IN-DEPTH 16 March 2017
The evolution of social casino
Social casino was one of the most talked about topics at G2E in 2016. General Manager at AGS Interactive, Bryan Bennet, explains why the social casino phenomena in the US is far from over
By Gambling Insider
How did you come to join the team at AGS?
I joined AGS when my social casino startup, RocketPlay, was acquired in June 2015. I had been leading marketing at RocketPlay for three years when we joined AGS.
Social casino was a huge topic of conversation at G2E 2016. Do you think it will continue to be of such high priority for operators moving forwards?
Yes. Social casino has proven to be a massive revenue opportunity for game developers and operators alike, and so far it seems to be 100% incremental to what they’re doing with their land-based business. The current trend in the social casino space is to create similar playing experiences to playing in a live casino. That means playing the same slot machines and, in many cases, earning player rewards as if they were playing on property.
What are the major benefits of having a functioning social casino interactive product for operators? Is revenue generation a consideration, or are products marketing tools only?
I think this completely depends on the goals of the operator. Most of the social casino products you see in the market today are from operators who are trying to monetise players just as any other social casino game would (i.e. in-app purchases). However, that’s not the only model that could work.
We have had conversations with operators who are much more interested in using mobile games as an engagement and marketing tool. Social casino is a great way to keep the player engaged with the operator’s brand and land-based content while they’re not in the casino and represents a great opportunity to offer promotions and incentives to come back.
When we’re discussing B2B options with operators, we’re quick to point out that both options are on the table for us. They each have different business models, but we can support the strategy that works best for each operator.
What are the key differentiators between successful and unsuccessful social casinos?
That’s a great question. I can give you my thoughts on what makes for a good social casino game, but like game development in general, it can be difficult to pinpoint the exact reason something is successful. Game development is a hits-driven business and what you think should work doesn’t always work. For me, there are really three components to a successful social casino game: Content, meta-game, and user acquisition.
Like any other industry, content is king. The trend right now is to create real casino experiences and that means bringing land-based content to the mobile device. At AGS, we’ve had great success with that strategy and the land-based AGS games are by far the most popular slots in all of our apps, including our flagship app Lucky Play Casino. This approach has been so well-liked, we’re going to expand our offerings to the table games side of our business to try to bring that aspect of the casino to mobile players. But I guess the main point here is that it all starts with content. If you have bad content, the other two points don’t matter.
The meta-game is also very important to keeping players engaged and interested. It can be as simple as status and level-ups or as complex as tournaments, missions, live events, and social interactions. I don’t think a successful social casino needs to offer all of those things, but they need a few of them to wrap around and enhance the content. We’ve really embraced the meta-game portion within Lucky Play Casino and our other apps, but some developers have chosen to go with the bare minimum. I don’t know if there’s any right or wrong answer, but having a host of meta-game activities allows us to be very aggressive on promotions and live operations. There’s always something going on in our apps and that drives engagement and revenue.
And last, but certainly not least, is user acquisition (UA). Some apps have the first two but don’t do UA well andthat’s a killer. We are involved in probably the most competitive segment of mobile games, and social casino games don’t have much organic or viral growth. So the only way to really scale is through paid UA. If new entrants into the space don’t have a decent marketing budget, they’re going to be in for a tough slog to try to get enough installs to scale revenue. But this is where operators have the advantage. By tapping into their player rewards programs, as well as on-property signage, operators can scale their apps without having to wade through the complex UA environment that other social casino apps have to deal with.
Is the social casino industry at such an advanced stage now that the cost of entry to the industry is a barrier preventing start-ups from launching?
There are still plenty of start-ups trying to break into the space, but my advice to them would be to look elsewhere for gaming opportunities. Don’t get me wrong, there is ample opportunity for growth and we’ll continue to see this segment of the mobile games industry perform well, but you must have at least two – or preferably all three – of my previous components to compete. Anything less will make it very, very difficult. So if a new entrant has great content and deep pockets, by all means, join the party.
The $4.4bn Playtika deal was obviously huge news in this field in 2016. What were your thoughts on the transaction when the news broke and do you think we’ll see another deal of this size done again?
This was perhaps the worse kept secret in the industry. It was common knowledge that Caesars was considering selling Playtika, but the big question was where they would go. I think it’s obviously a huge return on Caesars’ original investment and Playtika has been far-and-away the industry leader for years.
While I think there will be other deals, I don’t think anything will come remotely close to the $4.4bn number we’re talking about here. There’s just no one close to that size as Playtika has a 25% market share compared to SciGames and Zynga, which are around 8% each. So while I think others will be emboldened by the Playtika deal, I think we’ll be talking about much smaller deals going forward.
What are the major projects that AGS is currently involved in on the interactive side of the business? And what is AGS looking to achieve as goals for 2017?
We’re very excited about 2017. We’ve been a part of AGS for just over a year, and we now have the opportunity to branch out beyond our B2C activities. So in addition to continuing to build and expand our catalogue of AGS content, we’re also turning our attention much more proactively to B2B.
AGS works with hundreds of operators across the US and many of them are smaller properties with an interest in social but no pathways to get there. We can definitely help with that effort, and we’re already getting a lot of interest in building and managing apps for those operators based on Lucky Play Casino’s basic framework. And as I mentioned, we’re also looking to build out a compete robust catalog of AGS table games throughout 2017. No one has really cracked that market on the social side, and we think the AGS content puts us in a unique position to do that.
What are your current views on the state of real money online gaming (RMG) in the US? Is this a market AGS has interest is getting involved in? What would you like to see done to improve the market?
RMG is very small in the US at the moment, but I think there are hopes that it can grow. With the recent election, there’s obviously a lot of uncertainty at the federal level, and individual states have been slow to move. For now, we probably see a bigger opportunity internationally. We are just getting started with exploring RMG solutions, as AGS didn’t have any sort of interactive efforts until RocketPlay was acquired last year.
Since that time, we have been focused on social casino, but we’re now looking more closely at RMG. We haven’t specifically decided how we’re going to proceed there, but we are lookingatworking with companies that already haveRemote Gaming Server (RGS) and RMG distribution deals in place. Long term, I think it’s imperative that we have an internal solution and we’re exploring all sorts of options.
Mobile products housed on the premises of casinos, especially in tribal gaming, could be on the table as a growth market in 2017. Is this an avenue AGS would be keen to explore?
Yes. I don’t think you’ll see us launch any sort of on-premise interactiveproduct in 2017, but it’s definitely something we’re closely monitoring. Scaling our social B2B product is the primary focus next year, but on-premise RMG is a natural extension of that strategy.
Is it important for AGS that there are similarities between its land-based and online games? Or are the product pools unrelated?
We feel pretty strongly that the games played on social/mobile need to be the same game that the player experiences on the casino floor. So when we launch a new AGS land-based title in our social apps, it’s as much of a 1:1 port as the technology allows. While all of the animations and things of that nature may not be exact, the math, art, sounds, music, etc. are as close as our mobile technology will allow.
We think that’s even more important as we work on B2B efforts because we want to develop a flow where an operator adds games to both their floor and their mobile product at the same time. It’s a fantastic way to introduce new titles to their players in a risk-free environment and then offer promotions to incent that same player to try that title the next time they’re on the casino floor.