Last month, we began a discussion of how social gaming is playing a part in preparing the gaming industry for real-money iGaming. While some companies draw a bright line between the two forms of iGaming, others are using social gaming to ramp up their expertise in preparation for legal real-money iGaming.
According to a survey by the Innovation Group, in the fall of 2014, 85 percent of operators were preparing for real-money iGaming while 75 percent and 67 percent, respectively, were preparing for social gaming and free play. Operators appear to be hedging their bets, but they, I believe, see real-money gaming as a thorny legislative issue and have also invested heavily in assessing the value of free play and social gaming.
In the same survey, operators were asked to characterize their level of commitment to social media. Of the total, 89 percent said they had a moderate to major commitment to social media.
This suggests that land-based operators do take social media seriously, and more than a few already see social gaming as the way forward. This coupled with the analytical capabilities inherent in social gaming provides a strong rationale for land-based companies to get fully engaged in social gaming as part and parcel of their overall social media program.
I expect land-based operators will look to social gaming in the next couple of years as efforts to legalize real-money iGaming flounder. To maximize the impact, land-based operators will need to view social gaming the same way as any other marketing program that needs to show a positive ROI.
To achieve this, land-based companies need to leverage the data mining and marketing expertise of the social gaming operator (or other third-party experts) to induce the maximum monetization of social gaming itself, and to drive customers from the online platform to the land-based casino (and vice versa).
Social gaming operators should view U.S. land-based casinos as a major market. This should not only include the potential for initial software sales and installation, but should also include specific data mining and targeting efforts on an ongoing basis to help monetize the social gaming offering and to achieve the cherished goal of the land-based casino by increasing visitation.
Eventually, land-based operators will catch up, and will develop these skills through training or new hires. But for now, the opportunity exists for social gaming operators to show how their products and expertise can result in long-term, measurable benefits to land-based operations. Land-based operators need to be open to the concept that their marketing and IT staffs will be required to work closely with the social gaming operator to craft effective marketing and promotional campaigns launched through social gaming, with the view to increasing land-based visitation and revenues.
Several companies have already moved in this direction, with Caesars Interactive as a prime example. Others such as Penn, MGM and Wynn could follow suit, looking to acquire social gaming companies to provide them with the needed expertise.
Churchill Downs has proceeded in both directions, hiring an in-house staff of up to 50 individuals while also buying Big Fish Games, a social gaming company with a focus on mobile games. Others will likely build the expertise incrementally over time through in-house hires.
Many others, especially smaller land-based casino companies and Native American tribes, will look to the social gaming operator to provide the solution in terms of the platform. Critically, though, it is the data analytics capabilities that will provide these smaller land-based operators with the effective programs needed to achieve their goals, and these services should be central to any outreach from social gaming operators (and other third-party experts) to land-based casinos.
Once social gaming has been implemented, the road to real-money gaming will eventually become smoother, and the expectations more realistic than they have been up to now.