Time to get social

Social casino developers are at the forefront of mobile innovation. Martyn Hannah looks at what real-money operators can learn from their free-to-play cousins

It’s often said that social casino developers are leading the charge on mobile. Operators have been forced to adapt to the seismic shift in players ditching their desktop computers in favour of accessing games via mobile and tablet devices. Many have ploughed development dollars and talent into the channel, with the likes of Playtika, Big Fish Games and GSN transforming into mobile-first operators and deriving the majority of their revenues from the channel. But in order to succeed developers have had to innovate to counter spiralling player acquisition costs and fierce competition from their rivals.

As such, the social casino sector has become a hotbed for mobile experimentation. The lack of regulatory oversight offers developers the freedom to trial new game mechanics, designs, bonuses and promotions, and to test the limits of what can be achieved on the platform. Playtika has risen to the fore in terms of monetisation and converting paying users, while Seattle-based FlowPlay has received praise for its massively-multi-player game formats and continuing to think outside the box when it comes to creating an immersive ‘social’ experience.

Crack the code

RMG operators have also adapted to the rise of mobile, but many have yet to crack the code properly and still rely on desktop for player acquisition and revenues – bwin.party saw mobile account for just 30% of total revenues during the third quarter of the year. Plumbee CEO Raf Keustermans says social developers have been able to take greater strides on mobile due to the regulatory oversight RMG operators are subject to, particularly when it comes to distributing native applications in the Apple App Store and Google Play store, which has a blanket ban on stocking RMG apps.

“Entering a new market is relatively painless for a social game developer in comparison to a RMG operator. The same goes for other restrictions RMG operators face such as local licences and guidelines that make the global rollout of a mobile product very difficult and costly. Social developers can focus on the technology that best suits the platform and devices, rather than having to find technology that allows them to work around regulatory restrictions – like coming up with convoluted ways to download games that are not allowed in app stores,” Keustermans adds.

Despite different operating environments, real-money firms can still learn a lot from their social casino cousins when it comes to mobile. Whether that’s how best to create a seamless experience across mobile and tablet, or devising marketing strategies that cut through the competition and tap into the psyche of their target demographic. Alex Cohen, chief product officer at Akamon Entertainment, believes one of the key lessons is how social developers have structured their mobile teams in a way that allows developers to take charge of their product.

“In social casino the typical model is to have a vertically integrated operation where a developer makes their own slots, manages the casino, does their own marketing, etc. There is an outsourcing market, but a single social casino has to succeed in all areas with a relatively small team – you have marketing sitting next to slots designers. This means the team feels the product of their output very closely, plus the needs and constraints of others. In contrast, in RMG many of the larger B2B suppliers the industry has started to depend on are less sensitive to the needs of operators and the desires of the customer.”

A growing number of RMG operators are now taking a similar approach to social firms. Paddy Power, for example, recently rolled-out a major overhaul of its mobile offering that had been entirely developed in-house. The operator launched its upgraded iOS app first, followed by Android and web applications.  Rival William Hill has also been hard at work on a number of new mobile products at its Shoreditch tech hub WH Labs, including prototypes around future technology such as virtual reality.

Priorities in order

Paddy’s decision to launch on iOS first raises an interesting question about which operating system developers should prioritise. For social casino, Android is a much more significant platform in terms of volume – worldwide it enjoys an 80% share of the smartphone market. iOS, however, tends to offer superior revenues and LTVs particularly in mature markets such as the US and the UK. But for which OS are operators investing the most resources?

“Everybody assumes that iOS has better monetisation than Android,” says Cohen. “However, if you think that Android has a very big fragmentation – lots of smartphones in all ranges of price – it makes sense the cheaper ones will monetise lower. But if we compare just the top models, monetisation levels will be very close between Android and iOS. Android is a much more important platform in terms of volume, and that is only going to become more the case,” he adds.

In reality, operators develop for the channel that best serves their core player base. Akamon, for example, has a large presence in Latin America and Southern Europe where GDP per capita is lower than in other countries and Android usage much higher than the norm. Product Madness, in contrast, launched its flagship Heart of Vegas application on Android at the back end of summer, almost a year after first going live on iOS. Perhaps, then, the more pressing strategy decision is whether to develop separate strategies for mobile and tablet devices.

“A few years back there was a trend to create separate high definition versions of games for tablet devices, but currently most developers build apps that work on both devices,” says Keustermans. “The tablet category as a totally different platform never took off as some expected, and we have seen that a lot of players show similar behaviour on both devices. In fact, quite a few players have a couple of game sessions on their smartphone during the day when they are commuting or at work, and switch to their tablet in the evening or weekend so they can access a bigger screen,” he adds.

Spiralling costs

The technology itself has also helped to close the gap between smartphone and tablet, with mobile screens becoming larger and larger with each iteration and the rise of the phablet. But while technology certainly provides new opportunities for experimentation and growth, it will also likely see player acquisition costs continue to rise.

“We’re going to see a continued increase in user acquisition costs, which may unfortunately force several smaller, less stable social operators and publishers out of the market,” says Stuart Lewis-Smith, VP of casino and slots at GSN Games. “This high barrier to entry will make it extremely difficult and expensive for new entrants to gain market share. In addition, the existing user acquisition sources will likely experience significant consolidation in 2016, leading growth teams to spend more with fewer partners.

“The increase in ad network cost per installs may lead to marketing and growth teams across the industry to move more of their budget to non-traditional mobile marketing channels, like we’ve already begun to see with television,” he adds.

While social casino developers have undoubtedly adapted well to the shift towards mobile, they can’t take their feet off the gas. A raft of new technologies are set to shake up the sector with Oculus Rift and virtual reality seen by many as the next battle ground. Some even point to smart TVs and in particular Apple TV, which now allows users to download apps from the App Store, as replacing desktop and mobile devices in the future. Recent history shows the social casino industry is well poised to capitalise on these emerging trends, and by following their lead, real-money gaming operators can get in on the action too.

This article featured in EGR Mobile Intelligence 27.