Five Forces Model ~ Online Poker
The online gaming industry is alive and abundant in the United States, unfortunately our economy does not get to reap the benefits of this highly lucrative segment of the gaming industry. In 2005 alone, U.S. residents spent 4 billion dollars in overseas online gaming services, which in turn benefits these non-U.S. entities. In 2005, the international online gaming industry generated somewhere between $7-$10 billion in total revenues, with the U.S. generously providing half of the total revenue. The global revenues have since increased over time, reaching nearly $30 billion in revenue in 2010, largely due to the recent trend in more countries legalizing online gaming to capitalize on its’ benefits. In an AGA article, it mentions, “by driving all Internet gaming business to foreign entities, the current regime also ensures that no jobs are created for American workers, no returns are earned by American companies, and no tax revenues are paid to American governments”. With the online gaming market being such a lucrative market and the majority of the market share in the U.S., it is only a matter of time before legalization within the U.S. The government will more than likely take ‘baby steps’ in the legalization of online gaming, with Poker being the most likely game to come first. The online gaming market is vast and can be viewed from many vantage points. For the purpose of this section, we will be using Michael Porter’s Five Forces Model to evaluate the threats that exist in the online Poker industry. We will take the viewpoint of the software developers and technology companies, as representing the suppliers and the casinos and online gaming companies, as representing the ‘buyers’.
The Threat of Entry
There are many different areas to consider when evaluating the threat of entry in online Poker. Some of those areas include, economies of scale, product differentiation, cost advantages, capital...
Please join StudyMode to read the full document