Social Casino 2.0 (deck from Casual Connect Amsterdam 2014)

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  • 1. Social Casino 2.0 How to Survive and Grow in a Hyper-competitive Market
  • 2. RAF KEUSTERMANS Co-Founder, CEO Plumbee Board Director ISGA Board Director Bonza Gaming (Interim) VP Marketing Kobojo 2011 Independent Social Gaming Consultant 2010-2011 Global Marketing Director Playfish (EA) 2009-2010 Marketing Director EMEA (EA) 2008-2009 Head of Marketing Western Europe 2005-2008 Strategic Planner at BBDO, Grey and Publicis 1998-2005 @raf_keustermans
  • 3. The Great Social Casino Gold Rush, 2010-2013
  • 4. What happened? • M&A deals (Playtika, DoubleDown) and stories of high LTV created a ‘gold rush’ in the social casino vertical between 20102013. • Many small (casual) game studios pivoting to casino genre, usually without fully understanding specific skills required (mathematician, slots producer) • Today: 350+ slots/bingo/poker games on Fb, 1000+ on iOS and Android... – Mostly low quality, low production value – opportunistic products from small studios without huge cash reserves.
  • 5. • Top 10 social casino companies account for 70% of revenue. • Large companies dominate Top 5 (Caesars, Zynga, IGT, WMS/Scientific Games)
  • 6. • CPI rates keep increasing, while ARPU/LTV is flat, resulting in longer pay back period on ad spend. • Which results in cash drain, squeezing companies with smaller cash reserves... Source: Superdata
  • 7. Some solutions: • Regional focus • Product • Distribution • Real-Money Gaming
  • 8. Regional Focus • Problem: everyone, including market leaders is focused on US, Australia, key European markets. • Solution: focus on specific, underserved markets, with local content (e.g. local card games). • Peak Games (Turkey, MENA) and Akamon (Spanish-speaking markets, LatAm) are successful examples.
  • 9. Product Focus • Slots, Bingo are very mature/saturated verticals with high entry cost. • Poker: Zynga Poker still doing $120M/year, despite ‘stale’ product – opportunity for new entrants with right product. – Liquidity is key for success! • Other casino games: table games (Black Jack, Roulette, Baccarat…) or Videopoker: – Need a strong meta-game to offset ‘shallow’ gameplay. • Social Betting. – Hard to find the right mechanic but potential $1B+ market. • ‘New Games’. – An opportunity for ‘real’ game devs.
  • 10. Distribution Focus • Find a Publisher/Distribution partner. • Brands: IP licensing can be expensive, but there are creative solutions. – Use equity, rev share, ... Instead of upfront cash payments. – Structure brand licensing deal as JV or partnership. • B2B/partnership: opportunities to work with large companies who don’t have f2p expertise. – Land-based casinos, lottery operators... looking to enter social casino vertical. – Media companies trying to leverage their audience.
  • 11. What About Real-Money Gaming?
  • 12. Real-Money Gaming is Hard • • • • • Regulation: licenses are expensive, time-consuming process. Compliance, Fraud Prevention, KYC, … Payments! Mature industry: several multi-billion dollar companies. $200+ CPAs – big market budgets required to get market share. • No proven overlap between social/free-to-play and RMG casino games – no easy way to up-sell social players.
  • 13. Five Options in RMG for game devs Three easy options: • IP licensing: e.g. Monopoly Slots. – No Risk, no investment. – Only relevant/possible if you already have strong, recognisable IP, characters. • Affiliate: send traffic to RMG operator, get paid CPA/rev share for converting users – No Risk, no investment. – Low conversion rates (<1%), not a great user experience, hard to scale. • White Label/B2B Platform: re-skin existing gambling product or use B2B platform like Betable – Low risk, low investment. – Hard to convert f2p players, most social casino companies struggled so far to make this work.
  • 14. Two harder ones: • Joint-Venture: do a deal with existing RMG operator, leverage skill sets for both partners, e.g. Bonza Gaming, JV between Plumbee and Unibet, or the Nordeus/ JV. – Takes time, money ($500K+) – Could be great win-win deal for both parties, but execution, talent is key for success. • Become a gambling operator – Very expensive to build competitive new RMG operator from scratch ($10M+) – Not a lot of overlap (culture, skills, business model) with game studios.
  • 15. Key learnings from Plumbee/Bonza: • Timing is key: we got to 150K DAU (mostly US, AUS) with $300K ad spend in early 2012. • • Making quality casino games is not easy, and not cheap. • • Similar growth would cost $2M+ today... At Plumbee: 1 slot = team of 7 for 3 months, including mathematician and experienced slots producer RMG is hard. Me-too products are not good enough, unless you have a strong brand and millions to spend on marketing.
  • 16. @raf_keustermans