GamesBeat

DoubleDown Interactive succeeds by not sucking at social casino games (interview)

IGT made a few jaws drop wide open when it bought DoubleDown Interactive, a social casino game publisher, for $500 million in cash in January.

Following short on the heels of a U.S. Department of Justice decision in December that legalized online gambling with certain restrictions, the acquisition of DoubleDown was a triggering event for the investment craze in social casino games this year. As legal barriers between land-based casinos, online gambling firms, and social casino games melt away, investors are pouring money into startups like Playsino, Blitzoo, and Betable on the assumption that legalization will lead to huge profits.

But Glenn Walcott, president of DoubleDown, says that social casino games are a good business in their own right. They now account for about 13 percent of game playing on Facebook, which has 955 million monthly active users (MAU), about half of them game players.

But the market could turn out to be a bloody one. Big players like Zynga and rival Playtika-Caesars are out to steal audiences interested in social casino games. The card sharks are everywhere. But DoubleDown has a full suite of games within a single app, and it has 5.4 million monthly active users who are highly engaged. Three percent of them spend real money on virtual casino chips, and that’s enough to make a good business for DoubleDown.

We caught up with Walcott at the recent Casual Connect game conference in Seattle, where social casino games were a hot topic. Here’s an edited transcript of our interview.

GamesBeat: You guys are an interesting new player on the scene here. You have some history in this social casino game market that other people don’t.

Glenn Walcott: Yeah. It’s funny. People look at us and think — relative to the world of gaming, the Facebook world — it seems like we’re dinosaurs.

GamesBeat: How did you get started on Facebook?

Walcott: The three founders of the company had another game company before this. It was generally in the sweepstakes category. It was very successful. It printed money.

But they said, this is not what we want to do with the rest of our lives. They were spending time playing games on Facebook, especially Zynga Poker. They thought that it would be awesome to build a great casino-style game. They liked that style of game. But the problem with those games is: How do you monetize that style of game? It’s not like the download world, where there’s a great product that you can download for $5 to $20 dollars.

But Zynga was the first company to come out with a virtual currency for a casino-style game. It became so obvious. You just spend money to buy more chips. So they said, let’s go out there and do it.

We didn’t want to go right after Zynga Poker. That was the 800-pound gorilla. Zynga had a great product. Our founders said, let’s come out with a product that nobody else has come out with. Let’s do blackjack.

They came out with blackjack with a multiplayer engine because multiplayer is very difficult to build. That provides a major barrier to entry.

So we came out with blackjack, which launched in March of 2010. After that was successful, we moved on to another game that we liked, which was roulette. We launched a roulette game in the summer. Later that summer, we launched three slot games as well. So now we were on our way to really building a casino. We started ramping up the marketing of it on Facebook. We realized that our marketing dollars paid for themselves in about a month, which is a great return-on-investment (ROI) on a marketing investment. At that point in time, around October of 2010, we became a break-even company. We had eight people at the time.

Then we decided, hey, let’s go on a tear. Let’s think big. Let’s make this a really big company. We went on a hiring spree and spent tons of money on marketing. We had a product that monetized well. The casino-style genre monetizes well on Facebook. And we understand, anecdotally anyway, that we monetize very well within the casino genre. Because of that, our marketing dollars have been able to go further than many companies’ have.

Fortunately we’ve done a great job at continuing to launch innovative new products, all within the casino suite, and we’ve done a great job with the marketing to understand who our demo is and how to go after them. It’s not just acquisition marketing, but…how can we make sure that we get in front of people from a retention perspective? How do we continue to provide unique and incredible content to our customers? That’s the way we believe we’re going to retain them.

One of the things that’s unique about the DoubleDown Casino app versus many other apps that are out on Facebook is that we have one application, the Casino. It’s the only one. Whereas all these other companies — Zynga, Electronic Arts, other big companies — have multiple apps.

Every game, as you know, has a life cycle to it. It’s very successful for maybe up to three months of that life cycle, then it starts to go down, and you have to try to convert those users to another one of your applications. When you’re doing that, you hit another barrier to entry. You have to get someone to click an “allow” button to get access to that game. They have to give out more information. That’s just another reason for people to say no.

We’re just accumulating all these games into one spot, and we’ve found it to be very successful. It’s funny to us that we’re unique and that most people don’t like building the full casino. They’re just building blackjack or poker or slots, and if they do have other games, they’re putting them out as a different application. That’s one of the things we think has differentiated us.

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