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Tuesday, February 12, 2013

Converting Social Casino Players To Paying Online Gamblers

 The recent ICE conference demonstrated the popularity of social games being launched by traditional online gambling operators. The conversation is now moving to the  concept of using social casino games as a means to acquire online gamblers. This concept is actually not new  and has been discussed  and tried even before the recent popularity of  casino style freemium games. The earlier attempts at converting  freemium players to traditional online gambling venues did not prove successful for a variety of reasons. A study of those attempts may be helpful in understanding if and how current social gamers can be converted to "real" money players.

Business Environment And Fear Of Online Gambling -  I personally floated a business plan to Silicon Valley investors in the Fall of 2008 for this very concept. I called it the "Online Gaming Ecosystem" and gave presentations at the Macau gaming conference in 2009 and the first GIGSE conference in 2010 on the subject. The concept was also discussed at GDC in 2011.

My 2008  business plan was based on my experience at Pureplay, an online poker site, that also had a presence in Facebook. Pureplay is a subscription based US poker property that demonstrated the willingness for  casual poker players to pay for poker play. Our audience actually included a significant number of players that resided in countries where online gambling was legal.  It was not hard to imagine a scenario where a percentage of these players could be converted to "real" gambling. Thus the creation of the business plan which received little interest at the time because of the recession and the fact that Silicon Valley investors where wary of investing in online gambling related business. Consequently, the attempt to execute such a conversion strategy was stymied by a lack of investor interest.  However, given the popularity of  casual and freemium style games it was clear that given the proper environment an attempt to up sell freemium players into "real" money play would be a viable option. 

Zynga's Attempt To Sell Leads To  Gambling Sites - It came to my attention at the Macau  gambling conference in 2009  that  Zynga had been trying to sell leads to traditional European gambling sites for some time with very poor conversion rates. It appears that Zynga was sending random players to the gambling sites without any "profiling" of players resulting in  very low conversion rates. This practice did have a positive result because it established relationships between Zynga and European gambling operators which are paying off in the current frenzy to push Zynga into the gambling domain.  HOwever, there was a general disappointment amongst the gambling community about the ability to convert Zynga poker players to real money gambling.

2011 GDC Identification Of "High Rollers" - With the 2010 advent of the use of virtual currency to monetize gamers in Facebook research was done by a marketing firm to determine the profiling of social game players to determine how much money people were spending on virtual currency to play games. The graph of this study showed that the vast number of transacting players were spending perhaps 10 to 20 dollars a year on play. However, there were a small percentage of players that were actually transacting in the 10,000 to 50,000 dollar range. This was shocking to many including myself. The presenter also indicated that these high rollers were the least likely to play "real" gambling games. I am not sure how this research was conducted. However, it did reveal that there was no relationship between people that spend large sums of money on virtual currency/virtual goods and the propensity for these players to wager in real gambling venues.

Zynga Profiling Of Players -  Zynga has used sophisticated tools such as the ones deployed by Rapleaf to get a better handle on Zynga player behaviour that may be used to determine the conical profile of a Zynga "gambling" player. However, without any real experience actually converting players it has hard to determine the viability of this research.  Does Zynga have a viable profile of a player that will upgrade to gambling?

Betable - Betable has been offering a service for the past two years allowing traditional  social games to be integrated into the Betable gambling platform. Some high profile social and casual game companies have decided to try Betable's platform. Data on the experiences of these companies  with  social games launched for gambling purposes would be nice to have. This data would be a good indicator of conversion rates from social games to "real" money gambling. 

PartyPoker Freemium - For whatever reason PartyPoker has maintained a robust freemium poker site with many US players. However, it is unclear as to the conversion rates of these players to "real" money poker and the ability to hold paying players on their site when they decide not to play for real money.

Marketing Costs For Real Money Versus Social Gamers - It is certainly the case that acquiring a "real" money gambling player through affiliate networks is expensive and a good reason to look for an alternative and less costly way to acquire real money players. However, if only a very small percentage of social gamers will upgrade what is the true cost of acquiring a real money player from social gaming? 

Essentially, we do not really know or understand the viability of social games as a tool for converting social game players to real money players. Some of the common assumptions about a players propensity to spend high amounts on virtual goods and currency do not necessarily translate to real gambling.  It is also very unlikely that  social casino players will automatically gravitate to real money play if if the social game and gambling game are essentially the same.  The motivations for playing social versus "real" money gaming are different.  This does not mean that their is not a conversion rate of some kind. However, it is highly likely that some intermediate step between social and real money gambling will be required to get conversion rates to a level worth the effort and to avoid bombarding social players with a barrage of upgrade noise. Social casino players are already complaining about the constant harassment to buy more chips. They do not need another interruption of their social game play.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane works with companies in the social, Internet gambling and land based casino sectors developing game content and online gaming strategies. Kevin is a frequent speaker at social game, Internet gambling and casino events and conferences in Asia, Europe and the US. Kevin is currently working with organizations to determine their acquisition and merger strategy as it relates to the growing interdependence of the various game content and delivery platforms.


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