Much has been written about the opportunity for Zynga to accelerate its revenue by moving into real money gambling, but there is another contender coming from the social/casual game space who probably has a better chance of success. Last week, Big Fish announced it was teaming with Betable to bring a real-money, social mobile casino game (Card Ace: Casino) to the UK (and other markets where it is not prohibited). The announcement received less attention than the news that Zynga has spent about $75,000 on lobbying to legalize online gambling (keep in mind that you can’t even buy one Congressman for $75,000; that amount is virtually nothing in the world inside the Beltway).
If I were a betting man (sorry, couldn’t keep myself from this pun), I would put my money on Big Fish winning the battle to merge social gaming and gambling. Before pivoting to the social game space, my company was focused on the casual download business, which is dominated by Big Fish. Our company had a very deep relationship with Big Fish, as it generated the majority of our revenue and helped finance some of our projects. From my experience in that space and subsequent experience with social game companies, I see a path where Big Fish ends up winning the race to dominate social online real-money gambling. I’ll explain why.
First, Big Fish is incredible at understanding and satisfying its customers. When most companies merely pay lip service to customer satisfaction, Big Fish is truly focused on giving its players what they want. Its product selection strategy always comes down to finding the products its customers would play. The company understands what its customers want and is not only focused on publishing games that meet these needs but also directing its development companies to create the games it knows its customers will enjoy.
Big Fish probably has the best game services (e.g., customer support and community management) that I have seen in the game industry. It extends a lot of resources to moderating and building a huge online community in which players often discuss non-game topics. When community members do talk about games, Big Fish is quick to fix any problems that come up from the conversation and convey consumer preferences to its development partners. Moreover, people get very quick responses to technical or game problems. Contrast this strategy with Zynga or some other big social game companies, and “contrast” is the key word. Many support tickets are ignored and concerns that come up in forums are often left to fester rather than being dealt with. If you have read this blog for a while, you know I feel the root of success is satisfying your customers. Big Fish’s culture is already focused on this goal, something I am sure will transfer well into the online gambling space (just look at how casinos treat their customers).
Second, Big Fish is very experienced and effective at user acquisition. It has been very effective at using key words and other search engine marketing techniques to not only acquire customers but also acquire its competitors’ customers. Social game companies are brilliant at Facebook marketing but have stumbled with other marketing techniques (see their efforts to drive users to their destination portals).
Third, Big Fish understands how to use pricing strategy as a competitive weapon. One of the key reasons that Big Fish came to dominate the casual download market (and when it started, it had bigger and stronger competitors) was a proactive pricing strategy that kept its customers happy (see point one) and took competitors a long time to react to. In the social game space, pricing is focused primarily on revenue optimization and not as a competitive tool (very few people switch from Hidden Chronicles to Gardens of Time because of differences in price level). The online gambling market is likely to experience pricing strategy driving competitive advantage, as real-money gamblers are very cognizant of payout and other pricing issues.
Finally, Big Fish has shown it can compete with the big boys. Given the revenue potential, real-money gambling will be dominated by deep-pocketed companies (Caesars, IGT, Zynga and more have already shown they will be in the space). Big Fish has a history of meeting and winning such challenges. I remember having dinner with a senior member of its management team the day after Amazon announced it acquired Reflexive Entertainment and was going to try to dominate the casual game space. Almost everyone, myself included, felt it was only a matter of time until Amazon became the “big fish” of casual gaming. At dinner, when I brought up the topic, I was told that since “Big Fish launched, we were told that Yahoo [through Yahoo Games] was going to dominate the business, that Microsoft [Microsoft Casual Games] was going to dominate the business, EA [Pogo] was going to dominate the business, Real [RealArcade and GameHouse] was going to dominate the business. We beat all of them. So why should I worry about Amazon now.” I thought it was an arrogant comment that would come back to bite Big Fish. I was wrong.
All of this is not to say “fold your tent, Big Fish will win the online real money gambling market,” but it shows it has as clear or clearer path to success than any other company, including Zynga. Big Fish has failed famously in the free-to-play space, its offerings proved to be late to the party and not embracing completely the benefits of the model. Its cloud gaming initiative was widely criticized at Casual Connect. But its corporate strengths dovetail well with what is needed to succeed in real-money online gambling and makes them a favorite for success in the space.
The Business of Social Games and Casino 