The Internet gambling business community has woken up to the fact that they have missed out on perhaps one of the most important Internet wagering business opportunities of a lifetime by not taking social/freemium gaming seriously. They are now in catchup mode trying to sort out how to engage with gaming that is not of the conventional regulated ilk.
The problem is that in their panic to carve out market share in this space they have somehow lumped all non-conventional wagering Internet gambling in the "social gaming" category. I hear it time and time again that they are investing heavily into "social" when in fact many of the games they are investing in are not social at all?
The worrisome part about this is that making big bets in a highly competitive space without understanding what social really means could be disastrous for these operators. In point of fact, the term "social" as used by gambling operators really means "freemium" encapsulating all gaming that does not fall into the regulated gambling space. It should also be noted that even this definition may change as gambling operators invest heavily in the freemium gaming space. Ironically, This will draw the attention of regulators to freemium Internet gambling making regulators suspicious of virtual currency and goods transaction within games of chance. The operators emphasis in this space may kill the goose that laid the virtual golden egg.
In point of fact, we need to be conscious of what the gambling operators are really looking for despite the fact that they may not know themselves. Are they looking to invest in games that are truly social outside of any socially contextual platform such as Facebook and or are they investing in games that are not social and require a boost from a socially contextual platform to become social?
To answer this question we need to understand what social means and what it does not mean.
What Does "Social" Mean? - It my seem silly to have to ask or answer this question. However, the definition needs to be spelled out to draw focus to what is really important about social gaming. Social implies an environment that encourages interaction amongst individuals. An extension of this is the tendency for social environments to encourage people in the social environment to connect with other people they know to participate in the environment and for people to become acquainted with people they do not know within this environment. If a social setting is truly interesting to people, a community around that subject will grow quickly, providing that a communication mechanism is either part of the game or facilitated by an external communication system that can be leveraged to communicate to people inside and outside the social environment.
Truly Social Games - There are gambling games today that are social games. Poker and traditional bingo are the two most noteworthy. These games can only function if there are is a critical mass of people playing these games. This is commonly called "liquidity". Yes, there are stand alone video poker games and standalone bingo games. However, historically poker and bingo started as social games to enhance the dynamics of the game and in bingo's case to actually foster a sense of community. Gambling operators such as Party Poker, Full Tilt, Pokerstars, etc, are a few of the big gambling names that were able to leverage the inherent social nature of poker on the Internet. Other non gambling games such as Farmville and Cityville are freeemium style social games that leverage community social features encouraging players to act in a community way to achieve common goals.
Social Platforms - Platforms such as Facebook and Google+ are social backbones that provide basic social facilitation tools that mimic real world social interaction on a much bigger scale then found in a terrestrial environment. Simple things such as invitation capability, profiles of people, notification systems and meeting places such as forums and applications that provide meeting places for people to meet and communicate are provided. In the case of Facebook the overall community is very large leading to potentially high levels of interest, virility and liquidity for games.
Anti-Social Games - Slot machine, single player bingo, roulette, etc are not social games. They are played in a solitary way. Because of this they do not have tendency to create large communities or cannot create large communities without a facilitating" social network. These games are inherently anti-social because they require that the player concentrate on the game and not other players in the game or how other players are doing. There is no value to the individual player with the exception that Jackpots do require large amounts of players to increase the prize.
Social Games + Social Platforms - The combination of an inherently social game combined with an underlying social platform makes for an extremely powerful combination. Zynga Poker is the obvious example and a shrewd first application to launch within the popular social network Facebook. Within 3 months they leveraged the open virility components of Facebook resulting in massive adoption of their poker room blocking out all of the competition for the top application spot in Facebook. Zynga's Farmville and Cityville where both based on this strategy of first mover virtual world games within Facebook resulting in yet another success story and domination within Facebook of this game category.
Anti-Social Games + Social Platforms - We have recently seen success with anti-social gambling style games such as slots combined within social platforms. These games offer an essentially solitary game experience and combine it with invites, notification, updates and other community features to enhance the ability and likelihood that even without any real game purpose to engage others in the game the game can leverage the underlying social platform and perhaps its reward systems to encourage others to play the game.
Rapid Growth and Consolidation -An interesting phenomena about the combination of social platforms with games is that there is usually a quick consolidation of players into only a few popular games. Ironically, the social nature of the game and or the social platform facilitates this process. This is especially true if a game is inherently social leveraging social network features to grow a community.
Can Internet Gambling Operators Compete In The Social Gaming Space? Of course they can. However only if they really understand the social environment and if they launch new and interesting freemium games or at least hybrids of the traditional casino or social gambling games that are not offered at this time. Sure they can try and buy their way into the social space by spending more marketing funds than anyone else or they can acquire existing successful social games or game companies.
They also need to understand the freemium game business from a revenue per play, cost of acquisition, and retention perspective. Making freermium work requires much higher player volumes than they are accustomed to and there is no regulatory protection limiting competition. At least not yet.
This is not to say that the Internet gambling companies should not attempt to enter this space. However, their current culture of offering the same suite of gambling games as their competitors in the gambling space will most likely not be a successful strategy in the freemium world. Just putting the same old gambling game into a crowded social environment is not likely to be a winning combination. They will have a steep learning curve. However, they do understand that the world has changed and a business strategy that does not include a "freemium" component will most likely marginalize them. Freemium is also the faster moving game sector from a technology and delivery perspective. The gambling companies have consistently been behind the technology evolution curve because they have not been building and supporting freermium games. This will change by necessity if they want to compete with the highly funded startups in this space. It should also be noted that the mobile environment may be the best place to offer freemium goes and not Facebook or Google+. This is an entirely different discussion and will be forthcoming.
Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes 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.