The two biggest challenges for any web app are user acquisition and user monetization. The game industry is no exception, and with the rise of freemium models, user acquisition is more competitive than ever, and monetization needs a bit more thinking than the traditional retail model.
French studio Mandala Games, based in Nantes, has partenered with Betable to try and grow the monetization of La Riviera. This slot machines game, with virtual currency up to this point, had been slowly fading despite a partnership with 6waves, at only 2k DAU on average over the past month. La Riviera had decent production values, and a publisher who is supposed to know their job (though 6waves recently settled a suit by Spry Fox over shady business practices). Mandala must have therefore gone through its share of soul-searching over what strategic avenues they would need to explore to see some real returns on La Riviera. Nadya Jahan, CEO of Mandala, confirmed that real-money gambling is indeed one of the major areas the studio is going to explore in the coming year.
Betable is a very interesting partner in this perspective, since they have already done much of the groudwork involved in obtaining real-money gambling licences, and provide Mandala with a backend and API handling all the transactions. The current limit is that games are instant-reward gaming, such as slot machines, as opposed to card games for example, in which there is a significant number of game transactions between the initial bet and the final outcome resolution.
Mandala currently awaits the validation by Apple of their first real-money La Riviera app. The app will be tested in the UK market first. Gambling games metrics for success differ widely from social games DAU / ARPU magnitudes. A gambling game with 20k active players would be quite profitable already, with claimed ARPUs of up to 300$/month, when at this number of users a social game would very likely be a financial failure.
One issue that will be very real however will be user acquisition and onboarding. Since players will be required to set up a betable account and pay some money in it before being able to play with real money, it is a very substantial hurdle. Betable encourages developers to develop hybrid virtual currency / real money apps, in which playing with real-money is an upsell for players already engaged with the game. Mandala however has chosen a different route, putting out a La Riviera app that will be real money only, and going for media and possibly gambling industry partnerships in order to drive users to its slots app. Partnerships aren’t an easy path either, but it’s one where risk can be better hedged, though it is often balanced by increased revenue sharing.
The direction taken by Mandala is representative of the heavy trend by game developers and other industry players (such as MulteeGaming) to look toward gambling and betting systems to increase revenue. Online gambling being a market over 35 billions USD, dwarfing the social gaming space, one can understand the pull online gambling has on game studios.
It has a huge ethics pitfall though, as gambling addiction is no laughing matter, especially with a casino on your phone. It will be up to the game studios to develop games that keep everyone’s long-term interest at heart, and go for fun rather than compulsion with their design, as well as enforce safeguards for their players not to lose too much. As long as what people spend is commensurate with the fun they have, I would argue an ethical balance can be reached. Beyond complying with gambling regulations on minimum returns on slot machines (~ 90%), Mandala is striving to deliver a fun experience, and that will hopefully allow them to reach a balance for their users. Either way, social online gambling is only getting started, and it is a space where we’re sure to see a whole lot more happening over the next couple years.