Social casino: same but different

SOCIAL CASINO THE BIG DEBATE
Social casino:
same but different
How should real-money operators go about running a social casino?
And should they even bother at all? Gambling Insider asked four
industry experts for their insightful views on the matter
As many readers will already be aware, social
gaming players exist somewhere between
traditional video game players and real-money
gamblers – both of those activities generally
require substantial and sustained investment
from the consumer, both in terms of their
money and time. Social games however can
be played without having to spend cash on
costly dedicated hardware, or having to visit
a specialised gambling website. All you need
is a connected device and away you go.
As social gaming has exploded onto the
scene over the past 2-3 years, in part fuelled
by the soaring popularity of gaming apps
on smartphones and tablets, so gambling
companies have increasingly been scratching
their heads and wondering how they can
get in on the action.
Early adopters such as IGT jumped into bed
with DoubleDown Casino, and it's generally
considered to have been a shrewd (if perhaps
eyebrow-raisingly expensive) acquisition.
Others were slower off the mark and are still
busy making plans today. So much for this
fledgling industry of ours being right on
the cutting edge of technology – in actual
fact there have been plenty of complacent
companies who didn't see it coming. They'd
argue they're playing a wait-and-see game,
of course, but in some cases that would be
pure PR window-dressing.
But perhaps being slow starters will turn out
to be a good thing. Maybe we will see a hare-andtortoise scenario unfold in terms of social gaming
within the gambling industry. For the purposes
of this article, we're honing in specifically on
social casinos and wondering whether they are
worth all the fuss for RMG operators. Will they
see a return on investment? Do social casinos
drive business towards their RMG operations?
And, if they do, to what extent?
With all of this in mind, Gambling Insider
has brought together four industry experts,
each with a different take on the matter, to
air their views on the subject. Hopefully
once you've read this article you will have
been given a thoroughly balanced view of
the various positions and can then make up
your own mind as to which panellist's view
is closest to the truth. Each contributor was
asked to respond to the question: Is social
casino a viable business line for traditional
(land-based or online) casinos focused only
on real-money to date? 
gamblinginsider.com 21
SOCIAL CASINO THE BIG DEBATE
Rory Shanahan
head of marketing and B2B social
product, Williams Interactive
“An increasing percentage of traditional casino players
seek non-wagered casino entertainment from social
casino games – either on the web or on mobile devices”
At Williams Interactive, our view is a firm
'yes' – social casino represents an extremely
promising business line for traditional
casinos. With the right platform, tools and (if
needed) partner, social casino offers increased
player engagement opportunities that can be
leveraged to drive incremental casino traffic
from current player databases, while also
providing a channel through which a casino
can acquire new players for their operation.
One proof point to the latter is Snoqualmie
Casino, a terrestrial casino in the US, which
has reported that 55% of their social casino
players aren’t currently identified within their
player database – representing an abundance
of new players for their loyalty programme.
Regarding player engagement, across all
current deployments of our Play4Fun Network
social casino platform, daily active players
are averaging 85+ minutes per day spread
over four or more game sessions. During this
roughly hour and a half of daily exposure,
the players are immersed in the casino’s
brand – and with modern digital and mobile
marketing tools available, those players can be
targeted with personalised offers designed to
drive incremental traffic to the casino.
On top of providing brand engagement
in the fast-growing mobile and social
distribution channels, social casino also
provides additional methods of player
monetisation for traditional casino
operators. While ARPDAU (average revenue
per daily active user) rates among the top
social casinos may not seem appealing to
a traditional casino – depending on what
report you read anywhere from $0.20 to
$0.50 or higher – these amounts represent a
share of wallet that many traditional casino
players are likely spending elsewhere instead
of with their traditional casino of choice.
There’s ample opportunity for traditional
casino operators, with the right solution,
to provide an experience their players may
already enjoy, but under their brand and
while driving incremental daily revenues
to their bottom line.
And although social casino, as reported by
a number of sources, draws the majority of its
revenue from North America, there remains
a growing social casino business worldwide –
leading us to believe that the opportunity
isn’t limited geographically.
As an increasing percentage of traditional
casino players seek non-wagered casino
entertainment from social casino games
– either on the web or on mobile devices,
the opportunity will continue to grow for
traditional casinos to leverage these emerging
channels to keep players in the game.
Rob Smith
legal and business
affairs manager, Odobo
“Many of the operational and product mechanics that
underpin RMG can also be tailored to drive social growth
or convert social players into the RMG area”
Yes, social casino is a viable business line
for real-money casinos because we're
already seeing it happen. Here are a few
examples: Gamesys has done well with its
unique content for both segments; Caesars
Interactive Entertainment acquired Playtika,
Buffalo Studios and Pacific Interactive; Bwin
purchased Win.com; and Playtech bought
Viaden. While global social casino growth
has slowed to 8.6% in the second quarter
of 2014, the estimated $2.7bn industry
outpaces real-money casino in some
markets (particularly the US).
Early adopters often overlaid a virtual
currency offering onto an RMG game or
ported a real-money game straight to the
social arena. More recently the trend is to
implement a more customised approach.
This complements the nuances of the player
experience in the social segment. In particular,
this includes focusing on what motivates
social versus RMG players. It stands to reason
that the majority of RMG players play to win
money, wagering on the possibility of winning
big. In social casino, players are motivated by
a combination of achievements: pride, social
interaction, progression and immersion. This
is a key difference. Studios such as PlayStudios
understand this and use loyalty ‘prizes’ as
one of their engagement mechanisms – a step
closer to the RMG sector.
One of the challenges faced by RMGfocused operators is competition (especially
in North America and other Englishspeaking markets). This, however, is an
industry where operators are already familiar
with aggressive player acquisition and
retention, and where success doesn’t need
to equate to market dominance. Operators
may use this opportunity to lower the risk
of their offering. Given the rise in pointof-consumption licensing and increasingly
complex regulations, operators can create
new revenue streams from markets they could
not serve before and replace or supplement
ones that are no longer as lucrative.
Many of the operational and product
mechanics that underpin RMG can also be
tailored to drive social growth or convert
social players into the RMG area. With over
25 active developers, Odobo is seeing more
games come through its Developer Program
that blend real-money formats with social
incentives. This leads us to anticipate a
wave of RMG casino games that include
more social features.
Whether the operator is aggressively
expansionist or conservative, including a social
offering as part of a unique product portfolio
is achievable – and potentially very lucrative. u
gamblinginsider.com 23
THE BIG DEBATE SOCIAL CASINO
SOCIAL CASINO THE BIG DEBATE
Aideen Shortt
gaming industry consultant
“Social casino is a separate business.
Run it as such. And/or run it in a
way that truly understands when
a freemium offering adds value”
Whenever I see a film coming out of
Hollywood that promotes itself with the
tagline “Brought to you from the producers
of some other entirely unrelated movie”, I
immediately think that’s just about as useful as
“Here’s some bread, brought to you from the
supermarket that also sells shampoo”. And in a
nutshell that’s what I feel about the convergence
between social and real-money gambling.
It goes without saying that, of course, a
social casino is a viable business line for
a real-money casino – but only because a
profitable social casino is a viable standalone
revenue stream in and of itself. However,
despite the hopes and prayers of so many
operators it’s now become clear that a social
audience is not an automatic funnel for
new real-money players.
In the past four years a staggering $1.21.5bn has been spent on M&A activity
between the social and real-money sectors.
Nobody wanted to miss out on the hype, the
next big thing, the 'new mobile'. But social
gaming is not like mobile gaming where
the platform segued seamlessly with the
desktop; mobile is the same players using
new technology. Social players are a different
demographic altogether, with different
motivations, and just because a game is
played with cards or reels spin or a ball with
numbers appears on a screen doesn’t make
the two identical.
There are over 170 million players of
casino-style social games. That’s more than
three times as many real-money gamblers in
the world. But unlike real-money gambling,
social games – be they leisure or casino style
– have no higher purpose other than to please
the players while they are playing. Ergo, it’s
a separate business.
The issue at this point for operators to
consider is: “Now that we have it, what are
we going to do with it?” – and the answer is
simple. It’s a separate business. Run it as such.
And/or run it in a way that truly understands
when a freemium offering adds value –
whether it’s the ability to play online poker in
a country that doesn’t have a legal alternative,
or as part of a loyalty programme for a landbased casino (IGT’s DoubleDown is making
great progress with partnerships in this
regard) or simply because lots of people in the
world like playing games and are willing to
use money as the buy-in price for some fun,
without any further expectations.
Anything that makes a profit, any profit,
is good business. So social gaming can be a
good business for real-money operators, but
only if there are reasonable and appropriate
expectations and implementations.
Geoffrey Hansen
managing director,
Genesis Gaming
“The most popular games exist in a mathematical
'sweet spot', a spot that casino game designers
have been honing in on for decades. As player
tastes develop, that sweet spot also shifts”
Social gaming is relatively new and so it
seems mysterious. But is it really something
completely different? Let’s take a minute to
think about the social player. Social gaming
players are playing to fill a need. They
want to feel for a moment that they are in
a casino, even if they’re really waiting for
the bus in the rain.
What keeps these players playing when
they get on that bus is the same thing
that keeps players playing at the casino –
engaging gameplay driven by great math
models. Keeping those math models similar
to ones available in your real-money casino
is the key to unlocking the great potential
of social casino.
The most popular games exist in a
mathematical 'sweet spot', a spot that
24 gamblinginsider.com
casino game designers have been honing
in on for decades. As player tastes develop,
that sweet spot also shifts, elusive as
those huge bonus feature wins in a great
game. One of the biggest challenges can
be to get players to play a new game that
your analytics show they’ll love. Take the
player who is used to placing small wagers
on their favourite game in a traditional
casino, but who can play like a high roller
on a social game. This player now has the
freedom to explore new kinds of gameplay,
such as highly volatile games they may
have avoided in the casino but they now
see can pay out big, or they may discover
that bigger wagers are more fun than they
expected. With a social casino, you can
direct them to new styles of gameplay and
help them find the games they didn’t know
they always wanted to play. Those same
players will subsequently seek out this
experience in traditional environments.
All this makes game designers with
a history of creating successful realmoney casino games best prepared to
create compelling social casino games.
By recreating the traditional casino slot
experience, social games drive play to
casinos. The celebration of a big win
and the rush of excitement as a screen
is covered in a coin shower is a fun
experience, whether that screen is a
mobile phone, a tablet, a desktop or a slot
machine on a casino f loor. But players
know that a coin shower followed by a
cash out is even better.
THE BOTTOM LINE
Whether it be on smartphones, tablets or
desktop, Rory Shanahan is convinced that
more and more traditional real-money casino
players are looking to complement their RMG
gameplay with entertaining social casino
games. And while at a micro level most
operators would rather a player was spending
bigger bucks on their core offering, they'd
still prefer that these more modest revenues
were coming into their own social casino
games than a rival's.
Rob Smith echoes some of Shanahan's
sentiments, noting that the operational and
product mechanics under the bonnet of RMG
games can also flick a switch with social
casino players. But Smith also points out that
social players aren't motivated by a high-risk
gamble for a big win; instead it's a matter
of pride, progression and losing themselves
briefly (or maybe not briefly) within the
game. Social interaction and status among
peers undoubtedly plays a role too.
The ever thought-provoking Aideen Shortt
is frustrated by the amount of operators who,
in their desperation to jump on the next-bigthing bandwagon, are trying to run social
casinos without really understanding how to
nurture one. "It's a separate business. Run it
as such," she urges. She's right too. Operators
need to properly grasp what makes social
casino players tick, otherwise they may end
up bitter and with burnt fingers.
Finally Geoffrey Hansen echoes Smith's
point about game mechanics. RMG casino
game developers know where the sweet spot
is in math models and they know how it
evolves over time as game fashions changes.
Those skills can be utilised to create 'sticky'
social casino games – especially if your game
designers and maths geeks swot up on what
else social casino players are looking for.
It would appear the consensus is that
social casinos are worth the effort for RMG
operators, but only if they're prepared to put
in the hard yards to understand how social
players aren't really the same as their regular
clientele. Get that right and maybe operators
can think about migrating a percentage
of players over to their more traditional
offerings. It'll only ever be a percentage
though – some of them won't be for shifting.
Designing a business model in which such
behaviour is perfectly okay is probably
where operators should be headed.
And if you don't agree with any of the four
positions taken by our panel of experts, why
not write to us at editor@gamblinginsider.com with
a synopsis of your own informed opinion.
If we like the sound of it, perhaps it'll
appear on these pages in the not-toodistant future. 
“Social casinos are worth the effort
for RMG operators, but only if they're
prepared to put in the hard yards to
understand how social players think”
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