How casual and social games can benefit the RMG industry
Consultancy firm Sparks Advisory explains the role of casual and social games in the perception shift of the sector from hardcore gambling to entertainment
Words by Dina Niron, founder and CEO
When social games first came out, most real-money gambling operators were more than skeptical, to say the least, about their value. Hardly anyone believed there was money to be made. Especially after initial cross channel attempts to lure social players to real-money games proved to be a complete failure. However, as the sector has boomed, real-money operators would be wise to take notice, especially as they increasingly target the younger generation and millennials. Online gambling operators are still trying to maintain the loyalty of the heavy gamblers, who still bring a significant percentage of the income generated, but have started to understand the huge potential in social and casual games in attracting those younger players.
Perception shift
As more and more people played social games such as Zynga poker, the popularity of social and causal games as ‘soft gambling’ grew. The importance of casual and social games isn’t only in the revenues they bring but the huge role they play in transferring the gambling industry reputation from hardcore gambling to entertainment.
Gradually, soft gambling is becoming a form of entertainment in its own right. Skepticism turned into respect when Caesars acquired a controlling stake in Playtika in 2011, in a deal worth about $100m. Five years later, in 2016, Playtika was sold to a Chinese consortium for $4.4bn. Since then Caesars Interactive Entertainment Inc. has acquired another social and mobile casino games developer, Pacific Interactive UK Ltd, which created the well-known House of Fun games. The purchase price was not disclosed but reports put it as high as $90m. Most recently Plarium, developer of the successful War of Clans, was bought by Aristocrat for $500m and IGT acquired DoubleU, a social games developer for $850m. The social casino industry is highly advanced in digital marketing, game development and CRM, and their RMG cousins could certainly stand to copy some of those concepts.
Rise of esports
Elsewhere, esports is rapidly becoming one of the fastest growing engines in the industry and can be another useful tool when attracting millennials. Two hundred million players participated in esports in 2015, generating $325m, according to research by Deloitte. Esports is expected to generate over $1bn dollars by 2019, based on the same study. According to Newzoo, 22% of the $696m revenues in 2017 came from China and South Korea.
The popularity of esports continues to grow and the esports wave is about to become a tsunami. In August, the Dota 2 international championship in Seattle turned out to be the richest tournament in the history of esports, with a prize pool that eclipsed $24m. Additionally, in one of the biggest acquisitions of an esports team in this space, $35m were paid to move Team EnVyUs from Charlotte to Dallas for a spot in video-game maker Activision Blizzard’s upcoming Overwatch League. The winning team is guaranteed at least $1m in prize money.
The prize is massive for operators who can insert themselves into the fabric of these competitions, as Seth Schorr at the Downtown Grand in Las Vegas has done. The thin line between soft and real-money gambling grows thinner and thinner, demonstrating the growing acceptance of social games as entertainment.