Tag: gambling

Finding the User: the case for gaming operators (with slides)

Earlier this week, I gave a talk at the Mobile Gaming Conference at ICE, the premier i-gaming (that’s gambling to you and I) event in London. Below, you will find the slides to the talk.

Let me outline briefly though why I think that social elements to gaming is something that I find the gaming (as in gambling, real-money gaming, etc) sector should be excited about (and it was hard to tell if many people were; ’nuff said):

“Social” games work if they address or are based upon a community of sorts. This needs to be supported by the game design and its mechanic as well as through tools that actually allow those communal juices to flow (and, yes, that’s what we at Scoreloop are doing and that’s why I am preaching about the subject so regularly). Now, the gaming folks have a lot of this sitting on a big silver plate right under their noses: “proper” gamers, i.e. those who spend money on their pastime, are tied together by that particular passion (this of course equally applies to all those passionate about lost puppies, cows and golden eggs…). For the real-money folks, there is also the billing side to consider: their clientele is used and quite willing to pay, and a billing relationship is often already in place.

The addition of social elements to such “real” games can essentially do two things then:

Cement existing customer base and avoid promiscuity of users

I have been hearing this a lot: users on, say, real-money poker sites often play on multiple sites. This is painful to the gaming operators as they spend considerable amounts recruiting their folks. It is a race to the bottom (of sustainable margins) and the adjustment mechanisms are scarce and largely reduced to bounties and clever marketing. Adding social elements adds that glue that increases the likelihood that players will stay with you. Why? Because they receive value over and above the core proposition: they feel better nestled into their community, which is – albeit a little intangible – real and not only perceived value. Incidentally though, it is also value that is not that expensive to create (cf. above under “margins, low).

Attract new users

Outside the hard core of gamers, there is a whole lot of people who are quite content to play for fun (Zynga Poker still has more active users than most “real” poker sites combined). Funnily enough, Zynga also makes more money with its soft version than a lot of gaming operators do with its real one. This is because a) they tie it into the social graph and b) a lot of users just like to play for fun – but they still spend money, only in more manageable increments.

I suggest that this is a major entry gate for gaming operators to attract new users (though I do not suggest that “hooking” people is something good!). A softer approach that introduces many shades of grey rather than only offering black and white will make it so much more compelling to play, properly or only trying it out and the very folks that are in the prime spot to capture these users (because they have all the experience, background and know-how) leave a lot of money on the table there (pun indeed intended).

But now, without any further ado, here are the slides:

For those of you who like that better, I have also uploaded it to Sribd here.

Mobile Gambling is Recession-Proof

The busy bees over at Juniper are in a pre-Christmas frenzy it seems; they’re very active recently (see here and here). Today, they have enlightened us yet again: according to their latest report, there is a niche sector that will actually be completely unaffected by the doom and gloom of the world economy, and that is mobile gambling. They predict this segment to double in size in 2009 to a not too shabby $3.6bn, 30% of which to be coming out of the UK.

However, 3/4 of that are said to come from betting, which is to say it is mainly an extension of existing betting business: Ladbrokes, Bwin, William Hill, etc, all run mobile sites funneling punters into their regular business. The second-largest sector is casino games, which would be the likes of IGT-owned Million-2-1 early movers Spin3 and the likes. And there is presumably poker (Cecure Gaming has captured a good position there it seems: live on all UK operator decks).
What they don’t say is if the numbers quoted are gross turnover or only the rake (which is only a small fraction of the total). But the rationale convinces me, too: people will gamble. Hope is a powerful consumer value driver! 

Juniper to the Rescue…

We can depend on the researchers from Juniper after all (or maybe they simply felt bad after reading my post on their last report). Whichever the reason, apparently the mobile content industry could be worth a hefty $167bn (!) if – yes, if – the operators would resolve to allowing a workable commercial environment, namely by limiting themselves to lower revenue shares. Whatever the caveats (which are, as usual, hidden in the expensive main report) this number is topping even the loftiest predictions to date; right on in times of the doom and gloom. The key apparently lies in whether operators would act as dumb pipes (no richness for anyone) or a smart pipe (lots of play money for all players on the value chain). In their own words:

“If MNOs are to benefit financially, they need to move away from their Dumb Pipe roots to the Smart Pipe model, though they will clash with the content providers which already dominate the Smart Pipe. A compromise needs to be found.”

A smart pipe is understood as one where operators would offer flexible, application-centric value configurations, allowing lean, efficient content offerings from third parties. A dumb pipe is one where content (and value) would merely rush through the pipe without any value being added by the operator. The prevailing model in the mobile games world, namely the on-portal approach where operators implement comprehensive vertically-integrated models (“walled gardens”) is suggested to be somewhat doomed as content providers would gain bargaining power (presumably through consolidation of the supply side plus entry of meatier traditional media players in music, video and TV).

This is all pretty speculative though, and without some background it is quite frankly impossible to analyse the numbers some more. Mobile content appears to include (as per their report from March) games, music, video, TV, social networking, adult content, gambling and so on, and so forth. However, the exact calculatory basis is again hidden in the depths of the report, so I don’t know (do they e.g. take the gross gambling revenue or on;y the rake, which is only a few percentage points of the former). Anyhow, due to these foggy conditions, commentators seem to either merely re-print the PR blurb or mock it (Stuart Dredge thinks that “only gas could do that kind of money”), which is a shame really; just think what you could with this much money…

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