Mobile to dominate $3.4B social casino market

As the year comes to a close, we look ahead and see continued growth for social casino games. In 2015E we expect the social casino market to earn $3.4 billion, growing 13% year-over-year. The mobile sector will drive this growth, surpassing desktop revenue for the first time.

SC2015E

Forecast to capture 55% of the casino market in 2015E, all major publishers have been aggressively ramping up their mobile efforts. As part of their “mobile-first” strategy, Zynga relaunched their flagship mobile game Zynga Poker and have branched out with mobile-only titles like fantasy sports betting app NFL Showdown. This new focus follows the emigration of desktop spenders onto mobile in North America and Europe. A month after its re-launch, Zynga Poker on mobile earned almost a quarter more than its desktop counterpart. Other developers are following suit: High Five Games has released mobile versions of their games more frequently, and we expect this trend to accelerate in 2015.

Partnering up to reduce costs

A negative side-effect of this continued growth is that the transition to mobile especially in the West  is also saturating the market, thereby driving up player acquisition costs. To offset the increasing cost, publishers have been partnering up. A series of mergers of acquisition has consolidated the market creating barriers to entry for late-comers. Caesars Interactive acquired Pacific Interactive in February of this year, its fourth major acquisition in recent years. More recently, Scientific Games acquired Ballys for $5.1 billion in November and Churchill Downs announced their purchase of Big Fish Games for almost $900 million. As social casino companies consolidate, the majority of revenues will go to just a handful of large publishers.

Focusing on social casino in Asia

Opportunity exists, however, in emerging markets, which are in different stages of transition. In Latin America, desktop social casino is still strong and likely to peak in 2015. However, as smartphone penetration rises in this and other growing regions, many new players will bypass desktop games entirely and contribute to a surge in mobile revenue next year. On the other hand, even large western publishers like Ceasars Interactive have had a difficult time breaking into Asia. In a recent interview with Haaretz, Ceasars Interactive CEO Mitch Gerber told the Israeli newspaper, 

If you look at our revenue and check how much of it comes from China, it’s zero.

This is largely due to the insularity of China’s social and mobile gaming markets since outside publishers are required to partner with local companies. In addition, media giants like GREE and Tencent dominate the Asian mobile space, which will total 71% of the region’s social casino revenue in 2015. For more social casino data, take a look at our Social Casino Games Market report and stay tuned for our Asia Pacific report coming out in 2015.

Speed Read

  • Social casino revenue totals $3.4 billion in 2015E, growing 13% year-over-year.
  • Consolidation by major players offsets skyrocketing player acquisition cost and hurts late-comers.
  • Developing markets present opportunities, but Asia remains difficult for Western companies to penetrate.