Ryan Flum is the director of iGaming for VonChurch.
Back in July, social gaming giant Zynga announced its intentions to terminate their pursuit of an American real-money gambling license. Many investors saw this move as an act of a company spread too thin, fighting to regain relevancy in the wake of plummeting stock prices and mass layoffs. This viewpoint sprang from the conception that real-money gaming was the ultimate goal for the American online casino industry.
Now, a mere six months after Zynga’s midyear announcement and with social casinos having evolved into a new, long-lasting category, it’s time to ask if real-money gaming is truly necessary for success?
Social casino gaming is any casino-style game (blackjack, poker, slots, etc.) that monetizes through virtual currency mechanics instead of actual dollar rewards. A few years ago, social casino gaming was seen more as a means to a real-money end. Launching casino products on social and mobile platforms bought studios time to grow active player bases, build infrastructure, and staff up while states drafted various bills to legalize online gambling. What people did not necessarily anticipate was that the social casino genre would boom into a multibillion dollar industry.
Social casino games have proven to be able to monetize effectively without leaning on real-money bets — just today, a survey shows just how much the industry is growing with women players. Further, gambling comes with complications that have taken the luster off for many companies.
Some voices in the industry believe that social casino studios should be held accountable to the same regulations as real-money gaming. Social casino developers see no reason for this as other social titles (such as Farmville) are held to no such regulations. Staying away from real money frees up studios to develop their titles without having to worry about the various legal implications of their products.
Longer development cycles
Real-money gaming is guaranteed to slow down development cycles on casino games. Studios have claimed that adding a real-money component to social casino games could make development cycles up to four times longer. This is due to legal requirements around regulated math, models of which are generally patented, like Slingo or High 5’s stacking wilds. You also have to account for payout percentages and other volatility rates. This takes a separate, and often contrary, skillset from those you need to develop today’s crop of social games. Ultimately, real-money games are a mathematician’s game, not the game developer’s.
Social casino gaming is popular
Perhaps the most obvious reasons why social casino gaming is displacing real-money gaming is that the social casino games are doing extremely well. Rather than waiting for the many variables hanging over real-money gaming to get sorted out, many companies are focusing on what’s working now. The industry is growing and, as games like Candy Crush Saga have proven, there is far less stigma around buying virtual goods or paying money in-game than there was just a few short years ago.
This in no way implies that there isn’t a place for real-money gaming. States such as Delaware, New Jersey, and Nevada have passed legislations to enable real-money gaming and are now ramping up their industries. Daily Fantasy Sports are also proving to be a lucrative, fast-growing genre of gaming enabling real-money bets. But as we have seen with the success of companies like DoubleDown Interactive, Big Fish Games, and Caesars Interactive, social casino gaming brings much of the promise of real-money without the hassle.
The industry is taking notice and is continuing to grow every day. When it comes to social casino gaming, it’s simple: mo’ real money, mo’ real problems.
Ryan Flum is a director with the iGaming Division of VonChurch. VonChurch’s iGaming division includes companies developing social- and real-money casino games. Prior to founding the iGaming division, Flum worked with VonChurch’s social/mobile gaming team.