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A decade ago, social casino games exploded as free-to-play social casino games, where you could buy virtual chips but couldn’t cash out winnings. But Playstudios showed up in 2011 with a different kind of business model, where players earned loyalty points in the social casino games that could be redeemed for real-life rewards from a variety of hotel, entertainment and leisure brands.
The social mobile games worked out so well that the company grew to 10 studios and 750 people. CEO Andrew Pascal was able to take the Las Vegas company public at a valuation of $1.1 billion in early 2021. Since that time, the company’s value has dipped during the downturn, but it’s still valued at $502 million.
In that sense, the company has fared a lot better than many other social casino game companies. And Playstudios is operating 13 games, including Tetris, and it continues to add brands (121 at last count) to its rewards program for its 12 million monthly active users. Partners include MGM Resorts International, Wolfgang Puck, Norwegian Cruise Line, Resorts World and many others. The company acquired WonderBlocks to launch a blockchain-based loyalty platform, dubbed PlayBlocks, in partnership with Forte. Playstudios’ investors include Activision Blizzard and MGM Resorts International.
Pascal recently hired Mickey Sonnino, a veteran executive from Playtika, as chief operating officer. And I interviewed her recently. Here’s an edited transcript of our interview.
GamesBeat: Congratulations on the new position. How did that come about?
Mickey Sonnino: Prior to this I worked for Playtika for about seven and a half years. I left the company and took some time to breathe. I don’t know how well you know Playtika, but seven and a half years there was very intense. I started to think about what I was looking for for myself. Katie contacted me from the states with regards to this role. Andrew was in Israel at the time. We met a few times. I met the team. I was intrigued and I decided to join the company.
GamesBeat: Are you going to have to relocate to Las Vegas for Playstudios?
Sonnino: No, actually I’m based in Tel Aviv. To give you a little more background, Playstudios operates free-to-play games. We have a secret sauce that’s one of the reasons I joined, which is that it has a loyalty program called PlayAwards. It allows players playing the games to redeem real-world rewards. No other social gaming company has that. Playstudios is the pioneer of the rewarded play category. This adds a loyalty layer to the games. Players playing the games get loyalty points, and at the end they can go to a store and redeem those points for real-world rewards.
That program changed the trajectory of how a game’s life cycle works in terms of retention and the lift games get thanks to the loyalty program. Also, it creates a unique experience for players. It’s playing the games you love with the rewards you want. It gives the company an ability to attract, keep, and monetize players much more so than without it.
Playstudios is a global company now with more than 750 employees across six countries and nine studios. Tel Aviv is one of those key locations. Playstudios made a strategic decision to have their COO, one of the senior members of the management team, based in a region outside of their headquarters in Las Vegas. It shows the global agenda that the company is trying to move forward. It’s a very positive and interesting move. A company that has all its senior management in one location loses a bit of that global presence.
GamesBeat: We wrote about Playstudios getting the rights to the Tetris mobile game. How much of the business is on mobile versus other platforms?
Sonnino: Regardless of Tetris, most of the business, the games are on mobile, both iOS and Android. We have some games on Facebook, but that’s becoming a smaller and smaller strategic priority. Once it was all on Facebook, but today that’s a very small percentage. Mobile is the primary platform. We have nothing on consoles yet.
GamesBeat: Why do you feel that’s the right platform for the kind of games Playstudios has?
Sonnino: Our focus right now is mobile. That’s a big percentage of our players and business opportunities. That’s where the focus is right now. The strategic approach of the company started with one game in a niche category, the social casino category, and with one program, the loyalty program, built on top of it. Strategically, Playstudios wants to grow in two to three dimensions, depending how you define it. One dimension is from that one game in a niche category to a whole portfolio of products across different genres. The other dimension is to build the loyalty program into a platform where we can offer it to all Playstudios games. We’re putting it on Tetris and the Brainium suite, and also offering it to third-party titles outside of Playstudios. We’re creating a platform along these two dimensions.
The question is, is it not only genres along that one dimension, the portfolio expanding into different game genres, but also different platforms? Potentially that may happen in the future, but that’s not the focus right now. I hope that gives you our perspective.
GamesBeat: How much of the team is in Israel with you now?
Sonnino: Currently we’re about 170 people based in Tel Aviv. That’s less than a third of the company as a whole. About a fifth or less? In Las Vegas we have our headquarters, plus most of the PlayAwards team, including the hosts and the customer support. A lot of the hospitality and player experience competency resides there. Player treatment, I should say. In addition to Tel Aviv, a lot of the game operations sit there. Then we have sites in Vietnam and in Serbia that have a lot of the development and production. Vegas is not actually the biggest site. There are more people in Tel Aviv, in Serbia, and in Vietnam.
GamesBeat: Has the rewards program changed over time or evolved in a certain direction? Or has that remained pretty consistent as far as what players receive?
Sonnino: The program is becoming a platform. It’s growing very nicely, and not only in the amount of partners. We have more than 250 brands and more than 600 rewards that we’re offering across 17 different countries. We have people placed in different regions to bring in partners that are local to the players there. On a quarterly basis players purchase more than half a million rewards. If I recall correctly, we’ve had almost 15 million rewards purchased since the company started.
This program is building up momentum. It’s a key strategy for the company. A key point to appreciate, too, is that this is something no other gaming company has. It’s a very interesting layer that we’re able to offer. From a business perspective, it’s a unique point of differentiation, but also, from a player experience perspective, they’re getting something they can’t get anywhere else.
GamesBeat: Can you explain why this doesn’t fall into the classification of gambling? Is it because there’s no real obligation for money going in or out?
Sonnino: That’s the first question I asked when I interviewed with Andrew. The way the model works, it’s not correlated with an outcome. Gambling is when the reward is correlated with an outcome. You win, so you get something. Here, as long as you spend time in the game, you gain those loyalty points. It’s more time-based, and it’s true loyalty. It’s being in the game, not necessarily winning or losing. It’s not gambling at all. The players play for free as well. That’s another huge differentiator. For gambling you have to put in money. That’s important to recognize as well. Our program is completely free.
GamesBeat: Do you have in-app purchases?
Sonnino: Yes, we have them, but they’re optional. The game functions like any other social game, gambling or not. It’s free to play. You can make purchases to play with bigger bets or extended time. But the rewards aren’t dependent on the purchases you put in. That’s not correlated at all. Even if you don’t pay at all, if you play completely for free, you still gain those loyalty points. Players can redeem their loyalty points and go on cruises, get hotel rooms, go to the theater and so on without ever needing to pay in the game.
GamesBeat: I’m surprised that no other casino game companies have gone into following this particular model. It seems like it works well.
Sonnino: I can give two perspectives on that. First of all, when Playstudios was founded, Zynga was growing and purchasing a lot of brands. There was increasing competition in the market. Playstudios knew going in that if you don’t come with a point of difference, that’s hard. Playstudios was founded with the idea of doing something very unique and different from other game companies out there. This is something we built Playstudios upon, this loyalty program, for MyVegas, the first game.
In addition, the founders’ experience lies in the Vegas entertainment and leisure industry. That’s where their expertise is as well. Over time we’ve built a huge network of relationships with partners. It’s not that easy for just any game company to copy that and create the same thing. It’s many years of specific relationships and networking by the senior management and the founders, which they’ve brought with their experience into the company and cultivated over the years. This isn’t just a collectible feature that you can copy and put in your own game. It’s not that easy to build and scale.
The important thing, too, is that we struck an exclusive contract with the MGM properties, the largest gaming company, at the very beginning of this. We had an enormous head start in this gaming market. That has a lot to do with it as well. It’s taken a long time to perfect this. With MGM committed to the relationship, the expertise developed over many careers, and then the 10 years of building the platform–it’s hard to do. You have to have a broad distribution of properties to make it work, and MGM is the biggest one.
GamesBeat: Did Andrew convey how things changed as a public company? Did you get a sense of how things are different?
Sonnino: I just joined a month ago. I can tell you, after being at Playtika for many years prior, the impact on Playstudios–it’s hard to say how the day to day has changed yet. It does have a lot of processes and workloads associated with it, like any other company. You have to publish quarterly results, run earnings calls, and put a lot more rigor into the financial processes. It requires more people and more rigor and more time to attend to that. But I can’t tell you from a day to day perspective how that changed the atmosphere.
GamesBeat: I get the sense that this is a very mature market, in that I don’t really see startups anymore. You see them in real-money gambling, but that’s a separate category. Most social casino companies seem to have started more than a decade ago. Are there aspects of the market where it feels like there’s opportunity for change?
Sonnino: Playstudios launched MGM Slots Live about a year ago. We have a bingo game as well, depending on whether you consider that casino or not. That’s in the early stages of launch. But you’re right. In general, not only in casino, the biggest challenge in the gaming industry is launching games at scale. The top of the funnel approach is now yielding more limited results. It’s an incredible challenge, as you alluded. But it’s still exciting to see how gaming companies can overcome that in a creative manner.
Retention is now more important than ever. Retaining loyal users, existing players, and monetizing them. That’s why Playstudios right now has the industry’s most comprehensive and fully featured games based on our loyalty platform, the PlayAwards. It’s a big advantage. That’s what makes this opportunity for the company so much more exciting. It broadens the reach for us.
What gaming companies should do right now–one way to grow is to look at proven marketing tactics such as loyalty and put layers like that into games. Before, we had ways to grow like building in certain features, collectibles and meta-features as external layers to games. Now companies may have to look at marketing tactics even more broadly. Whether it’s new market penetration, both geographically and in general, or something like taking a proven track record of a loyalty mechanism and implementing it as a layer on top of the games.
GamesBeat: The Tetris license suggested you were looking for opportunities outside social casino as well. Are there other places you’re looking to expand?
Sonnino: As I mentioned before, the strategy is to grow in two dimensions. One is to grow our portfolio of games from a few games in casino to multiple games across multiple genres. We want to build a portfolio across genres. That’s where Tetris comes into play. But also, the other strategy is to grow in the rewards or the loyalty dimension, taking it from a program we have inside a game to a full platform or marketplace that we can offer through all our games. We want to bring all of the new games coming into our portfolio to that platform, as well as games outside of the Playstudios catalog. It’s loyalty as a service.
Tetris, specifically Tetris, is not only our way of addressing the challenges around UA. As I’m sure you know, this is one of the biggest challenges in the industry right now, given the new regulations around IDFA, increasing CPIs, and increasing competition. Buying a game with that kind of IP and such organically driven traffic is our way of addressing the UA challenges, but also our way to integrate our PlayAwards with high-value brands like Tetris or the Brainium suite. That gives us a huge network effect, a core loop that’s unique to us.
Players earn loyalty points. They redeem them for real-world benefits. It gives exposure to those brands. That exposure increases awareness, which the partners are happy to receive. We act as user acquisition for them. We get more partners, more brands, more rewards. More games want to be part of this marketplace. We get more players and the cycle continues. As the snowball grows, the attractiveness of the rewards program increases. That proposition becomes more and more well-positioned, which drives retention and monetization and so on. Through Tetris, our mission is to bring PlayAwards and rewarded play to every player around the world. Tetris is one option to do it. Extending this loyalty program to every game, obviously, is part of it.
GamesBeat: When it comes to UA, do you get a bit of help coming from the direction of brands like MGM?
Sonnino: Absolutely. We have great relationships and partnerships with companies like MGM. We have a lot of VIP events in their venues. That presents a lot of economies of scale. Doing a VIP event by yourself as one game company requires a lot of resources and money. We can do it much more economically and more frequently. That’s why our treatment of VIPs is so much more extensive and wider in terms of our reach and what we can offer them.
GamesBeat: What are you doing with blockchain games?
Sonnino: Playstudios is leveraging blockchain technology to expand the company’s leadership position in ‘rewarded play’ and deliver more engaging and rewarding experiences to players across its portfolio of games, further providing new capabilities to our rewards partners, and offer a more secure marketplace for both players and rewards partners to connect.
GamesBeat: Is there anything else you wanted to add today?
Sonnino: The gaming industry is such a fast-paced one. Gaming companies need to know when to stop and challenge what they’re doing. You can stay on automatic pilot and keep running at 100 miles an hour. What was most intriguing to me about Playstudios was the fact that they wanted to bring fresh thinking, fresh ways to look at things. They wanted to stop and re-evaluate. If you don’t reinvent yourself, you can fall out of the race. Constantly looking for fresh views and ways to improve–that’s how I came about.
I’m very excited to be part of this forward-thinking and innovative team, being able to bring my experience to the table with a company that has this unique IP and a unique platform. We’ll see how we can leverage it and grow in the future.
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