Conferences are spawning all of the place on "CONVERGENCE" and organizations are cashing in on the hype over the concept of converging gaming models. It is assumed that these conferences are talking about the movement of players from a free to play gaming model into a classic Internet gambling model. If this is true, convergence has actually been operational for some time. So what is the hype about, what is the history or convergence and what if anything are we missing at this point in the evolution of online gaming?
Traditional Internet Gambling Convergence Experience - Internet gambling organizations in Europe have been converging and merging free to pay and Internet gambling for some time. Most of them have had free to play sections where players can learn how to play familiar European style gambling table games, bingo and poker. The free play zone has also been a place to up-sell players into real gambling. With the exception of Party Poker now Bwin.Party there has not been a heavy emphasis on these free to play offerings to acquire players because the high cost of acquiring gamblers in Europe has resulted in the tendency to drop players directly into the play for play zone directly fromt marketing campaigns. However, discussions with gambling operators indicate that the free play zone has attracted players, and for low or no cost. They have had programs to up-sell players into conventional gambling games and their has been conversions from these free to play offerings in the single percentages range.
The Party Poker free to play model is a bit of an enigma because of its popularity and its very high numbers of players relative to casino style free play zones. it is unclear if Party was cultivating this traffic or the popularity of the brand itself drew unsolicited players to the property. It is also speculated that the closure of the US market to legal online real money poker may have driven many of the US players into the free to play model. Irrespective of how or why Party cultivated the free play traffic it is clear that professional and a mature poker player like free play and move between the free to play and pay for play model. Not sure if Party is or was looking at the conversion numbers. However, their recent partnership with Zynga may be an indication that they believe their is an expected "conversion" rate between free to play an play for play poker.
Tweener Subscription Games - Before the advent of Facebook, and even today, subscription or "alternative method of entry" gaming models have been launched and operated in Europe and the US. Subscription games are games that pay out real money and require a monthly subscription fee to play. In general, they target a market segment that is willing to pay some amount of money to gamble but not a particularly large amount relative to traditional gambling. The subscription gaming model is usually attached to a reasonably robust free to play model as well, intentionally moving players back and forth to keep them in the property. The movement of a player up into a subscription is essentially a conversion. The challenge with the subscription model has been the intentional cap on the amount of money a player can invest in game play during a single transaction. Because of this keeping a player within the gaming environment is critical to realize the full value of a player and to keep the subscription model working. Thus the concept of the focus on the "lifetime value" of player as opposed to an exclusive gambling emphasis. Subscription gaming models have paid more attention to convergence of free to play and pay for play then traditional gambling models for good reason. The subscription model is more holistic realizing that players will move bi-directionally from one model to another.
Monetizing In Social Games - Post launch of applications in Facebook allowing virtual currency transaction and the eventual Facebook introduction of Facebook credits the world saw the first social casino games begin to make money from gambling transactions. Despite the fact that Facebook game players can not cash out their credits, the Facebook game providers were and are able to cash out what the players are contributing. This paradox created by an arcane legal notion of what "value" is has been exploited by the social casino community. This business model has been carried over to mobile as well. Facebook social games use free to play extensively for the purpose of acquisition, to obtain the connections these players have, to eventually convert/up-sell them into a virtual goods transaction and to allow them to drop in and out of free to play and pay for play keeping them in the game ecosystem. Yes, the conversion rates up into a paying model are small, around 4 to 6% in most cases. However, there would be no conversion at all if free to play did not exist. Also, oddly enough the free to play conversion numbers to paying players is not much different then the subscription or pay for play gambling properties. Without free to play the player pool would be be very small obviating the social game model all together.
So What Is The Convergence About? - We can see from the historical record that convergence in one form or another between free to play and pay for play has been around for awhile so what convergence are these new conferences trying to address? My belief is that the convergence being discussed is the convergence of disparate gaming models that are not connected in a holistic gaming environment. An example would be the convergence of a Facebook social casino model with an externally hosted Internet gambling model or a Facebook social casino with a Facebook gambling model a la the Gamesys JackPotJoy combination.
It is unclear if business models that send players from one gaming business model to another without any overriding context will be successful. However, I suspect they will be sub-optimal. The lack of a truly integrated player experience will be potentially confusing to players perhaps making them feel as if they have been forced into an environment that they did not sign-up for.
Ideally, a gaming environment should not force a player out of the "system" and into an alien environment to either pay or play for free. Instead their needs to be a way to move players up and down the monetization ladder and hold them in the overriding gaming economy and environment.
Life Time Values Of A Player - The concept of the life time value of a player is frequently used in free to play, social games and subscription gaming models that have a number of monetization methods such as advertising , virtual currency transactions and branding revenue. Gambling has a tendency not to use this term, instead, focusing on a breakdown of players into categories such as wales or fish. The problem with the gambling player profiling in a world were the various gaming models are becoming intertwined is that the wale/fish dichotomy overlooks the symbiotic relationship between these two classification of players and the the tendency for some wales to become fish for a time and some fish becoming wales for a time. So the proper way to characterize the true "value" of a player in a multi gaming model environment is to think of players holistically and to use the "life time value" of a player as the true measure of the effectiveness of the gaming platform. It is still unclear if a free to play player that drops into a play for play environment for the first time will automatically become a fish. Hopefully not, because this will certainly undermine the attempt to make a convergent gaming model work. The lifetime value of a player is much more important concept on a business model that has a number of different ways to monetize a player.
Player Profiling - Player profiling becomes important in a convergent model to determine what players are more likely to upgrade and to attract players that will feel equally comfortable in free and play to play gaming model. Profiling is proving to be more challenging then first thought with top grossing wales in a free to play or subscription model not necessarily being the most likely to go all in and play in a gambling environment. I suspect that data points such as player social game monetization, age and demographics are not going to help very much in understanding what motivates someone to up the anti and play a higher stakes gambling game. It will most likely take some reasonably sophisticated evaluation of a players historical and more immediate player behavior to determine at what point and time a player is "most" likely to upgrade or downgrade. At that instant and time the game environment has to respond to drive that player into a "crossover" experience to coax them into the higher stakes game or keep them in the game environment.
Profiling of players may require the evaluation of information outside of the game environment to fully understand a player's propensity to play one style or game or another, or if they are intending to leave a gaming environment or joining one. Tweets, Facebook intra-friend communication and other publicly obtainable information may be a resource that can be exploited to build a 360 degree view of a player at an instance in time.
Transaction Sensitivity - It is reasonable to assume that a player that first transitions from a free to play model to a pay for play model will be hyper-sensitive about losing. Especially, if the amount of money lost is significant. Consequently, the gaming system has to be keenly aware of where a player is in terms of the player life cycle and be able to modulate the amount wagered and potentially the amount lost in a play to pay model. You still want the player to continue to play in the free area to maintain liquidity and to monetize that player with advertising or virtual currency transactions if the play for play experience is not working for that player. A convergent gaming model needs to place an equal important on both free to play and pay for play. We see this in Facebook games and it works really well. In addition, the current crop of game analytics will most likely not adequately address the convergent environment in a way that optimizes player retention and the lifetime value of a player requiring an overall of the data points and reports to adequately operate a convergent model.
In conclusion, conversion and convergence of players from free to play to pay for play has been around for a long time. What is new is the current need to seamlessly move players bi-directionally within a holistic gaming environment that makes a player feel comfortable in both environments. Overall, optimizing this form of convergence will be difficult to do without changing the mindset of what a gaming environment is and understanding in a more comprehensive way, at an instance in time, what is the players "state". These requirements will pose challenges for the businesses that are attempting to converge the free to play and play for play players within the context of of their current business operational models. Essentially, convergence is going to be harder then initially thought for some and more natural for others that already understand the lifetime value of a player concept.