social games - Lotteriinspektionen

Jimi Hendrix and the Social Gaming Conundrum
November 2012
Christina Thakor-Rankin
Operations Director – Virgin Games
Agenda
‘Social gaming’ – what is it, how does it work, who plays/spends and why?
How big is the market – is it a sustainable model?
Why are we interested in ‘social gaming’?
Does it need regulating and who is responsible?
New stuff
Jimi Hendrix
Types of social games
COMMUNITY & COLLABORATION
Crops, cows, communities built upon social interaction – community
and nurture based – cash for cows and corn
CHALLENGE & (M)MPOG
Consoles + classmates to computers and community based gaming –
exchange cash for goods and advantages – geeks go mainstream
CASUAL & SKILL
Old school skills games leveraging the data base of a wider network –
win peer to peer challenges – Scrabble for social butterflies
CASINO & CARDS
Slots, poker, table and bingo - cash goes in nothing comes out –
gambling or not?
Free to Play + Pay to Play
FREE PLAY
FREEMIUM
CASH PLAY
Free to play games with a premium required to unlock advance features, gain access
to hidden areas, and/or take part in some aspects or elements.
The premium is a real cash payment: Pay to Play
The payment enables further participation, an enhancement of the experience or
accelerate progress and:
• The player uses real cash to purchase virtual credits
• The player can never play with, win or withdraw real cash
• In this model free play is essentially an acquisition tool
‘Social’ network gaming
‘Social Gaming’:
Initially the description of games specially designed and utilising the dynamics of the
social network; Angry Birds, Farmville, Mafia Wars. These games could only be
accessed and played via the social network.
Games which use the social networks and users social graphs to propagate
Games which use the social network as a primary acquisition tool
Games played using the infrastructure of the social network platform
BUT…
‘Social’ (semi-network) gaming
http://www.superdataresearch.com/wp-content/uploads/2011/10/SuperDataViximo_BeyondFacebook_100711.pdf
‘Social’ (non-network) gaming
http://www.yazino.com/welcome
http://www.doubledowncasino.com
Not reliant on a social network
‘Social’ gaming
Conclusion – The Name of the Game
There is no universal definition of ‘social gaming’:
Not all social games are reliant on social networks
Not all games are reliant upon community engagement
All however involve virtual assets and the FREEMIUM model
So when we say social game do we mean a game which involves the use of virtual
assets and/or a FREEMIUM model?
‘Social’ gamers who are they?
Average social gamer 2010 = 43 yr old woman
Average social gamer 2010 = 43 yr old woman
‘Social’ gamers who are they?
‘Social’ gamers who are they?
Why do they stop spending?
http://www.arkadium.com/promocontent/monetizationresearch/index.html
Conclusion – Knowing Me Knowing You
We do not have any consistency of measure and therefore no scientific profile of a
social gamer
For the data to be valuable:
• The research needs to be independent
• The research needs to be game type specific
• The research needs to ask specific risk based questions
How big is the market?
2010 - forecast
•As of 2010, there were almost 600
million social gamers
•The global social gaming market was
worth just under $1.5 billion in 2010,
and is forecast to reach almost $4 billion
in 2015
2012 - forecast
•Valued globally at $8.2bn today, is set
to almost double to $14.6bn by 2015(1)
•750 million users are playing social
games online and mobile platforms
http://www.gamesindustry.biz/articles/2012-
How big is the market?
How easy is it to grab a slice of the pie?
Double Down now has 1.415 million
daily users spending an average of 28
cents per day on the social, nongambling site, the company said. The
user count is up 4 percent, while average
daily spending increased 3 cents from
the third fiscal quarter.
IGT executives said today they expect
Double Down to add to earnings by 2014
Nov 2012
Is it a sustainable business model – Going…
•≤1% of users are "Whales" who will buy
every virtual item no matter how expensive
to show off to their in-game friends
•5-9% of users are will buy one or more
virtual items to speed up their achievement
of specific game objectives
•90-95% of users will never buy anything,
but add value for other users and
advertisers
Going…?
85% of social gamers quit after
their first day
Almost 95% of all US players
acquired in the first part of Q3
were inactive by the end of Q3
Gone…?
‘…players spend more
time on smartphones
than on social gaming
and paying gamers
now comprise less
than 5% of Zynga’s
user base.’
Conclusion – Take A Chance
The market is huge and has massive potential based upon the forecasts from
analysts, with gambling style games highlighted as a growth area
The forecasts and analysis are based on experiences to date
Bingo and sports are not mentioned but should be included (as we shall see)
We do not know yet if the model is sustainable long-term
Market is very crowded and cost of entry is increasing
In view of the evolving landscape is it too early to give a defined long term view?
Why are we interested in social gaming?
Why are we interested in social gaming?
Gambling moves into social
Social moves into gambling?
What they are saying at the top..
The advantage over gambling games was ‘less regulation, no age gating and no disaster
recovery.’
But "because you can’t rely on the excitement of real cash, you have to put in a lot more bells
and whistles to get that extra hit", he said.
Bingo Friendzy was "looking very positive at the moment" and "seeing good lifetime values".
…did not know how or when Facebook might open up to other for-cash social games, but he
said he believes that it will.
"Facebook’s kind of 'refer a friend’ on steroids,’" he said. "'Refer a friend' is trusted; advertising
is not — that’s the power of the platform."
Under age, vulnerable..?
Nearly 9,000 adolescents aged between 12 and 15 - survey found that:
•21% had gambled in the past week.
•2% were estimated to have a gambling problem, which equates to
around 60,000 people aged between 12 and 15.
53% of the respondents say they play social games, and -- a little more
surprising -- 19% admit that they're 'addicted' to social games.
2010
Technology favours the young
Are we right to be concerned?
Spot the difference
Pay to lose OR pay to win..??
Why are we interested in social gaming?
According to Betable's own research,
"freemium" social games - which are offered as
free downloads but promote paid-for
additional content - generate on average $1
(65p) per month per user, while real-money
casino-style gambling generates $300.
Betable provides the license, support and
infrastructure that allow developers to
legally integrate real-money gaming into
their mobile and social games and
applications
"We know the issue of problem gambling is linked
to accessibility," said Prof Mark Griffiths, director
of the International Gaming Research Unit at
Nottingham Trent University.
"What you are doing here is increasing the
opportunities to gamble on the move, and people
may not think about the negative effects it may
have when they download one of the apps.
T & Cs
Conclusion – The Winner Takes It All?
Whilst there is no ‘hard evidence’ everything suggests that there is a strong link
between social and real casino type games.
We have evidence of concerns which is why real cash gaming is regulated.
And perhaps one of the strongest indication of whether social casino games need
to be treated with the same principles is the fact that the social gaming industry
has gone so far as to set up a voluntary body where player responsibility is one of
the key areas of focus:
Jez San at last week’s Social Gambling Conference in London, - while
there is not necessarily a need to regulate the social games industry as
with the real-money gambling industry, “providers of social gaming
products should take more responsible attitudes.”
Who’s responsibility?
Social gaming is too big for the gambling regulators to take on by themselves.
Is taking on a type of social game more feasible?
Can 1 regulator acting unilaterally make any impact or does it have to be agreed
by all regulators e.g. if the US does not regulate will there be any impact?
Is social gaming bigger than this and will others do the job for the gaming
regulator instead?
Consumer Law – virtual assets/currency
• Wikipedia: "Virtual goods are non-physical objects
purchased for use in online communities or online
games…Virtual goods have no intrinsic value and
are intangible by definition“
• Virtual currency is an online, intangible currency
typically used to purchase virtual goods. Virtual
currency is partly a subset of virtual goods itself, but
presents its own particular issues too
Consumer Law – legal status
What the providers think:
• Deny virtual goods have any property existence.
• To the extent they do, they are licensed, not sold.
Example #1: Facebook payment terms (Aug 2012) – “When you purchase or
receive Credits, you do not own those
Credits. What you have is a limited right to use the Credits in connection with
certain features on Facebook, such as the purchase of a virtual good…”
What consumers think:
• We spent money on buying them
• We are strongly attached by investment by time and
motion on them
• We own the virtual goods/currency
Consumer Law – virtual assets
The man from Paignton, England transferred 400
billion virtual play chips to his account and decided
to sell them on the black market at a rate of £430
per billion.
Selling all the play money would earn him £184,000
profit at a rate like that.
He even managed to make £53,000 until he was
arrested
Zynga has not been deprived of goods like it would if
it was real chips or money stolen in case of a normal
fraud, since everything was virtual, Zynga can always
issue more - commented prosecutor Gareth Evans.
Mitchell faced 5 charges, which are contrary to the
Computer Misuse Act.
Financial Regulation
Financial Regulation
Up to 100,000 people in China and Vietnam are
playing online games to gather gold and other
items for sale to Western players, a report
suggests.
They gave the example of a 100 dollar payment
made via Paypal for game gold. After processing
fees, the cash would be split between a large
retailer ($30), a smaller farmer ($45) and the
individual ($23) who had gathered the gold.
The global market for such virtual game goods is
worth at least $3bn (£1.8bn) the World Bank study
estimates. About 75% of that comes from socalled "gold farmers" who stockpile game
currencies to sell on later.
Regulation made easy
Proposals are underway at UK and EU level to classify software (and implicitly
virtual goods therefore) as definitively either goods, service or a new sui generis
right/asset.
If consumer law determines that a virtual asset or currency is ‘owned’ by
the purchaser then that gives it a tangible cash value.
In terms of social gaming the FREEMIUM model becomes gambling as it
involves cash – withdraw or not!
Technology
Conclusion
‘Knowledge speaks,
but wisdom listens’
Thank you