Social betting everyone does it?

Written by SBC Director on January 8, 2012. Posted in NEWS, Social Betting, SOCIAL GAMING

Not a day passes by when the talk at tradeshows or at the office in the egambling industry or indeed any other industry sector turns to the topic or new buzz word including ‘social’ in its sentence construct or the huge valuations and money raised in various IPO’s of any socially termed business.

Indeed and I suspect that the Totally Ice Gaming Show which heralds in a new year for the industry shall reverberant with new and inexplicable social terminology – watch this space. It is everywhere and is consuming every waking thought and perhaps in their nightmares as well, of CEO’s, investors, agencies, technologists and marketers alike with jargon such as social networks, social media, social CRM, player social graph and the latest hyperbolic term social gamification – so are you social or antisocial towards betting?

So what is this social betting market opportunity – well in broad terms the network is the platform or website where groups of individuals align into specific groups to share common interests such as sport, music or fashion and therefore begin to ‘socialize’ just in the same way they would have done before the accession of the internet within their real world communities of the village town square, workplace, the pub, and so forth – although now more of the social interaction and engagement takes place online in the virtual world and on the move via mobile smart phones.

Therefore following this logically – social betting and gaming are bets, challenges or games that run on social networking platforms / websites, requiring the user to log on via a social network or direct games website and have developed as a model for social networks to monetize their gargantuan user bases to generate revenue from consumers to pay for online games or content is a major success story, especially when you think of how the traditional media owners such as newspaper groups have suffered in trying to protect and monetize their online digital content assets.

Social betting and gaming is after all still a virgin industry in real terms, but I expect massive growth considering the recent speculation that Facebook shall open its platform to betting and gambling in regulated territories. To some in other new world verticals, social betting and gaming could be considered the antipathy of the traditional multibillion dollar console games market in terms of design, graphics and computer generated animation – in that social betting and games are much simpler in the look and feel and in the overall game/challenge concept – in other words a lesser degree of cognitive brain power is required to engage social gamers & bettors and is less disruptive to their core activity on the networking platform – however could these traditional ‘gaming’ behemoths but a threat to the burgeoning social betting sphere – yes of course and I for one suspect the coming 18 months may see some strategic alliances come together given some figures report the global betting market to be worth $60 billion compared to the console market forecast to reach just $24.8 billion in 2014.

Now if for a minute let us stop and consider this ‘Social Universe’ and some of the market numbers although source’s may vary – 5.3 billion mobile devices, Skype (663 million users); Facebook (629 million users); QZone (480 million users); Hotmail (360 million users); Twitter (100million users) and 600 million social network gamers combined with arguably the leading social games developer Zynga’s reported 195 million plus active users across its games network – dwarfs any traditional marketing model or distribution channel that an egaming operator would use in its marketing mix to acquire customers.

Social betting, gaming and social media from a business and marketing standpoint based on the social universe numbers highlighted allow huge market penetration and much lower acquisition costs than say normal affiliate marketing due to the ‘viral’ effect of the social networks users acting as the operators extended sales force and passing the marketing message along are certainly positive attractions for any business.

So are you becoming more social or anti-social towards social betting? There are certainly many opportunities and many challenges ahead for operators in the egaming sector as fundamentally the current egambling ecosystem value chain and business model is predicated on centralizing data across its platforms in terms of the financial transactions and related gambling activity in order to calculate the gambling stakes and winnings to be paid are in ‘silos’ and is not shared with other operators, which really by its nature goes against the ethos of social networks and social gaming which is communication and free sharing of information.

This coupled with the fact the egambling sector deals in real currency and not virtual currency poses some long tail thinking on how to migrate virtual currency bettors and gamers to real money players given on the available market data suggests the average revenue per user of social betting and games is under $3 per year means the initial profit model may not stack-up in the short term, coupled with the low eventual CPA (cost per acquisition cost) for that customer, means critical mass and volume are hugely important KPI’s. Other factors possibly out-with the egaming operators control could centre on the whole debate by governments on pure virtual currencies versus real world currency and purchases and the tax revenue implication could prove an interesting play-out along with activities in markets such as China and it’s walled garden approach to social networks, gaming and currency need to be factored into the social betting and gaming strategy.

I will leave you with this last thought, certainly social betting and gaming offers a mind boggling number of potential customers that these new distribution channels can deliver as egaming operators struggle with increasing costs, consolidation and more regulated markets – but given the backdrop of the world’s economy – are we in danger of another tech ‘social’ bubble burst which could mean the social gaming panacea platforms that the business may access now, may not be around in five years time – I will leave you to decide.

Mark McGuinness

Content & Social Director

Sports Betting Community