to make the same amount of income, they would have to convert traffic at least 101% more than a pay site. This is certainly possible, because it is a lot easier to sell a monthly subscription than it is to get people to start playing for real money, especially new players. Also, a subscription based service has the chance for more retention, because a monthly subscription can go on for a long time before the user actually cancels. Many users never cancel. On a pay site, the players don't get their deposit bonuses after their first deposit, and many will go to other sites instead of reloading their account at their current site. The players don't have to worry about losing all of their money on a subscription site, and thus their loss is limited to the monthly fee they pay to use the software. A subscription site also does not have to pay out first deposit bonuses, which helps the bottom line a great deal.
Downsides to subscription based sites include not being able to cross sell to sports and casino sites, which tend to gross over $450 per real money player. On the other hand, subscription sites are able to have an easier time taking US players because subscription sites are legal; people are paying to use an upgraded version of the software, and not actually placing any wagers. This is a tremendous advantage not just over pay sites that don't accept US players, but also over pay sites that do, because it is still a hassle for US players to both deposit and withdraw their money from these sites. Many pay sites require users to use money orders and wait several days before getting any of their money in or out. A subscription based service is also a great alternative for current and old US gambling sites to be able to get market share while waiting for laws to change to their favor, which could take years.
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