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State of the Social Casino Industry, Q3 2014

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VISIT WWW.ELADKUSHNIR.WORDPRESS.COM TO SEE AN UP TO DATE VERSION OF THIS LECTURE (Q2/Q3 2016)

Slides from my lecture at Casual Connect San Francisco on July 22nd 2014.

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State of the Social Casino Industry, Q3 2014

  1. 1. State of the Social Casino Industry Q3 2014 Elad Kushnir, VP of Business Development Email: eladk(at)Playtika.com Twitter: @eladkushnir
  2. 2. 2 Social Casino About Playtika
  3. 3. 3 Playtika: Overview  Founded in 2010  Multiplatform social games developer  9 games  12 platforms  Headquarters in Tel Aviv, Israel  Offices in USA, Canada, Ukraine, Belarus, Romania, and Argentina.  750+ Employees
  4. 4. 4 Playtika: Evolution of our Studios
  5. 5. 5 Playtika: in Numbers
  6. 6. 6 Social Casino Market and Industry Overview
  7. 7. A very brief history  Games of chance have been played since the times of the ancient Greeks.  The first slot machine was invented in the 1890’s.  In their modern format, casinos in the USA have existed since 1931. Social Casino in Context  Social Casino is a spinoff of a very mature industry.  The innovation of Social Casino is in the adaptation of casino games into a non-gambling environment. 7 Social Casino in the Casino Industry Context
  8. 8. 8 Social Casino in the Gaming Industry context Social Casino ($) / Other Categories ($) Social Casino is one of the most lucrative mobile gaming categories Social Casino Market ($Billions) The Social Casino category will generate ~11% of Social and Mobile gaming revenue in 2014 0.80 1.25 2.00 2.60 3.30 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 2011 2012 2013 2014 E 2015 E Source: Distimo Source: Eilers Research / New Zoo / Distimo 7% 14% 10%0% 50% 100% iPhone iPad Android Social Casino % Other Game Categories %
  9. 9. 9 Social Casino: Market Makers (continued) Offline Slots Manufacturers Competitive Advantage: Proven Content Offline Casino Operators Competitive Advantage: Brand Recognition / Cross Promo Online Real Money Gaming Competitive Advantage: Digital Casino Experience Purely Social Competitive Advantage: Agility / Social Mobile Experience / Regional Focus
  10. 10. 10 Social Casino: Market Makers ~50% $ Market Share ~20% $ Market Share + hundreds more
  11. 11. 11 Social Casino Growth Drivers – Mobile – Regional – In-game optimization
  12. 12. Global Smartphone Shipments Global Smartphone penetration will continue to drive growth in the gaming market. Every smartphone owner is a (potential) gamer. Social Casino Revenues Q1-2 2014 Mobile has formally trumped Facebook/Web platforms. This means Social Casino is now a mobile first industry. 12 Social Casino: Growth via Mobile Source: Playtika ResearchSource: BI Intelligence
  13. 13. Smartphone Growth 2013-2019 (m) Social Casino will grow in emerging markets. Asia trumps all other regions Offline Casino Revenues 2013 ($B) Casino Revenues from Asia are mind blowing. And its only the start. 13 Social Casino: Regional Growth Source: Statista 110 150 393 986 2077 0 500 1000 1500 2000 2500 44 6.4 6.3 4.2 2 1.6 0.37 0 10 20 30 40 50 Source: Citibank Research
  14. 14. Local Games for Local Markets Social Casino will grow in emerging markets. The key to success will be culturalization not just localization Asia is the biggest gaming region (B$) Asia is already the largest gaming market on the globe. Japan already generates more mobile gaming revenue than the US. China will generate 17B this year 14 Social Casino: Regional Growth (Continued) Source: New Zoo
  15. 15. 15 Social Casino: Growth via Optimization The lowest hanging fruit is right inside your game Segmentation Personalization AI / Big Data
  16. 16. 16 Social Casino Emergence of a B2B Trend
  17. 17. Emergence of a B2B trend Social casino has caught the attention of offline casino operators. Suppliers have emerged to help these “late bloomers go to market”. Strategy: Create value via Loyalty Forecast: B2B will not become a large direct revenue source for the offline casino operators but may allow for increased retention and loyalty of their offline customer base 17 Social Casino: An emerging B2B trend
  18. 18. 18 Social Casino M&A Update
  19. 19. Gaming Consolidation continues 12.5B in M&A transactions in the last 12 months = 2X 2013 pace Social Casino M&A / Strategic Rationale 19 Social Casino: M&A Update Source: Digi Capital
  20. 20. 20 Social Casino: Summary 1. Social Casino is an evergreen gaming category which adapted casino games into a non-gambling environment 2. The social casino market has shown consistent growth since inception and commands a non-trivial share of the social & mobile gaming market 3. The social casino market is dominated by four types of interested parties. slot manufacturers, offline casinos, online RMG operators, and social gaming companies 4. Growth will come from mobile, regional opportunities, and in-game optimization 5. The Asian opportunity is mind-blowing! 6. A social casino B2B trend is emerging. It will not be significant in terms of revenues but rather will be a retention tool for the offline casinos. 7. Consolidation continues as social casino revenues grow and both the social gaming and casino giants want a piece of the pie
  21. 21. 21 Thanks for Listening! Playtika is constantly looking for opportunities Please contact me at eladk(at)Playtika.com if you have any ideas for us. Follow me on Twitter @eladkushnir

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