Social gaming in its various forms has become a massive phenomenon. Players all around the globe have taken to it, drawing attention from operators and developers. What is social gaming, and what are its prospects and challenges? Read on to find out.
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What is Social Gaming?
Social Gaming is a form of gaming that is played over social networks. Real money is not at stake, and the primary focus of social gaming is to build a sense of community with the other players, who are usually friends and family. Social gaming has truly taken off in popularity in the past few years. Most visibly, games like Farmville, Mafia Wars, and Words with Friends have caught fire and spread across social media platforms like Facebook. Social games’ emphasis on the interaction between players mirrors the community-centered nature of social media platforms.
But games based on virtual farms, competitive wordplay, and organized crime are only one side of the social gaming phenomenon. Social casino games, which are free-to-play versions of online casino games, are enjoying widespread popularity. They offer the same user experience and gameplay as standard online casino games. KamaGames’ Pokerist is a highly popular option, as is Slotomania, a free-to-play online slot machine hall. Zynga, the company that produced hit social game Words with Friends, also has a line of social casino games like poker and slots.
Social casino games provide players with free daily bonus chips or spins to play. When the player has run out of their daily bonus, they are unable to keep playing unless they pay for more of them. The two prime motivators for playing social casino games are entertainment and socialization. Social media users play social casino games because they’re fun and sometimes provide a new, different experience, especially when it comes to connecting with other players and chat during gameplay.
Another aspect of social casino games that motivates players to keep playing is the competitive element. For instance, leaderboards featuring the most advanced players provide an incentive to play more. Public rankings trigger the basic human psychological need to compete and outperform others.
The difference between social casino games and traditional casino games boils down to a quite simple fact. In standard casino games like slots, roulette, blackjack, or poker, players wager real money with the aim of winning real money. However, in social casino games, there is no option to withdraw, even in cases where players can use real money for in-game purchases like additional chips or tokens. Players play for fun and, most importantly, to socialize. There is no prize or prize money. When players win, they receive additional spins or chips to play with.
Companies that produce social games monetize them through in-app purchases. For example, a social poker app might provide players with daily bonus chips to play with, and once the player has run out of free chips they can pay real money to purchase more so that they can keep playing without having to wait for the free chip refill.
Many social casino operators use this as an opportunity for upselling. For example, players can be given the option to pay a certain amount for a certain number of chips, like $10 for 100 chips, or pay a marginally higher amount for a substantially greater number of chips, like $11 for 200 chips. The same logic applies to social slots and roulette. This makes the games free-to-play with the option of pay-to-play, meaning that players might begin on the free-to-play basis but decide to pay to keep the fun going once their free chips or spins have run out. This is a very simple and basic way for any social or mobile game developers to monetize on the human tendency to pursue instant gratification.
The Appeal of Social Casino Gaming
Social casino games often allow for increased player interaction, something that is growing in appeal in the increasingly connected digital age. Players search out both their friends and their rivals and develop strategies against each other by deriving lessons from their playing histories together. The social element is critical. It is one of the most in-demand aspects of contemporary online life, with internet users becoming more and more aware that sometimes the world wide web can create as much isolation as it does connection.
As social gaming is primarily a method of connecting with other internet users, one big lesson that operators can take away from studying the phenomenon is that players respond very positively to enhanced sociability. This insight is parallel to the current explosion in popularity enjoyed by live dealer games, where players can chat and connect with other players, as well as experiencing interaction with a dealer, as they would if they were to go to a land-based venue.
As the stakes for social casino gaming are lower than they are for true online casino gaming, there’s a lower barrier for new players and a higher chance they could be nudged from idle interest to actually trying a few games. The process of signing up and making a real-money deposit on an online casino can be intimidating for new players, but social casino games provide a nearly identical experience without the same level of commitment. This could potentially be used as a form of cross-selling to drive social gamers towards real-money online casinos. Social casino gaming also has a particular appeal in markets where online casino gambling is prohibited by law.
In a 2015 report on social gaming, the UKGC came to the decision that social gaming did not pose any significant societal risk regarding harmful behaviors commonly associated with gambling, such as problem gambling and underage gambling. The UKGC made it clear in a 2019 statement that social casino games would not be subject to regulation provided operators demonstrated social responsibility.
Market Outlook and the Future of Social Gaming
The most commonly-cited demographic profile of a social casino gamer is a female in her mid-40s. However, it must be noted that different operators target different player segments with different games, so there is not necessarily a single profile of the social casino gamer. According to the UKGC’s 2015 report, nearly half of all social casino gamers are between the ages of 21 and 34.
The UKGC report also provided an estimate that only roughly 1-5% of social casino gamers go beyond their allotted free plays and pay to continue playing, and 15% of that group generates 50% of all social casino revenues. This distribution mimics that of gambling, where high rollers account for massive proportions of revenue compared to regular players.
Additionally, operators should take note that according to NewZoo, 58% of social casino gamers have also tried gambling for real money, with that number rising to 81% of those who had paid to play social casino games. Where there is obviously a significant amount of crossover, operators should bear in mind that players’ motivations are different. While online casino and social casino gamers both play for fun, social casino players obviously won’t always be motivated by the chance to win money, whereas online casino players like to go for the win and hoping to make it big.
This graph offers a recap of the past five years of social casino GGR and estimates for the near future:
The social gaming market is big and getting bigger. Global GGR for social gaming in 2019 reached $5.3 billion, according to a report from BV1sion. This is predicted to steadily rise over the next several years, hitting $7.2 billion by 2024. However, there’s another statistic which is equally critical, if not more so: an estimated 71% of social gaming GGR was generated by the North American market. The second biggest market for social gaming is Oceania, with Australia alone experiencing a 4.2% growth in GGR over the course of 2019.
Below we reproduce BV1sion’s Q4 2019 breakdown of social casino GGR by region:
Social gaming is very popular in the Asian market. In fact, according to numbers from bV1sion, Asia saw the second-highest rate of social gaming GGR growth in 2019, with an estimated growth of 9% (the highest rate of growth was Africa, with 14%). The Korean market is growing strong, with an 18% increase in revenues in 2019, according to BV1sion. In fact, perhaps unsurprisingly, the Chinese government has already moved to ban all social poker games, in keeping with the government’s stance on gambling.
Here we reproduce BV1sion’s Q2 2019 assessment of the top and bottom 5 countries for social casino GGR growth.
Aside from the Chinese government’s ban and a ruling in the US state of Washington, social casino games almost never suffer under restrictive regulations. In almost all countries with gambling regulation, the definition of gambling involves a game of chance where there is a prize to be won. As social casino games have no prize, they generally fail to fit the definition of gambling and thus escape regulators’ attention. The UKGC, for example, has adopted the position that as long as social casino operators demonstrate sufficient social responsibility, there is no need to regulate the sector. As winnings cannot be withdrawn, the sector doesn’t pose any opportunities for money-launderers.
As revenues are projected to continue rising for the foreseeable future, it seems that social gaming is here to stay. Social game operators are devising new products and massive industry players like land-based casinos are looking into releasing products of their own as a promotional tool.
Two things that have a lot of potential to influence the future of social gaming are personalization and new technology. According to a CasinoBeats interview with Andrey Kuznetsov, CEO of KamaGames, social casino operators stand to benefit greatly by employing the kind of personalized promotional offers enabled by real-time marketing. As in many other sectors and industries, there is a growing expectation among players and other consumers that experiences must be personalized to be worthwhile. A high level of personalization is becoming the standard, which is a key to customer engagement and, consequently, retention and a better lifetime value.
In order to keep their momentum, social gaming operators must stay nimble and take into account the competition they face from other forms of online community-based entertainment. The social casino player is not a complete overlap with online gamblers, but instead a broader population of internet users and gamers who enjoy having fun and being part of a community, pitting social games against, for example, mobile games, which have a similarly high entertainment value and level of social interaction.
Perhaps surprisingly, the appeal of social gaming is so great that KamaGames successfully launched a social sports betting product. Players with a love of sports and a competitive streak can bet against their friends without the risk of losing their money. Social sports betting also provides a forum for bettors to make their betting choices public so that their friends - and rivals - can see what their betting choices are.
In the end, social gaming is a growing phenomenon that at the very least has lessons to teach the iGaming space when it comes to players’ wants and needs.