It was recently reported that three casual gaming companies will move into the world of online gambling utilising the service, software, and online gambling licence from the company, Betable. Slingo Inc., Digital Chocolate Inc., and Murka Ltd. are all contenders within the more casual and social gambling arena. Betable, which launched this past summer, is a company that provides solutions to the mobile and social gaming arena to turn games into fully blown real money gambling machines. It just launched a real money casino last week with another strong brand in the social gaming arena, BigFish.
The three new additions to the Betable family follows last week’s announcement from the world’s largest Facebook games maker, Zynga, which will now partner with the online gambling juggernaut, bwin.party Digital Entertainment Plc to launch a real money poker offering as well. It all sounds exciting especially with US based companies entering the arena but it does have its issues and quite frankly, we feel that these companies do not have a clue in terms of what they are getting themselves into. In fact, they should fire their ‘strategists’ who are advising them on this new venture. Why you may ask? First, all of the companies above (and we really mean all of them) are going to be restricted to the UK marketplace only. Sure it is a $2 Billion online gambling marketplace but that pie is not only cut up into so many slices but also, the real money gambling apps giants are spending more marketing dollars (or shall we say pounds) to keep their slice than some of the companies above are even worth (ok, a bit of an exaggeration but you know what we mean). The last part of that reason is another issue in its own right: everyone is in the UK. Since the UK marketplace legalized online gambling in 2005, all online operators have moved in and been relentless in letting go. As a result, marketing costs continue to get driven up. If large operators such as Unibet failed to penetrate the market what makes these pushers of virtual goods think they can make it?
Finally, it is all about the audience. We recently published a graph showing the low attention span of the average casual, social, whatever gamer. They basically make people on Ritalin look focused. What that equated to is low time spent on these sites which equals low revenues per player. Of course we start there because – in the end of the day – these companies are allegedly great at recruiting such players. Guess what happens when they need to get serious online gamblers? You guessed it, they have to tap into channels where the big boy online gambling companies dominate. Are these companies really ready to do that (financially and experience-wise)? At least Betable is laughing all the way to the bank, right? Wrong! Most likely, the company’s revenue model consists of a setup fee plus revenue split (maybe with a flat monthly fee or at least a minimum revenue guarantee). If these casual wimpy game makers cannot make the cash flow come in then Betable is going to be out of pocket and in debt. Trust us, this is not the first ‘amazing’ company that has tried to enter the online gambling industry or mobile betting apps and there is nothing unique in their model.
So for the entire buzz generated, not much will stick. We figure that these companies will start disappearing within a year after they launch unless their home territory opens up, the United States. In fact, some of these companies are hoping to take learnings here that they can apply back in the US but what’s the point? As the US appears to be on a state by state regulatory path, the landscape is not only small, but set to continue to be dominated by the larger true online gambling operators. It looks like someone is going to need to buy these companies a virtual drink as they are headed into a real rough time.