With continued and future disruptions on land-based casino revenues, industry executives are asking whether online casino platforms, which have seen rapid growth rates, can play a role in assisting stalled revenue lines and help them move beyond these difficult times.
From my own personal experience, launching an online casino today is not for the faint-hearted. You will need deep pockets, be smart and take knowledgeable advice from experienced industry experts and have an iron will to succeed. Let’s also not forget, online casino gaming is banned in most South-East Asia jurisdictions.
The silver lining however is that there is a viable alternative that can capture players legally throughout South East Asia, and it’s called Social Casino Gaming.
Social casino gaming is a booming segment of social games. Last year, a market study published by Euro Pacific Asia Consulting (EPA) estimates the global social casino gaming industry to grow by 6.4 percent in 2021. However, with Covid and the associated restrictions on travel and social distancing, the current run-rate is significantly ahead of this, and there is even an upside risk to their 2021 GGR forecast of $5.7 billion. Revenues are forecast to reach $7.2 billion by 2024.
The Korean market has shown particularly strong growth in the social casino gaming sector, with revenues growing 18 percent in 2020. Asia overall recorded the second-highest rate of social gaming GGR growth in the same year, up by 11 percent. According to the EPA, this revenue growth has not been so much the result of an increase in users, but the amount spent per user on a daily basis.
The Covid impact has and will continue to be significant. When lockdowns started to grip the world in March 2020, social casino GGR growth saw a marked increase. By April, GGR increased 43 percent compared to the start of the year. Downloads peaked, and analysis from Mobile Action showed an increase in users, daily active users (DAUs) compounded by an increase in user rate and average spend, resulting in growth in daily average revenue per user (DARPU) – a welcome positive for the industry.
The most popular games are slots, bingo, and poker which are easily played on mobile devices. As a part of the overall picture, it’s important to recognize the shift to mobile platforms. In the early days of social games, Facebook was the dominant platform with a lot of companies making significant revenues. Those who pivoted away too late or did not allocate needed resources to mobile have now been largely forgotten.
In a recent study that looks at the rise of social casino games installed in 2020, the report estimated that the number of installations of social casino games on Android / Google rose from 33.3 million in March 2012 to 1.39 billion in July 2020.
In terms of regulation, there isn’t any, as social casino gaming with no prize or payout schedule is not considered as gambling. Also, very few people understand the difference between gambling and social games. In most first-world jurisdictions gambling requires the presence of three elements: consideration, chance, and some sort of prize. Players bet on the outcome of an uncertain event to win a larger amount. Social games are not gambling if they eliminate one of the three elements.
Because the games are not regulated, operators are free to set the odds at any level they want. In fact, these games are almost never truly random. Game developers do not want players to get bored so the game becomes easier if a player is stuck at one level, or on the other hand harder if the player is winning too quickly. This Dynamic Game Balancing (“DGB”) is done automatically because game designers want players to stay engaged and these games become very entertaining as a result.
So if it’s not gambling how do social casino game providers generate the large revenues we see today? There are basically three revenue models:
FREE, WITH IN-APP-PURCHASES (IAPs) – The most common and lucrative model. Distributing a free, entirely open-access game attracts players to download. Once captivated, IAPs offer additional credits, discounts, and incentive chances to skip ahead or enhance the playing experience. An example of this is Candy Crush, which can be played completely free of charge, but offers players to purchase boosts in-game to give them a helping hand if they get stuck.
FREEMIUM Apps – Freemium apps involve some form of ‘upgrade’, perhaps to unlock exclusive levels. Non-game apps, particularly media providers, often use this model in the form of a ‘paywall’ protecting premium content.
PAID / PREMIUM – Pay your money and get your game. The old-fashioned way. Parents, many of whom have decried IAPs as honey- traps rate this model.
GameWorkz, a Company developing an innovative social casino games platform using blockchain technologies, said the key elements in social are games that are mobile-centric and compatible across all platforms, offering a total solution that includes a loyalty and retention program through point-earning capabilities.
According to GameWorkz, a social casino game must provide elements over and above the everyday game offering of a particular slot or card game, for the player it must be a fun social experience. Elements such as tournaments, the ability to create a club with friends, or join one and meet new people are key additions. Competing with other clubs in leagues and to win additional rewards for helping out your fellow members are all part of the social experience.
The GameWorkz creed is one where players need to feel they are joining a community and connecting with people from around the region. The key to the success of any social casino game is ensuring the players feel they get value for the free credits. If they burn through them too quickly, or if bonus payouts are not generous and often, then they will go elsewhere. Free bonus spins and the ability to win free coins are a must, particularly for the Asian markets.
The future looks promising for the mobile social casino games market, which is growing twice as fast as the overall mobile games space. As they say, a rising tide lifts all boats, well from what we are seeing in social casino games, the tide is rising quicker than most anticipated so if you don’t want to miss out get in now.
*Shaun McCamley is the founder and managing partner of Euro Pacific Asia Consulting. He has over 39 years of experience in the land-based and digital gaming industries. Recognized by Global Gaming Business Weekly as one of the top 25 industry people to watch. Since 2001, Shaun has been building Euro-Pacific-Asia Management Consulting into a leading firm that provides advice, casino management services, and turn-key solutions to the land-based and digital gaming industries.