Simon Collins of social and mobile gaming investment fund NewGame has argued that the transition to real-money models for successful Facebook gambling formats such as Zynga Poker is far from assured.
Presenting on Day 2 of the recent Online Bingo Summit in London, Foxy Bingo founder Collins said that while he expected Facebook to pursue real-money gaming revenues once its forthcoming IPO was out of the way, as Google did, he thought that this move was far less straightforward for games developers that currently make the bulk of their money from people buying pay-to-play credits on the platform, such as Zynga, reported to be discussing a future real-money partnership with casino group Wynn.
“It’s an obvious opportunity for people like Zynga to try and justify their large valuation. It is the world’s largest online poker game, so theoretically switching on just one platform like the UK could be an interesting revenue generation proposition”, Collins said.
“But if you are Zynga or Bingo Blitz, and you make great money on freeplay, why go away from that effort? With freeplay, you don’t have the same issues you have with real play. If before your IPO you are making many millions per month in net profit, why change what is already a winning formula?
“So in trying to access 300m users playing Facebook gambling formats, you are hindered not just by Facebook policy and geographic regulations, but also by the fact you can make great money just selling Facebook credits. It won’t be as easy for these companies to potentially go straight into real money-gambling, and there may not be the desire for it, as they are generating good money as they stand,” he added.
Collins, whose bwin.party-backed NewGame Capital investment fund recently made its second investment, in mobile gaming business AlchemyBet, told the audience that there were also plenty of opportunities for real-money bingo operators working in the other direction. “The opportunity for Facebook and social platforms to expand our reach, improve offering to customers, to enhance our engagement with those users is huge”, said Collins, whose presentation covered the strategies open to real-money gaming businesses on platforms Facebook, Twitter and Pininterest.
Simon Smiley of NewGame’s first investment, Avatingo-developed social game beJig, said that achieving this successful move into social gaming would however require change of mindset on behalf of real-money operators, who tend only to see converted players as important. “You also need people who are involved and are not fully committed. In every community that works you have the guys in the middle and the guys on the outside circling around.”
Charles Cohen of dedicated mobile B2C and B2B business Probability also argued against the pervasive view of the UK online gaming market as saturated. He revealed to the audience that 80% of the people recruited to its Ladylucks mobile casino brand did not have an online gambling account and had therefore never gambled online before signing up to Ladylucks.
“That’s about 1m people. That means none of these people are currently your customers. If you are sitting here thinking the action has capped out, the reason is because you are missing the action, and the action is these people.”
Cohen also demoed Probability’s solution to the confusing user interfaces of existing bingo offerings, by only ever having one ticket on the screen at any time, big “Fisher Price numbers” and fast gameplay, to take account of the fact that most people only played for an average of 10-12 minutes per session low-spec handsets while doing something else, like talking to someone eating or watching TV.
Other presentations on the day included Paddy Power’s Robert Fell on the development of its mobile bingo platform, Chris Drake of Beacon Bingo on the progress of the company’s Enteraction-developed Facebook game and various stakeholders in the soon-to-regulate Spanish online bingo market.
Simon is right - why bother with regulated online gaming when you own the unregulated market.