Online debate: Social Gaming & Gambling Convergence – threat, opportunity or just hype

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How do the worlds of social gaming and gambling converge? Can they co-exist, co-operate, or do they perhaps compete? How does convergence between the two sectors impact on your business, whether …

How do the worlds of social gaming and gambling converge? Can they co-exist, co-operate, or do they perhaps compete? How does convergence between the two sectors impact on your business, whether you’re a social game developer or a gambling company?

The survey launched by Kontagent and EiG to find out the views on these questions from both sectors revealed very contrasting opinions on the goals for launching social-casino games, on regulation and Facebook’s move into real-money gaming.

Find out the first results of that survey during the pre-EiG webinar when experts from the social gaming and gambling sectors will present the key factors and questions to be taken into consideration to decide the extent and success of the social gaming and gambling convergence.

Find out more about the social gaming research study launched by EiG and Kontagent here.

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  • SPEAKING:Ewa:Welcomeand introductionContext of the social gaming and gambling convergence and evolution of topicSegue to research with Kontagent and survey and the title of the webinarhttp://www.istockphoto.com/stock-photo-12981265-gambling-stuff-in-laptop.php?st=68bd6b8
  • SPEAKING:Ewa:Segue to research/survey and agenda of the webinar MentionEiG (full results to be presented in Barcelona)Introduce the presenters, provide background in the spaceSegue to the topicInvite audience to comment
  • SPEAKING:Ewa: What are casino games? Use bullet points, note they incorporate all verticalsDisagreements about the vocabulary – ask Kevin Flood for commentInvite audience to give us their definitionKevin:Provide views on the definition of ‘social’
  • SPEAKING:Ewa: Explain the graphic and 4 key market players involved and how they converge alreadyAsk David for US market perspective and regulatory pressureDavid:Talk about how market is changing as the stateside regulation in the US is gaining momentum
  • SPEAKING:Ewa:Introduce David as a data scientist from Kontagent. Kontagent has hundreds of social and mobile casino customers, and based on Kontagent’s internal data and research, here are some insights into the space. David, could you please walk through some of your key findings?David: Please use the bullet points as a guide.
  • SPEAKING:Ewa: As I mentioned in the introduction, we’ve conducted a survey. We wanted to get a sense of how players view and are reacting to the convergence. David, can you tell us what we learned from the online gambling community.David: Please use the slide as a guide of findings. Please also mention respondents’ locations and channels.
  • SPEAKING:Ewa: Please use this as a segue: Now that we’ve summarized the findings of what online gambling operators think, let’s speak with James Hollins (may be worthwhile to remind the audience who James is).Ewa:In light of that, what have you found in your practice as an investment professional in this space? How would you rate ‘social gaming’ on the list of priorities of both the investors and operators within the gambling industry?Ewa/James: Q1: Ewa, ask about the research that James has mentioned?A1: James had this as an original talking point and can go into further detail.
  • SPEAKING:Ewa/James: Q1: Ewa: James- how exactly are online gambling operators considering social gaming and the opportunity presented by ‘social’. What is the value for gambling? A1: James …Q2: Ewa: Are there other opportunities? What are they? A2: James … 
  • SPEAKING:Ewa/James: Q1: Ewa, ask about the M&As: it all sort of started with the DoubleDown acquisition (even though there had been others before that) – what exactly have we seen in terms of M&A and what does it mean for both sectors?A1: James had this as an original talking points and can go into further detail.Q2: Ewa, ask about other indicators: Acquisitions have certainly built the momentum, but what are other indicators?A1: James had this as an original talking point and can go into further detail. Ewa Bonus question: Does gambling actually think social is a threat? Is there also fear of cannibalization?
  • SPEAKING:Ewa/James: Q1: Ewa, ask about the other factors that James thinks people should consider.A1: James had this as an original talking points and can go into further detail.Ewa: at this stage, I want to ask other presenters to comment on James’s opinions – Kevin to ask James his question…
  • SPEAKING:Ewa: Now, we’ll look at survey results from the social games industry. David, can you tell us what was found?David: Please use the slide as a guide of findings. Please also give a brief explanation of the difference between social casino game developers and non-casino social game developers.
  • SPEAKING:Ewa: Please use this as a segue: Introduce this. “Because Kontagent has many social casino customers and understand the social gaming space much better, I’m going to ask David to conduct the Q&A with Kevin FloodDavid: Now that we’ve summarized the findings of what the social games industry think, let’s speak with Kevin Flood (may be worthwhile to remind the audience who Kevin is).Kevin: Please use the slide as a guide of your speaking points.
  • SPEAKING:David: Use the questions as a guideKevin: Please use the slide as a guide of your speaking points.
  • SPEAKING:David/Kevin: Q1: Ask about the other factors that opportunities and threats that exist for social gaming industry WRT to social casinos. A1: Kevin can speak to these points.Bonus: ask James: Have you had any interaction with the social gaming industry? How do you assess the social gaming perspective in the context of your research and itneraction with the gambling sector
  • SPEAKING:Ewa: Segue: Well, now you’ve learned about the survey results, and heard from the experts in online gambling and social gaming. David, can you summarize the main points decision makers from these two areas fields agree and disagree on? David: David can speak to these points.Ewa: Question for James: online gambling seems to want to keep off Facebook but it was Gamesys to launch first and there are others to follow – Please comment?Question for Kevin: real-money gaming is seen as opportunity by social gaming – but are they prepared? What do they need to consider?
  • SPEAKING:Ewa: Ask David to present what the industries disagree onDavidSpeak to these pointsDavid: Talk with Kevin about how the analytics are different from online casinos and social, and total cost of acquisition and revenue as players move back-forth between platformsEwa: James and Kevin – would you like to comment or add something to this?
  • SPEAKING:Ewa: Wrap up, ask audience to submit questions. Park questions: - For James and Kevin: is regulation needed in freemium casino games even though players cannot cash out?- For David: what are some typical analytics that you do in social and mobile freemium games?Also, remind folks about EIG, where where we will present more results from the survey– bring up the social gaming element in the EiGprogramme and Kontagentpresention

Transcript

  • 1. Social Gaming andGambling Convergence:Threat, Opportunity orJust a Hype?19 September 2012
  • 2. AGENDA WHO’S WHO Intro Moderator Background and landscape Ewa Bakun Head of Content, Gaming, Clarion Events Research findings Ewa.Bakun@clarionevents.com Online gambling o Survey results Speakers o Expert perspective David Gutierrez, PhD Social gaming Data Scientist, Kontagent o Survey results David.Gutierrez@kontagent.com o Expert perspective James Hollins Summary Industry Analyst, Investec Securities James.Hollins@investec.co.uk o Conflicting opinions o Convergence Kevin Flood CEO, GameInLane Q&A Kevin_Floodz@yahoo.com@Clarion_Gaming | @Kontagent
  • 3. WHAT ARE “SOCIAL” CASINO GAMES? Casino-style games on social networks, mostly Facebook Players cannot “cash-out”; no real-money wagering „Freemium‟ model: most players play for free, but can buy virtual chips/goods for enhanced experience „Freemium‟ games are also popular on mobile platforms (iOS, Android)@Clarion_Gaming | @Kontagent
  • 4. SOCIAL CASINO-STYLE GAMES LANDSCAPE Land-Based Casinos iGaming Social Operators Games Mobile Games@Clarion_Gaming | @Kontagent
  • 5. EXCITING MARKET OPPORTUNITY Social casino games share has doubled on Facebook since 2010 (from 6% to 13%) Social casino games have surpassed farming games 40% higher ARPU than RPG games; 7x higher than casual games Of the Top 10 grossing iPhone apps, three are casino games Social and mobile casino worldwide market size could be up to 100B USD by 2017 Sources: Kontagent Data Science, Juniper Research, AppData, App Annie.@Clarion_Gaming | @Kontagent
  • 6. ? WHAT THE ONLINE GAMBLING INDUSTRY THINKS More than half of online gambling sites respondents have already launched a social casino game or are seriously considering it Those who have launched a social casino game: • Have done it for a separate revenue stream and in anticipation of US regulation • Expect this revenue to be up to 25% of their total revenue Most respondents believe there is still room for new entrants 25% think Facebook is not going to allow gambling on its platform Sources: Kontagent survey@Clarion_Gaming | @Kontagent
  • 7. ONLINE GAMBLING INDUSTRY AND INVESTORS’ PERSPECTIVE Q: In light of that, what have you found in your research as an investor in this space? A: Research shows you need to be looking at social gaming • Social has become a major talking point for companies, shareholders and investors • Deals and investments are taking place to drive early-mover advantage • A number of operators are staying away from the area@Clarion_Gaming | @Kontagent
  • 8. ONLINE GAMBLING INDUSTRY AND INVESTORS’ PERSPECTIVE Q: How are online gambling operators viewing social? A: A new revenue driver & most operators targeting social Q: What are some other opportunities? A: It goes beyond revenue. • New recruitment platform • Facebook move towards real-money gaming • International expansion with limited cost or regulatory threat • High returns from well-invested games platforms available • Cross-fertilisation of marketing and affiliate skills • Attractive online and mobile crossover–always on • However, regulation may change and competition is intensifying@Clarion_Gaming | @Kontagent
  • 9. ONLINE GAMBLING INDUSTRY AND INVESTORS’ PERSPECTIVE Q: The recent M&As are an indication. What have we seen? A: M&As have been extensive • IGT purchase of Double Down ($420-585m) • Caesars acquisition of Playtika (c$90m) • Bwin.Party $23m acquisition of Velasco and Orneon • 888 purchase of Mytopia ($18m) Q: Besides M&As, are there other indicators? A: Organic growth also aggressive • Facebook launch of Bingo/Slots Friendzy with Gamesys • Big Fish real money games launch with Betable • Bwin.Party c$30m games studio investment (2-year)@Clarion_Gaming | @Kontagent
  • 10. ONLINE GAMBLING INDUSTRY AND INVESTORS’ PERSPECTIVE Q: What are some other things to consider? A: Not for everyone–skepticism remains • Social gaming in name, gambling in nature • Long-term legal viability • Cashing in chips blurs the boundaries • Gambling Commission in UK likely to review • Zynga Poker launched in China • More wary of US domestic market • If not prohibition, then at least a tax impact@Clarion_Gaming | @Kontagent
  • 11. ? WHAT THE SOCIAL GAMES INDUSTRY THINKS 40% of respondents have already launched a social casino game • Of those who haven‟t, about half will consider launching one. • Those who have launched it have done it mostly encouraged by the success of these games and looking to be acquired. Most respondents believe there is still room for new entrants 10% think Facebook is not going to allow gambling on its platform Sources: Kontagent Survey.@Clarion_Gaming | @Kontagent
  • 12. SOCIAL GAMING INDUSTRY PERSPECTIVE Q: Can you give us your market perspective? A: Growing adoption of „freemium‟ and social casinos • High level of competition Q: What did you think of the initial research findings? A: Social casinos outside of Facebook • Using engagement hooks/mechanics outside of Facebook Q: In your opinion, what is the relevance of the online gambling industry to social casino games? A: Relationship between iGaming platforms and „freemium‟ and social platforms still distant • However, more thought needed on linking the two environments@Clarion_Gaming | @Kontagent
  • 13. SOCIAL GAMING INDUSTRY PERSPECTIVE Q: How are social casino games different from other social games? A: Social mechanics provided by underlying social networking platform Q: Is regulation needed for „freemium‟ social games? A: Complicated; could be a threat to standard iGaming businesses Q: Can you speak about how the social games industry has been impacted lately? A: More competition means it‟s more difficult to make money Interesting trend: Publishers are avoiding 30% Facebook tax Industry changes: • Facebook - Gamesys Jackpot Joy in the UK • Big Fish Casino in the UK@Clarion_Gaming | @Kontagent
  • 14. SOCIAL GAMING INDUSTRY PERSPECTIVE Q: Given your industry knowledge, what are some of the biggest opportunities for social game developers? A: There are many opportunities, but also threats. Opportunities Threats Increased competition; Higher-revenue games lots of entrants Big gambling houses Partnerships and acquisitions entering the space With regulation, opportunity for even High licensing higher revenues after licensing/approval acquisition costs@Clarion_Gaming | @Kontagent
  • 15. THE TWO INDUSTRIES DISAGREE ON: Rationale to get into this space: • Online gambling industry o Revenue and regulation • Social and mobile game industry o Success and acquisition Real-money wagering on Facebook is perceived more as an opportunity by the social gaming industry Online gambling industry prefers to keep real-money wagering off Facebook Sources: Kontagent Survey.@Clarion_Gaming | @Kontagent
  • 16. THE TWO INDUSTRIES AGREE ON: Still room for more entrants Long-term business opportunity and are planning to enter it if they haven‟t already Prefer slots games over any other games Optimistic about mobile platforms Most see real-money gambling on Facebook coming Analytics and game mechanics are very important in developing successful social casino game Sources: Kontagent Survey.@Clarion_Gaming | @Kontagent
  • 17. Q&A Thank you for attending ktgt.co/social-casino-survey@Clarion_Gaming | @Kontagent