I had the pleasure of speaking and attending the Asia Pacific Lottery Association (APLA) conference in Malaysia this year(2011). The main topics addressed at the conference where Social Media/Social Network Integration, Green Initiatives and Responsible Gaming. My primary focus was on Social Media/Social Networks and Social Games. My presentation covered the popularity or social games in the context of the social web with special emphasis on the volume of play that is occurring and the use of virtual currency and virtual goods as a means of monetizing games in social networks. I also emphasized marketing, community building and CS using social media. My presentation can be found online at: http:/bit.lyKevinFloodAPLA2011.
Overall the audience was surprised by the shear number of players, transactions and growth rate of social network adoption around the world. Of special interest to them was the use of virtual currency and goods to monetize social games.
The growth of social network adoption in Asia is much higher relative to other parts of the world driving increasing interest in this sector by organizations like APLA. This is most likely attributed to increased access to the Internet, the proliferation of web enabled devices such as smart phones and the demographics of Asian communities which is skewed heavily to 18 to 24 year old.
The adoption of the social web as the primary form of interaction is a challenge that all businesses face and especially lottery operators constrained by regulation and a history of slow technical innovation in their sector. In Asia it is even more of a challenge and opportunity because social networks may be the only place lotteries can interact with their potential audience and the audiences are split over a number different social networks.
The lottery companies have an added challenge and benefit given their "regulated" status and the need to address under age gambling. However, European gambling companies have been using social networks for years to market their products to social network participants indicating that regulated environments do not prohibit a company from engaging consumers in social networks.
Many of the Asian lottery companies do not have a social network or social media strategy. This was a bit surprising given the statistics previously mentioned. Why have Asian lotteries largely ignoring the most important and potentially lucrative form of online communication currently available to them?
I do not want to paint all Asian lotteries as having ignored this sector. The Hong Kong Jokey Club for one has been aggressive in this area and witnessing benefits. I am sure there are others as well. However, the majority of them are just beginning to understand the significance of this market channel.
So what is it about the lottery world that is holding them back from adopting social networks as a lucrative sales lead and monetization source? What are the opportunities for the lotteries if they decide to engage social networks and social media?
Dependency On Retail Outlets: The lotteries have a long tradition of peddling their products through retail channels. This is their "bread and butter" as we say in the US and they view the world from this perspective. The lotteries have not seen social networks as a big threat to their business. However, things are changing as witnessed by the topic selection for the conference.
Granted the lotteries should not ignore this retail channel. However, if this focus is resulting in them ignoring the social web as a channel the decision could be dangerous and may result in the lotteries losing market share to more aggressive online, social media and social network marketing efforts.
Monopoly and Regulatory Protection: Essentially lotteries operate in a monopolistic environment supported by government regulation. This certainly does explain why a lottery would not aggressively exploit new marketing channels because there is no one to challenge them. Also, regulators themselves may construct bureaucratic obstacles that make it difficult and expensive to initiate new marketing efforts.
I would caution lotteries from relying too heavily on this perceived protective fence. Social game companies and legal online gambling companies are aggressively building games that look and feel like lottery games. This is certainly a threat to the future growth and well being of regulated lotteries.
Illegal Operators: There is evidence that illegal lottery operators are alive and well in Asia with many of them closely allied with government agencies. If these illegal operators decide to aggressively exploit social media and social networks to attract players the illegal operators will take market share away from legal operators. It is very likely that they either are or will exploit social media and networks to grow their market share.
Mobile Devices Challenge Lottery Outlets: One of the speakers from the Malaysian police department spoke about the reasons why illegal operators are so successful competing against legal lotteries. One of the reason he gave was service and availability. Illegal operators go directly to a persons house to sell tickets and they also deliver winnings to punters that have won lotteries. Essentially, a person does not have to go to a retail lottery outlet to play a lottery.
If you think through this further it is not hard to image a time when the majority of lottery transactions are done through mobile devices. Asia is becoming more connected and connected through mobile devices. What a better way to buy a ticket and redeem your prize? Why do you need a retail outlet??? Yes, the bread and butter of the industry could be challenged if mobile Internet enabled devices proliferate.
Attracting the 18 to 25 Year Old Market: It is very interesting that the lotteries want to attract younger age players, realize that these potential players are all interacting in the social web and have not aggressively taken action to address this age group within social networks? I am not exactly sure why there is a disconnect between the realization and execution. However, it is clear that the disassociation will dissolve as lotteries grasp the fact that all of these potential players are alive and well in social networks.
Virtual Currency/Virtual Goods - I did get a number of direct inquires from lottery operators on this topic. This interest is well founded given the special place lotteries find themselves in their communities. Many virtual currency systems are designed for social causes and to stimulate interaction among various groups in society. They are also used as a legal means to monetize social games. People can legally transact in Facebook using virtual currency and virtual goods. These are many ways that lotteries can use the virtual world to increase sales, revenue per consumer and to promote brand identity.
Social Responsibility - Lotteries engage in social programs to assist and enrich their communities. In some cases the history of lotteries has emerged from lotteries that where created specifically to raise funds for social causes. Given this historic emphasis lotteries should explore the numerous web related socially responsible focused organizations. They are too numerous to mention all of them. With some of them focusing on micro-funding, corporate sponsorship, organization building, donations, etc. I have direct experience with a few that the lotteries should consider as models or potential partners. SocialVibe.com is very interesting because it merges corporate sponsorship and advertising with socially responsible investing. I became aware of this because of the clever way they use rich media to monetize their visitors. Taproot.org is an organization that works with non-profits to help them staff and execute on projects. Taproot engages a pool of pro bono consultants that they attract from well established companies and place them into projects for non-profit organizations. I have worked with them to integrate their service into social networks.
Social Games And Lotteries - Many social game companies offer a number of social games and monetize players over the full range or their game portfolio. The concept is simple and effective. If you spend the time and money acquiring a player why not monetize them across a range of games to increase revenue per player. Lotteries should consider this strategy for obvious reasons.
Generate More Revenue Per Player
Engage In The Social Web
Offer More Content To Attract More Players
Social Media - If a business does not have a Facebook fan page, is not developing a community within a relevant social network and does not use a tool like Twitter to communicate and interact with its target market market then the business is really missing out on relatively inexpensive ways to engage its customer base. Also, social networks and social media will evolve. Lotteries need to engage in these social tools if they want to keep pace with the march of the social media phenomena.
Overall the APLA members get the importance of the social web for their world, businesses and consumers. The challenge going forward for them is where to start and how do they keep pace with the rate of change in this sector. This is a good question. My recommendation is that the more you work with these social tools the more you will understand how they work and how best to exploit them.
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.