Gaming Blog "Kevin's Corner" Achieves Milestone of 130, 000 Visitors!!

Kevin's Corner traffic exceeded 130,000 visits last week marking a significant milestone in the Gaming blog!  Kevin's Corner   started 5 years ago as a "professional" blog targeting individuals and businesses engaged in the "gaming" industry. With over 200 individual  blogs  it provides a wealth of knowledge on a variety of different gaming subjects. It has covered, "real" money iGaming, social casino, freemium gaming, virtual currency transaction and the relationship between land based casino and online gaming operators. The blog continues to attract a global  audience  as  different gaming business models merge and converge creating  acquisition and business partnership  opportunities.

Kevin Flood started the blog  to encourage  an open dialogue on a subject that was becoming increasingly complicated as new forms of online gaming began to emerge and merge into a complex interwoven environment of land based gaming, online gambling, social casino, virtual currency transactions and real money transactions. The international nature of gaming and the various laws  and preferences impacting gaming made for an interesting and, perhaps, confusing mix of laws, player populations and revenue models. Kevin's own experience as a game developer, game publisher  and executive for  US  based land based casinos exposed him to many of the influences that guided gaming behavior and business models. His experience launching  online gaming operations in different countries and in different environments made him realize that there are also similarities across borders that could be shared and discussed in a public forum.

The following  blogs are the top 5 blogs in terms of volume. Although volume is a good indicator of popularity it is not necessarily  an indicator of  "value". Kevin's Corner has attempted to address many aspects of gaming for  a variety of different business  sectors. In some cases a blog that has not hit the top five in terms of volume has been very useful for its  targeted audience and the information it provided.

Number 1 -Game Analytics - Big  Data and Business Intelligence  -  With over 2500 views this blog has received the  most attention and still continues to get   high traffic views based on how important making sense out of all of the data that games and game businesses produce.  Games are unique based on the amount of data that games can produce. It is a lot harder to understand the significance of, and patterns within data, then to collect it. Planning ahead for what you really need to know and being flexible in how to add new data and new data types into the mix is the key to good gaming business intelligence. Understanding player behavior and player (state) is challenging.  Where a player is(state) in terms of the lifetime value of the player is critical for the success of a gaming business. Having comprehensive analytical systems that  individuals or even a staff of analysts pealing through the data is not uncommon as a slight difference in game content and marketing strategy can make a meaningful difference in revenue, player retention  and player acquisition.

Number 2 -What Is the Better Gaming Business Model? - With the advent of social networks, social casino, freemium play, virtual currency and various new notions of what constitutes a game of chance , skill or for fun it is easy to become confused as to what is the right gaming model for a business. The source of revenue for the models, consumers of the content , marketing approach and revenue per player differ widely across gaming business models.   This makes the choice of a gaming model difficult. In the end, the gaming business model of chose has to fit the knowledge, skills, investment capital and legal framework that fits the organization.

Number 3 - Will Social Casino Games Be Subject To Regulated Gambling Laws?  - In the early days of social casino there was much speculation that social casino would be categorized as "real" gambling. Facebook credits(virtual currency) where at the heart of the controversy. Gambling is traditionally characterized as an activity that includes chance, consideration and "prize".   Government entities and traditional online gambling regulators where skeptical about the use of virtual currency in social casino games as a prize.  After a lengthy debate on the subject of virtual currency, regulators concluded that virtual currency that could not be converted or "cashed out" into a traditional currency obviated the "prize" definition of gambling. Therefore, avoiding the need to "regulate" social casino.

The regulator's decision not to regulate social casino may also have been influenced by the  realization that the social casino and "real" money gambling populations had different characteristics. Traditional gambling attracted a smaller audience relative to social casino.  Also, social casino was heavily influenced by the social network that hosted the games with the network itself being as important, if not more important then the game play itself.  The  poor "conversion" of social casino players to "real" money gambling players also had an influence on the regulators decision.  Some players prefer social casino  over real money gambling and others prefer freemium or virtual currency games. The social casino businesses have also been careful to make a clear differentiation between their models and online gambling business models. 

Number 4 - The Merger Of Social Casino, Online Gambling And Land Based Casino Models. - Similar to number 3 in terms of content and interest blog number 4 also received a lot of attention as a number of businesses began to develop, acquire and launch a number of  gaming models. However, merging of these models has been difficult as the audience, risk and governance of these models is  very different.  Operating the  gaming models as separate and distinct businesses has proven to be the most rational and successful way to operate  these discrete models.

Number 5 - Zynga Under Investigation  By The US Justice Department -   The popularity of Zynga poker in the Facebook  social network did catch the attention of the US Justice Department as it was one of the first really large social casino businesses using Facebook virtual currency credits as a way to monetize players. The sheer size of the Zynga poker community averaging thousands of players interacting at  peak time did draw the attention of US authorities.  However, with no cash out possible the JD had little to stand on without changing the "definition" of what "prize" meant in a gambling  context. Prize is something of "tangible value" that can be exchanged and used to purchase other items of tangible value outside the origin of the currency generated. Facebook made sure that this could not happen, therefore, obviating the need to either shutdown Zynga or forces the company to change its revenue model.

Kevin's Corner continues to cover global gambling topics of all, types and  varieties. Reflecting on what has been the most sought after gaming content subject  over the past 5 years certainly reinforces what is "popular". However, the popularity of a blog does not necessarily indicate its "value" to all audiences. Thus, making it an important goal of Kevin's Corner to continue to cover many different topics.  Kevin's Corner subjects are often recommended by members of the gaming community as the community seeks to decipher what is really going on in the space and to engage others in a open dialogue about the future of gaming. If you would like a subject covered lets us know. Please send your suggestions to kflood@gameinlane.com.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.

 

Are Social Casino And Fantasy Sports A "Proxy" For "Real" Online Gambling?

There has been much debate  concerning the relationship  between social casino, freemium,  virtual currency and "real" online gambling games over the last several years. It was thought at one time that social and freemium games that involved playing gambling style games could lead to "conversion" of social casino players to "real" online gambling venues.   In fact, this has proven not to be the case. A number of online gambling businesses; most notably, JackPotJoy, 888, Party Gaming/Bwin and PlayTech either created social casino properties or teamed with social casino business to determine if "conversion" up into "real" money online gambling could be achieved by association with social/freemium online game properties.  Their experiments showed that there was, in fact, little or no meaningful conversion of social casino players to "real" money gambling play. In addition, an   extensive independent research study was  conducted by Australian researchers  to determine if social/freemium gaming content and game play acted as a proxy and or ramp to "real" gambling. This study was prompted by real concern on the part of Australian politicians that social casino was a  threat to the population increasing the risk of "problem" gambling. The research showed that there was no meaningful conversion of social casino players to "real" online gambling.

The results from these experiments and research projects decreased the anxiety and public concern about social casino as a "gambling" threat. Over the years the social casino(Facebook) and mobile/social casino have grown and have developed into an independent industry on its own completely divorced from "real" online gambling.  Estimates for "social" casino  are in the billions of USD world wide establishing this industry as a real contender; and possibly a competitor  to; as opposed to a collaborator with online gambling.

The question now arises is social casino a "proxy" for online gaming? Does social casino keep players away from real gambling venues either physical or virtual?  There is certainly plenty of research on the up-sell for social casino into "real" money gambling. However, there is a noticeable absence of any objective research on either the satisficing of the urge to play "real" gambling style games by playing social casino games. The awareness of social casino as an alternative form of gambling became front and center for me when a distraught parent contacted me asking me to intervene on behalf of her teenage son that was racking-up big bills on her credit cards spending money on Facebook casino games. I attempted to contact Facebook to request them to block this individual from further transactions. However, there was no way for a third party, or a parent for that matter, to engage Facebook on this subject.  Clearly, this was an example of a person that was having a "gambling" problem.

No mater what the answer is to this final question of social casino as a true "gambling" activity it is well documented that social casinos are doing very well on their own with absolutely no association with or up-sell into "real" money gambling. In fact, the rather arcane notion that virtual goods and the virtual experience has no "value" is clearly absurd and being leveraged to grow very successful social casino businesses. In truth, social casino is an established business sector on its own with its own "problem" gambling challenges. This phenomena deserves serious organized attention similar to how "real" gambling" has created a problem gambling initiative.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin, has developed, launched and operated Internet gambling sites in Europe.   Kevin and Gameinlane   develop "social and real money" casino games for third parties. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions. Kevin can be reached at kflood@gameinlane.com. 

Will Facebook Virtual Currency Credits Derail Their IPO?

In an act of desperation or genius ,depending on how you perceive Facebook, the company's adoption of  a virtual currency economy may very well propel them to a much sought after IPO. Despite their creation of a "proprietary" Internet world (a topic for another blog) where they control the applications and content that a user sees or participates in they have struggled with how best to monetize their exclusive Facebook community and the applications that serve the community. Generating revenue exclusively from Ad impressions clearly was not an adequate revenue source even for a  large community of 500 million plus users.  This conundrum has been a head wind that the company has faced since their inception stalling its IPO aspirations. It appears virtual currency and virtual goods are coming to the rescue.

To date Facebook has not revealed any numbers relative to revenue generated by virtual currency transactions. However, if you look at the Facebook credits being issued to companies such as Zynga and RockYou and the 30% haircut they take and give back to Facebook for these transactions the numbers are very good indeed.

Despite this much needed revenue boost there is a significant problem associated with this new found revenue source. Virtual currency inflation is already rampant in the Facebook economy devaluing the virtual currency bought to date and paid for by people playing games in Facebook applications.

The inflation issue is growing for a number of reasons. Facebook is arbitrarily issuing large blocks of currency to Facebook application providers without any consideration for the total amount of currency in the system.  Another contributing factor for Facebook credit inflation is the lack of another currency to peg the value of the currency against. With Zynga and RockYou discarding their own currencies and exclusively using Facebook credits Facebook credits lack a reference point to control their valuation. Of course the biggest issue is that there is no exchange or trading with traditional virtual currencies like the Euro, Dollar, Pound Sterling, etc.

So how could this inflation impact the Facebook IPO? Well if purchasers of Facebook credits realize that they bought a bunch of credits and now they want to buy something with them and the purchase price of that item continues to go up relative to the currency the holder of the currency will be less than happy.  On the flip side, if the virtual good they did buy with the credits decreases in value over time the desire to transact with Facebook credits will also diminish. Essentially the faith and trust in the currency will wane and cease to have value for consumers.

Certainly demand for a product also impacts the price of a commodity impacting  pricing. However, this could create a more serious problem with high demand products going stratospheric making sought after virtual products difficult to buy.

This phenomena could easily result in consumers and application developers abandoning Facebook credits and the transaction medium thus removing Facebook credit as meaningful source of revenue for Facebook.

Regulatory scrutiny by the SEC will also be a problem. They are not going to be keen on floating a company on the NYSE with an unregulated currency exchange system propping up their revenue numbers.

This is all very solvable if Facebook begins to let its currency float in relationship to some other viable currency. Unfortunately, the close association of Facebook game play and Facebook credit accumulations by gamers will squarely put Facebook in the online gambling penalty box if they peg Facebook credits against the Dollar or Euro. This is certainly something Facebook is  very aware of.

This situation leaves Facebook in a bit of a jam. They have only two virtual currency management alternatives that could save their virtual currency revenue stream and IPO. They could begin to control virtual currency issuing based on overall valuation of the currency within their system. This would require them to monitor all Facebook credit transactions in their closed economy to determine the true value of the currency at any given time. If they see inflation occurring they could buy back virtual currency from application providers to keep the currency stable. They could also peg their virtual currency against another virtual currency. This is a bit more complex and requires them to create a virtual currency trading system that let's institutions, companies and individuals trade other virtual currencies with Facebook credits.

Clearly the scrutiny associated with IPO preparation will reveal Facebook's weak virtual currency revenue management and cause the company to deal with this issue. If they do not it is unlikely that Facebook will be going public anytime soon. 

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. 

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.

Is Facebook Killing The Goose That Laid The Golden Egg?

Recently TechCrunch published a blog by Alex St. John, the President of Hi5, entitled "Social Gaming Market Reaches Its Final Stage". Alex describes how Facebook's recent strategic changes are killing off social games within Facebook. He talks about the end to viral features and the draconian 30% take of virtual goods transactions that Facebook extracts from Facebook game operators using Facebook credits. He also talks about Facebook's cut of the advertising revenue generated by Facebook social gaming operators. Alex has concluded that this means the death of social games in Facebook as we know it. The game operators will have to operate on margins similar to non-Facebook online game operators if they want to survive.

Alex certainly has an axe to grind. Hi5 has been undermined by Facebook. Facebook has taken much of Hi5's social networking clientele leaving Hi5 as a much smaller social networking game platform. He certainly would like to see Facebook game operators convert to Hi5. Despite this potential underlying motivation for the article, Alex has a very real point. His intense interest in Facebook, because of their competitive position relative to Hi5, has made him keenly aware of the dynamics of social networking monitization, customer acquisition and customer retention.

I agree with Alex that Facebook has made some interesting moves to raise their own revenue and to stem the tide of member loss. It is no secret that Facebook is not growing like it used to and has to figure out how to protect its installed base.

What Alex does not mention is how these polices will impact all Facebook application providers. This is not just about social gaming application providers. If Facebook's application provider community realizes that Facebook economics do not work for them will they be forced to pull out of Facebook? I already know several non-gaming application developers that are concerned over the impact of Facebook's new policies. The diminishing viral effect is a very real concern. Add to this the increasing importance of virtual goods and currency to traditional business models and you start to see the new Facebook policies as a real turn off to businesses.

If Facebook applications begin to disappear because of the new policies will people continue to stay in Facebook? If I was a Facebook executive I certainly would be watching this. We have all seen social networks come and go at a blink of an eye. Are Facebook's recently introduced policies making us all think about the new and improved social network of the future?