Early this year, Vonasek began hearing good things about MyVEGAS, a free-play social casino app developed by PLAYSTUDIOS, then hosted by MGM Resorts International, that offers players a chance to accumulate “loyalty currency” and earn valuable, real-world rewards from Las Vegas-based attractions and entertainment properties. Curious, he asked a company receptionist to join, play and report back to him on the experience. Two days later, this person approached him asking for some time off—apparently, she had won enough for a mid-week stay for two at Circus Circus Las Vegas and really wanted to take them up on the offer.
“If [MGM Resorts] had just sent her a text message, e-mail or printed direct mail piece, I’m sure she would not have responded,” Vonsek said. “But because she played the MyVEGAS games and felt like she earned the prize, she asked for two days off, bought a $300 plane ticket, flew to Las Vegas, and stayed at Circus Circus and had a great time. MGM Resorts evidently has had 80,000 people come through its properties to redeem various MyVEGAS offerings.”
“That is what social gaming and social casinos are all about—extending a property’s brand beyond the walls of the casino, and giving someone a completely different type of gaming experience,” Vonasek added.
Vonasek relayed the anecdote during a session on social gaming strategies that took place earlier this year at the Southern Gaming Summit conference and trade show in Biloxi, Miss. The topic and timing of the session was apropos, given the level of interest both social games and social casinos have garnered from the brick-and-mortar casino community. Indeed, given recent usage and revenue figures from both forms of “free” play, it’s easy to understand the excitement.
As a whole, the international social games market is expected to have a combined annual growth rate of 16 percent, and become a $17.4 billion market by 2019, according to a report from Transparency Market Research. The outlook for the social casino games subset is equally rosy. According to SuperData Research, there were 205 million active social casino players in 2013, a number that is expected to grow to 269 million by 2016. All told, the global social casino market generated $2.35 billion in revenue for 2013, a 47 percent increase over the $1.6 billion it generated in 2012. It’s estimated that the social casino games market could hit $4.4 billion by 2015.
“Many consider social gaming to be the newest and strongest prospect for the future of the gaming industry,” said Craig Border, vice president of database marketing for Marketing Results Inc. “There are plenty of numbers to support this position, the potential is huge.”
The size and potentially lucrative nature of this social casino market segment is certainly not lost on the terrestrial casino marketplace. Some large casino operators have already taken steps to become major players in this space, such as Caesars Interactive Entertainment, which has bought social game developers such as Playtika and Buffalo Studios. Casino game providers have also gotten in on the act. Slot machine giant International Game Technology entered the social casino market in 2012 with the purchase of DoubleDown Casino; and Bally Technologies just this last summer with its acquisition of Dragonplay. Indeed, for slot providers in general, a stake in the social casino realm can pay out in two ways—by developing games for sale as apps to mobile and Internet users, and by selling social casino games and systems to land-based operators for white-label applications on their websites.
And for the most part, this is how most brick-and-mortar gaming operations have dealt with the free-play phenomenon, by offering third-party social casino games to customers on their websites. Many operators view such systems as a hedge to the eventuality of for-pay online gaming, a strategy that still has applies today.
“Ultimately, the casino is establishing an online relationship, a mobile relationship with the customer so they start to interact with the property that way,” Vonasek said. “So if iGaming does happen, if it is legalized within a casino’s jurisdiction, the property has already built up that online database and relationship with the customer where they are willing to interact with the facility outside of its walls.”
However, the promise of immediate revenue from online gaming for casinos within the United States has declined somewhat of late, due in part to delayed legalization processes in many jurisdictions and the less than stellar performance of Internet wagering in states where it is allowed. Meanwhile, thanks in large part to the growing popularity of smartphones and tablets, mobile-device friendly social game use continues to skyrocket, which could lead to business opportunities for operators with social casino systems in place.
“Social gaming is a rapidly growing industry, no doubt about it,” said Bob Hays vice president and head of North America for Williams Interactive. “If people are not in your casino, we know they are spending the majority of their time on mobile devices. When they are playing on their mobile devices, they are downloading apps, they are not browsing. For many of the gamers, specifically casino slot players, the apps they are downloading are casino slot games.”
Indeed, according to a recent active gambler report from Williams Interactive, 75 percent of land-based casino patrons actively play social games, up from 54 percent in 2010. The report also found that when it came to active social casino players visiting land-based gaming facilities, 33 percent had done so in the past week, 45 percent in the last 90 days and 82 percent within the last year.
“Your players that are in your land-based operation are certainly spending time with social casino content and those that are out there spending time with social casino content are visiting your casinos very often,” Hays said.
The report also showed that social games have a broad demographic appeal and that nearly 70 percent of social casino players are under the age of 50, and 50 percent are actually 40 years of age or younger. These players access the social casino in multiple sessions each week, with each session lasting an average of 20 minutes.
“As I know from my land-based experience, operators are very focused right now on finding ways to bring more of this age group into the casino and have them be part of the brand community,” Hays said. “If the player is new, you have an opportunity to acquire them through the social games. If the person is already a player in the property’s database, and if they visit the social casino four times a week, that is 80 minutes of engagement in a low-cost, mobile model with the goal of enticing them to go to the land-based casino.”
Tonya Roedell, director of digital and systems professional services for Aristocrat Technologies, has seen similar numbers and usage for the company’s nLive virtual casino solution. Aristocrat has found that there is a 57 percent higher casino visitation rate from customers who first play at a property’s social casino, and that these players provide 38 percent to 40 percent more ROI for the operator. “So not only are social casino players visiting a property’s online space and land-based casino, but they are also increasing their spend at the property whenever they become active in the online space,” she said.
These statistics, combined with the growth of DoubleDown, Zynga and other gaming companies with strong social casino products, may entice brick-and-mortar operators to develop their own social casino concepts and enter the space as a for-pay social game competitor. Such a strategy may be easier said than done, especially for smaller brick-and-mortar operators, warns Vonasek.
“The number of social casino players who actually pay real money for site currency and other extras is in the low single-digits, 5 percent tops,” Vonasek said. “And it’s already a very well-serviced industry competing for the players actually willing to open their wallets. You can try to make millions from direct social casino gaming as everyone hoped when the technology first developed, but make sure you invest properly because you’ll need to compete against the DoubleDowns and Zyngas of the world.”
Instead, Vonasek recommends that regional land-based casino operators use social games and free-play casinos as a marketing tool. “A social casino is nothing other than an extension of a property’s marketing campaign,” he said. “Operators can use social gaming to drive new players into a players’ club and the brick-and-mortar casino experience. They also provide an opportunity to interact with a customer every day, to become involved with their lives beyond standard marketing practices. It’s a completely different kind of relationship.”
Operators looking to create marketing-oriented social games and social casino sites face challenges as well. To start, the social game or social casino offering needs to be more than just a few games hosted on a property’s homepage. Content is king when it comes to social gaming and key to creating return traffic.
“Casino operators need to extend the land-based brand to the online space beyond just the website.” Hays said. “They need some type of compelling content or experience that is going to drive the player to the brand around that online presence.”
MGM Resorts and MyVEGAS shows that such concepts do exist, it just a matter of finding and fine-tuning them.
Other items brick-and-mortar operators need to keep in mind when developing social casino concepts include:
- Targeting the right customer. Social casino patrons can be loosely grouped into two categories, “gamers” and “gamblers.” Social casino gamers play primarily for entertainment value and are the customers most likely to convert into paying social casino customers. Brick-and-mortar operators looking to find new customers or boost return visitation are better off concentrating on social casino gamblers, customers who genuinely enjoy slot machine or table game play and are most likely to convert to paying land-based customers. To attract social casino gamblers, operators need to develop content that keeps existing casino game math models and minimizes friction points that block player access to favorite content.
- Offering enticing rewards. Social casino gamblers seek real-world prizes and status as opposed to advancements in game play often sought by social gamers. Social gamblers don’t mind coming to land-based operations to redeem these rewards.
- Integration with existing land-based customer management systems. Social casino sites aimed at attracting social gamblers with the goal of increased brick-and–mortar attendance and play should make certain their offerings synch with a property’s and loyalty club systems.
- Staff with marketing personnel. Sites aimed at growing revenue from social gamers often employ virtual economists, psychologists, monetization experts and other professionals. For sites looking to develop more brick-and-mortar trade from social casino gamblers, staffing with existing iGaming or land-based marketing experts makes more sense.
- Make sure the offering can function across all communications platforms.The social game or casino experience needs to function across all channels of communication with the customer, especially mobile.
“Mobile is the most popular entertainment device for social gamblers,” Vonasek said. “They have these devices in their hands every day of their lives. This is where the brick-and-mortar casino operator needs to be.”