Social casino market shrinks, and game operators shift strategy

Social and mobile casino game operators are facing a shrinking market, as the number of monthly players has shrunk to 85 million from 109 million a year ago, according to market researcher SuperData Research. In response, those companies are shifting away from acquiring more players and instead are focused on making money from those that they already have.

Above: Zynga Poker lobby

Image Credit: Zynga

Joost van Dreunen, the chief executive of SuperData, said that the sector is entering its next stage and that casino-style game operators are positioning themselves for a mature market. Building a long-term relationship with consumers now makes more sense for a sustainable social-casino-game business.

“As the number of available casino-style games on Facebook and mobile continues to grow, a subset of the audience has cycled out of the abundant but relatively low-quality offering and moved on,” van Dreunen said.

“This means that publishers active in this category face an important transitional moment,” he added. “No longer is it enough to merely acquire new users. For one, because it is becoming increasingly expensive. The current market landscape forces publishers to consider a strategy centered on player retention. And it’s working. In April we recorded a record month in terms of revenues, totaling $175 million in the U.S.”

The lifetime value, or the amount of revenue generated from player throughout the life of a game, for Scientific Games’ Jackpot Party game is double that of Caesars Interactive’s Slotomania.

“Zynga Poker [Zynga] has a massive audience with relatively low overall spending but manages to offset this by having a high retention rate,” van Dreunen said. “Keeping players interested is key to building a sustainable business across digital platforms.”

Like Zynga, companies are turning toward “authentic casino experiences” rather than acquisition-oriented experiences.

“Dedicated players show a distinct preference for games that emulate the payout rates of real-life casino games, opening a new arena in the social- and mobile-casino market,” van Dreunen said. “And finally, building a truly cross-platform strategy that connects with players digitally and in the real world is proving successful for MGM as it continues to use digital platforms to drive people to its casinos. Doing so enables it to build a deeper, richer experience both on- and offline with its customers.”