Gambling goes mainstream

Interesting to read how video game producer Sega recently secured an online gambling license with the Alderney Gambling Control Commission.

Is this a sign that gambling is becoming an increasingly mainstream activity? Or is it just that Sega are finding the video games market tough and are looking for new high growth markets? I suspect the latter.

Certainly, there are plenty of synergies between a video game producer and a producer of gambling games. And I'm sure the online gambling cash flows are tempting to senior management at Sega. However, there are also some crucial differences. There is a special skill in separating a punter from his cash in a game and I wonder if Sega can really compete in an already crowded marketplace? It will be interesting to see if Sega's experience with pachinko games and parlors can help them break into the market.

Down on the farm

Zynga have done it again. Farmville has 62,304,652 monthly active users on Facebook. Absolutely incredible. What is worse, I'm one of them. I started playing a few weeks ago and now I have to check it everyday to see how my pumkins and strawberries are getting on.

What is it about these games that make them so sticky and popular? Well I'll pick out a few characteristics that I think lead to success:

1. The game format is universally recognisable, e.g. everybody knows what a farm is and roughly what happens on a farm. This has several benefits:
a) Simplicity. Almost no learning curve
b) Common language. The vernacular is instantly recognisable
c) Universal appeal. Including, different ages and nationalities

2. Time limited features. The strawberries are ready to harvest every 4 hours. If you don't harvest they will wither and die!

3. Hoarding psychology. The more you play Farmville the bigger your farm gets. You acquire more stuff. This appeals to a deep seated psychological trait that I'm only starting to fully appreciate. As I have mentioned in previous posts, the psychology is very similar to gambling.

4. Social. You are playing with your friends. This has a number of knock-on benefits:
a) Competition. You want to out perform your neighbours
b) Fun. It is fun to compare notes and just to talk about the fact that you are playing this game (like I am now)

5. Facebook. Huge international audience. Quick and cheap distribution platform. Built in viral features mean limited marketing spend required.

So Zynga have a template that they can apply to any universal format. A template that is being continually refined to greater and greater effect. However, as people dissect and copy the template the question is whether they can maintain a dominant position? I also wonder how the evolving Facebook platform will impact Zynga going forward.

Personally, I think they should be able to dominate just about long enough to IPO. If I were them I'd be planning to do this soon, before the competition demonstrate that there is no magic behind creating these apps.

I think it would be great to learn from Zynga's template and apply it to online gambling. Facebook Ts&Cs preclude gambling. However, there may be new revenue models and game formats out there that are acceptable to Facebook. The Zynga template is one example.

Internet video falls short

I chose to experience Ukraine versus England match yesterday on the Bet365 website. Not that I was so desperate to watch the game Live but I didn't have anything else to do and I was interested in the experience of watching sport online.

I have to report that I was very disappointed by the whole experience. I decided to join Bet365 rather than pay the £11.99 to watch the game. As well as getting the game for free (I did have to fund the account to £10) I was also interested in how Bet365 presented the game.

Initially, when I arrived on the site to watch the game I could only see it in the Live betting window. I then managed to find the live streaming popup which provided a larger window. However, the site was obviously struggling with the traffic. The live streaming window failed to load and it took me 5-10 attempts to get a picture.

Although the picture quality was actually very good the window was about 4x4 inches and could not be extended. Something of a step down from the 42 inch widescreen I was watching at the same time.

Later in the 2nd half the streaming started to freeze. This became gradually worse and made the final 20 minutes difficult to follow.

Overall, live online streaming has a long way to go. I favour the 2 screen model of having the match on the TV and the betting on the laptop. Betting on a TV or video on a laptop just doesn't provide the same quality of experience.

I also lost my draw bet. Not free after all.

Gambling is just a game

Gambling has a lot of similarities with gaming. The similarities in the psychology is striking. Growing your gambling bank can be compared to moving up the levels in a game, or increasing your points. I see gambling products becoming increasingly game like. Having play for fun game that teaches people how to gamble is very useful from an acquisition and monetization perspective.

I think that the similarity has been recognised by operators like Zynga, who have begun to integrate gambling features into their popular games like Mafia Wars (see previous post). Bwin have also recently purchased a majority stake in United Games, an MMORPG games company.

People who play Mafia Wars, or MMORPG games, are predisposed to gamble because the gaming dynamics press the same psychological buttons. Owning such games provides operators with a huge audience of pre-screened, high quality prospects from which they can convert to their pay for real offerings.

From a product development perspective it means monitoring the gaming industry for developments and ideas that are relevant for gambling. A recent article by New Scientist about adaptive games is a good example. Developing an adaptive gambling website would have the same benefits. Matching the site features to the level of expertise of it's user to maximise relevancy and engagement.

Create your own gaming site

I came across Nonoba Gamerise this afternoon on Techcrunch. This is a great concept. The platform allows you to create your own customized game website. You choose your content from a wide range of flash games which are uploaded by a raft of developers.

The platform is a bit clunky. Whilst there is a wide range of games it isn't wide enough and there is a lack of quality. However, I completely see where they are heading. This my game site that I created in about 10 minutes (you can tell) http://playzerv.joyem.com/.

How long will it be until somebody creates the gambling version of this platform? The closest I can think of is the Orbis OpenBet platform. However, this is not open in the true sense of the word. Yes, it allows 3rd parties to create games for the platform. However, Orbis retain a lot of control over the games that leverage their platform.

The main issues I can think of are around the licensing aspects. Regulators like to know exactly what is going to appear on a gambling site. A truly open platform is in conflict to this need for control. Not an insurmountable issue, just more complicated.

Mobile is more than a channel

I spent Tuesday evening at the British Computer Society, attending the latest mashup event - Investment Opportunities in Digital. This was certainly one of the better entrepreneur events I have attended in London. Offering a good blend of expert insight and early stage entrepreneurial ventures.



One of the macro trends that was discussed was the importance of mobile. This struck a chord with my recent thinking around football fandom and betting. Responding to a comment from the audience Sean Seton-Rogers (PROfounders Capital) made a case for mobile as a channel extension of existing web based services. This view is supported by the current mobile betting applications which allow people to place bets on the move. A simple extension of the operators website.

However, mobile offers unique capabilities that move it way beyond being just a channel:

1. People carry their mobiles with them all the time.
2. Mobiles have cameras for taking photos and video.
3. Mobiles know where they are.
4. Mobiles can detect and transmit noise.
5. Mobiles (at least Iphones) know when and how hard they are being moved.

How can we leverage these capabilities to generate novel mobile based services? Watch any Premiership football game and you see 50,000+ passionate fans supporting their team at the game. Mobile offers the unique opportunity to recreate that intense fan experience online. Something that really doesn't exist. So what features could be created that leverage the unique capabilities?

a) Fans taking and uploading content Live from the game and sharing the content with fans who can't be at the game. Either on a website or with other mobile users.
b) Fans talking about the game on their mobiles.
c) Fans showing their passion through the movement of the handsets. Imagine an online chart (could be shown on the big screen at the game) displaying fan excitement levels based on cumulative movement of the handsets held by each group of fans.
d) Same as 'c' but based on cumulative noise coming through the handsets.

By creating a mobile fan application the mobile becomes much more than just another channel. Mobile becomes an entry point feeding a real-time fan experience. And how do we make money from this? Betting. Where there are fans their are selling opportunities for operators. Furthermore, tapping directly into fandom helps build a connection between the fans and the brand.

Want to know what this kind of mobile app might look like? Check out some of the startups playing with the concept like Fan Chatter.