Looking ahead: the 2014 mobile social casino market

As one of the more profitable digital game segments, social and mobile casino games are a key growth market in 2014. After posting $2.4 billion in combined revenue across all platforms in 2013, its continued momentum is expected to drive worldwide spending on casino-style games to $4.2 billion by 2016E. But as the market matures, more is expected from the industry.

During the ICE Totally Gaming conference recently in London, an audience of developers, land-based casino operators and investors came together to assess this market’s opportunities and challenges for 2014. While the overall social games category has been on decline in 2013, it is segments like mid-core and social casino that move in the opposite direction. Here’s what lies ahead.

ICE article images.001

The opportunity is real

As audiences have started to migrate from desktop to mobile platforms, overall spending has improved. Today, social casino players make up about 13% of all social gamers, down from 25% two years ago. This decline in overall numbers has improved overall spending, as dedicated, paying players remain.

As players move from desktop to mobile and tablet, we’re seeing an increase in spending: the average tablet player spends almost twice as much as a desktop social casino player. Further, we observe a 22% higher lifetime value on tablets compared to smartphones. The transition to digital devices has improved the market’s overall performance.

ICE article images 2.001

The challenges are real, too

The market for casino games has started to mature. Audiences have become more demanding, wanting more engaging game play and a deeper social experience. And following a series of high profile acquisitions, competition has increased, too. Key areas where we expect social and mobile casino companies to compete in 2014 are marketing, cross-platform design and math model complexity.

Smart marketing. It is no secret that marketing has become more expensive: the cost-per-install on both social and mobile platforms has doubled in a year’s time. Increasing the return on marketing spend means making a dedicated effort to optimize for efficiency. To offset this expense, a growing number of companies are using existing brands to distinguish themselves. Brand holders like FremantleMedia have started to license casino games like The Price is Right Slots, and averages around $400,000 in monthly revenues. Similarly, Dutch media holding firm Endemol invested $14 million in mobile casino developer Plumbee, as part of its effort to expand its existing brands’ footprint among digital audiences. This brings greater exposure to the games, and can provide a huge boost to the bottom-line in an increasingly crowded market.

Cross-platform design. A natural extension of developing branded games is the crossover in usage behavior: increasingly, television audiences fiddle with a tablet while watching a show. Establishing a connection between the two screens is a solid method to both acquire and retain customers. From the side of real-money casinos we’ve already seen similar efforts, like MGM’s collaboration with PlayStudios on myVegas, which allows players to earn reward points that can be redeemed at its casinos. (As a side note, in the eyes of regulators being able to win something that has real-world value (e.g. air miles, drink tickets) constitutes gambling and therefore should fall under gambling law. It’s certainly an area to keep an eye on.)

Players love the math. Initially, the underlying math that determined a player’s winnings for play-money games was largely informed by an acquisition-based strategy: games rewarded players often to quickly scale its audience size. Following the shake-out, however, dedicated players show a strong preference for games that employ the same mathematical payout tables as real casinos. This gives especially land-based casino and operators a leg up on digital developers, who often lack the in-house expertise to build complex mathematical models and offer an authentic gambling experience

Mobilizing the casino experience

Given these competitive areas, it’s clear that the mobile social casino segment faces a tougher, but potentially more profitable, period. It is no longer enough to simply “mobilize the casino experience” and porting the same exact content to different devices. Instead, each game has to be tailored to its platform, audience and play environment.

Learn more about SuperData’s industry-leading casino research.