asual Connect is in just a few days’ time. Can you tell us your thoughts on how the social casino sector has evolved over the last five years?
It’s less a case of social casino evolving and more that it’s exploded. The market’s expected to reach close to $3.5 billion this year. So clearly the appetite for this type of entertainment is incredibly large – and it just continues to go on increasing.
When I first started working in the industry back in 2011, the social gambling sector existed and it was growing. But what we’ve seen over the last year or so has been staggering – from both a player acquisition standpoint and from a revenue perspective.
The social casino guys are on the same revenue scale as some of the large real-money iGaming brands, and they’re continuing to grow.
In Q4 2013 Income Access launched the iGaming industry’s very first affiliate network for social casino brands. What motivated the launch and how has your network grown?
We saw an opportunity due to the fact that while social operators know acquisition well and how to acquire players, costs were rising. Many social operators were still focusing on volume, but were also starting to look more at player value. This is where affiliates come in. Affiliates are an additional traffic source that are cost effective, as you’re paying for performance. They also generally specialize in targeted traffic, meaning that their site visitors are generally more valuable.
As with growth in any new project, there have been challenges. However, we’ve seen more and more iGaming affiliates showing an interest in social, especially for US-based brands. A lot of the big EU affiliates have US traffic that they have not been monetizing. We also have been able to start leveraging some of the longer-standing relationships we have with US-based affiliates and have had success in getting them to give social a try.
There’s much discussion in the industry about the convergence between the social casino and real-money iGaming sectors. What are your thoughts?
I think with the US starting to open up to real-money iGaming, naturally these two sectors are going to be mentioned more and more as products that support each other. Real-money brands are now actively using social gambling features to keep players engaged.
Meanwhile, in states that are yet to open up to real money, social operators are helping sustain growth in a market that’s exploding. Some operators, and land-based casinos as well, are looking to build-up their player databases to one day be able to convert these customers to a real-money platform. There are tons of ways social and real-money operators can both support and learn from each other.
You’ll soon be flying to San Francisco, so let’s discuss the US market. Can you give us your current state of the union for the American social casino sector?
At the moment, two operators – Caesars Interactive with their Playtika subsidiary and IGT with their Double-Down product – represent about one third of the whole US social casino market between them. Caesars especially reported strong growth in Q1, and Churchill Downs has said that their social brand Big Fish was a key factor in their impressive earnings the same quarter.
Along with Zynga, these four social operators are really dominating the US scene, so the word ‘competitive’ springs to mind, especially for up-and-coming brands trying to carve out their own niche. With competition comes the need for operators to stay at the cutting edge of technology and customer experience.
Basically, it’s truly an industry that will swallow anyone standing still. User loyalty is a fickle thing – you can’t expect to retain customers if your competition is offering a better product or new features. It’s really exciting to watch top brands dueling each other, and to see new brands bringing incredibly innovative products to the table.
Social casinos are not only growing from an online operator perspective. You can also see land-based casino groups use social casino products to engage their foot traffic off-property. Look at Penn National’s recent deal with Scientific Games to have their SG Universe at their properties. I think this is a side of the industry that’s of particular interest when it comes to growth.
How do you see the social casino sector evolving going forward?
I think as acquisition costs rise, you will continue to see social operators looking for other ways to monetize their huge traffic volumes – that could be more app-vertising, working as affiliates for other social operators, or another approach entirely.
I think you’ll start to see more and more land-based casino groups leveraging digital, and providing social products for their customers so they can engage with them off-property. I do see affiliates as a key component to growth, as this is currently a channel that is being under-utilized.
Above all, product is going to be key moving forward – the brands that offer unique products with engaging content are going to be the ones that either take over as top brands, or retain their strong positions in the industry.