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Tuesday, October 19, 2010

Is It Time For Online Gambling Operators To Answer The Social Gaming Question?

I have been following the social gaming phenomena for some time having launched a Facebook poker site in 2007. Many people do not realize that social gaming first became a significant source of revenue in China within the Chinese social networks resulting in a number of them going public. It eventually cropped up in North America in Facebook with Zynga being the most highly publicized social game provider. Europe is now just catching on to the significance and impact of online social gaming.

I began to talk to online gaming operators about the importance of social gaming for their own businesses in early 2009. I indicated that "their" players or potential players were in social networks playing social games and they should consider ways to tap into that player pool.

The initial response I got from online gambling operators was muted. There was a recognition that something was going on. However, their attitude was and still is that social game players were not really their demographic or the types of players they cared about. Online gambling operators were interested in "real" gamblers and not interested in making the effort to attract social gamers to their properties.

Is it time for online gambling operators to reconsider this position?

Social Gaming has become a serious business with real revenue and lots of players. Zynga, the largest Facebook social game and online poker provider has a market cap of 5 billion USD with $600 million in annualized revenue. It is estimated that 2 billion will be spent on social games in 2012. Party Poker recent market cap was 1 billion pounds. How can any online gambling operator not take notice of those numbers??

Another reason for online gambling operators to ignore social gaming has been the average age of players. They felt that the social gaming players were too young to gamble. This is now proven to be be incorrect. The average age of a Facebook user is now 44 years old. This demographic is clearly is a "gambling" demographic.

Facebook itself has recognized the value of social gaming within their own social gaming community. This has prompted them to create their own virtual currency called credits. These credits are now the virtual currency of choice for Facebook social game operators. Facebook is on target to generate 835 million dollars in Facebook credit transactions this year. Most of this is related to social gaming. Credits have essentially become a universal social gaming currency.

The numbers clearly indicate that an online gambling operator at least has to answer the " social gaming question" and state their position relative too social gaming. They may indicate that they still see no threat or synergy between social games and online gambling and therefore have no interest in social gaming players. However, they will have to defend this position as other online gambling operators take a different approach.

Online gambling businesses are starting to explore social networks as a means of advertising and promoting their goods and services. New hybrid social gambling products and business models are emerging. The Harrahs deal with Playdom indicates that alliances are being formed between social gaming companies and casino operators. Granted the success of these approaches is still unproven. However, waiting for another online gambling company to demonstrate success may result in the early adopter's dominance of the market. Social network economics have proven that early adopters that are successful dominate the social network market.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

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