Collision of gambling and social gaming now ‘inevitable’
Whoa. Just a couple months ago, Zynga was cautiously musing that social games and gambling could join forces to make more money. Now Dean Takahashi is saying that real online gambling and social games are on a collision course. What a difference a few months makes.
Don’t get me wrong, Dean is correct. He’s got some great quotes in his article, including:
“Social gaming is obviously the coming thing and in some sense it has already arrived,” said Simon Burridge, chief executive of Virgin Games, speaking on a panel. “Social gaming meets [real gambling] is the high ground of the future.”
Jim Ryan, co-chief executive of Bwin.party Digital Entertainment, said of the online gambling companies, “As an industry we have missed the ball. Bingo is easy. That is the one and only social game that our industry has gotten right.” He noted that social game companies such as Zynga have amassed huge audiences in the meantime.
Malcolm Graham, chief executive of online gambling firm PKR, agreed. He said, “We have all missed the opportunity to build tournament-style gambling games (for no real-money betting) on Facebook. But in the next 12 months to 18 months, our gambling industry will move onto Facebook.”
Uh oh. The gambling industry has woken from their slumber and realized that pretty soon the social gambling boat is going to leave without them. The smart players have already started making moves into the space, such as IGT’s purchase of Double Down Interactive and Caesar’s purchase of Playtika. Companies that are further behind are now struggling to catch up. With rumors swirling that Facebook is preparing to roll out gambling in the UK, it seems like only a matter of time before social gambling is a reality.
But what does this mean for the social game industry? Unfortunately, it means that massive companies with equally massive marketing budgets are lumbering into town. The good news is that these are large, slow-moving companies with little knowledge of modern social game mechanics, though the similarities between social games and casino games could shorten the learning curve. The bad news is that the average gambling player is worth over $300 per month, so these guys are packing big guns when it comes to user acquisition and retention. Competing with that kind of a budget is going to be downright hard. And after multiple swooning love letters back and forth, it seems inevitable that Zynga and Wynn will team up to offer real-money gambling in legal jurisdictions. This means social game developers can’t count on their industry know-how to protect them, even in the short term.
So what can social game companies do? Well, operating exclusively in the US will keep you safe for the time being. But, now that The Wire Act has been modified, multiple states are throwing their hats into the ring to offer legalized online gambling, including big markets like Florida, California, New Jersey. According to the VentureBeat article, Jim Ryan expects that online gambling will be largely legal in the US by 2014. That means that hiding in the US is not a good business plan.
Instead, social game companies should do what they have always done best: adapt. There’s a number of avenues this could take:
Frankly, mobile is likely to befuddle many gambling operators for some time, but the smart gambling companies are already making big moves into the space. Given that most smaller social game companies have already turned their attention away from Facebook, I’m guessing this is a good idea anyways.
2) Younger audiences
Social game companies could target their games for a younger audience, which gambling companies are legally obligated to avoid. This doesn’t have to mean anything sleazy, just that you make more kid-oriented games or go into a specific, younger vertical like educational games. However, children under 18 only make up 5% of money spent on social games, which is rather limiting.
3) Offer real-money gaming
Social game companies can compete with gambling companies on their own turf: by offering real-money gaming in their social games. In this strategy, social game companies have the advantage. They understand their players and what drives them to purchase or play better than anyone, and they can leverage this knowledge to onboard them into lucrative real-money gaming. However, most social game companies haven’t done this already because gambling licenses are tremendously difficult and expensive to acquire.
That’s where we come in (what, you didn’t think I wrote this for fun, did you? ). With Betable, you can offer real-money gaming to your players without the hassle of getting a gambling license and get back to what you’re good at: making awesome games.
Either way, brace yourselves, because gambling is coming. The question is how you will respond.