Eastern Promises

The social casino phenomenon is undeniably global, with millions of players across all continents, and it’s growing exponentially. Indeed, by some estimates, the global revenue for social casino games is approaching US$4billion a year and growing – worldwide – at a rate of over 7%.

And yet, these numbers hide the fact that potential has not yet been fulfilled. That same report hints at billions being left on the table: “While [JP Morgan’s survey] estimated US$1.7 billion to US$1.8 billion of the revenue – or close to half in the range – was generated in North America, it said it believed international expansion could provide the next leg of growth as smartphone penetration increases.”

Whilst we aren’t going to give anyone any investment advice, we can say mobile social casino games especially have potential in Asia. Rising incomes combined with a burgeoning new market for videogames, a preference for smartphones over consoles and an appetite for card games has created a perfect storm of market demand and opportunity.

Here are a few things to consider for games companies – especially mobile and social casino ones – broaching this new market…

Smartphones and 4G

One tantalizing statistic for those hoping to break the Asian markets is smartphone ownership.

Across many fields of entertainment and tech, “leapfrogging” is a phenomenon. Essentially, it means skipping over an existing trend and technology. In gaming, the PC and console domination of Japan, Korea, Europe and North America has passed by much of Asia.

Games consoles were unavailable in some Asian countries and outright banned in some others (such as China) for much of the industry’s formative years.

China’s mobile market dwarves its console and PC audience, and emerging markets like India, Indonesia, Vietnam, Thailand and more have followed a similar path – bypassing console and PC gaming and going straight to mobile.

As incomes have risen in recent years across the region, so has ownership of luxury electronic devices. Statista reports that approximately 378million smartphones were sold in the Asia Pacific region in 2017, a jump of over 100million units on 2016. It’s an exponential climb, as in 2013 the number was 165million.

eMarketer estimates that “The Asia-Pacific’s region will be home to 1.33 billion smartphone users by the end of [2017], and that their ranks will swell to 1.81 billion by 2021.”

What’s more, GSMA Intelligence claims that the region will hit an important mobile internet milestone in 2018, as 41% of mobile connections in the region will be on 4G networks, with more 4G connections than either 3G (23%) or 2G (36%) for the first time. Wifi is rolling out across the region too, along with innovative payment methods (crucial for in-game transactions). For example, in Indonesia where credit card ownership is relatively low, in-game payments are sourced from pre-pay deals or subscriptions.

Social networks, games developers and social casino developers are only beginning to see the bubbling potential of these hundreds of millions of 4G and wifi-connected smartphones.

Disposable Income and Social Media

These numbers reflect what we’ve seen elsewhere: the rise of disposable income across the region. Indeed, within a generation, Asia has essentially transformed from a low-income region to a middle-income one.

There is now a generation with significantly more disposable income than the one before, one that’s buying smartphones in their near-billions, consuming data via 4G and – crucially – in regions where Western social media hasn’t taken hold to the same extent.

While Western players often value game-play and graphics, many Asian markets also enjoy the social aspect: Facebook is restricted or unavailable in many countries including China, Bangladesh and Malaysia, leading to communications via other social networks and with social casino gaming.

Why Poker?

From a global point of view, poker has immense potential. Coupled with the relative prosperity in Asia, poker has seen an upswing in revenue and profile, as regions like Macau see booming business: Its real money gaming revenue is expected to be up 19% year on year for 2017, an estimated US$25billion.

Macau’s profile has risen across Asia, as it hosts a growing number of international poker tournaments. Meanwhile, high-profile professional Chinese poker players like Dong Kim and Xuan Liu bring the game’s profile to a younger audience.

This recent rise in poker follows decades of promotion from Western culture and is coupled with the rise of Las Vegas itself as an international brand. Beyond the “Ocean’s” film series and “Rounders”, the Nevada gambling mecca has been the focal point of countless films across all genres, from “Swingers” to the “Hangover” right up to the recent Blade Runner sequel and Girls Trip.

Beyond the cool factor, poker suits mobile customers for a number of reasons; a game can be as short as a dealt hand (less than a minute) or can run for hours and even days; it’s accessible to newcomers, but has a depth that allows for improvement over a lifetime; it’s sociable (players can communicate with words and with how they play); and the clear formatting of a hand of cards suits a mobile device perfectly.

Card Games in Big Deals

The international appetite for mobile card games and social casino titles is reflected in the deals that were taking place across the gaming world in 2016 and 2017. Eight-figure and nine-figure deals between existing gaming giants and mobile card and social casino games companies are becoming more and more commonplace.

Just recently Australian slot machine company Aristocrat bought social gaming company Big Fish for US$980million. Zynga bought Peak Games’ mobile cards studio for US$100million. Penn National (which owns racetracks) bought Rocket Games (a US social casino studio) for US$60million.

On the Asian casino games front, Playtika (formally owned by Caesars) was bought by a Chinese consortium in 2016 for a whopping US$4.4billion, bringing their portfolio of games to a whole new audience.

Another interesting thing to note is that as a whole, the social casino genre officially doesn’t exist in China, but there is a clear distinction between social casino and social poker, which is derived by the fact that casino games such as slots are gambling (decided by chance), while poker is a skill-based strategy game. This is an important distinction.

Meanwhile, in other parts of the region, Korean social casino company DoubleDown was acquired by DoubleU (also Korean) for US$825million.

Different Region, Same Goal

Ultimately, regardless of region, developers want the same thing; a growing userbase. And players (whether they value game-play or social networking) value the same things regardless of location or cultural differences; an engaging UX that’s good value.

Once you iron out the game-play and marketing, there are other issues to address, from local infrastructure knowledge, to legislation and beyond.

The journey to prosperity is well under way in China and the other Asian Markets. Western developers are rushing to make the most of this impressive growth but the industry is crowded, and it will take time, discipline and a keen understanding of the varied Asian Markets to truly scale The Wall.