Today’s Q&A is with Ya-Bing Chu, chief product officer at Betable, a real-money gaming (RMG) platform provider. Chu will be speaking at our Inside Social Apps conference next week on the Gambling Games: The Promise of Real Money panel. Go here to register.
Inside Mobile Apps: What do you think the impact will be if more real-money games were real-time, not asynchronous, on mobile?
Ya-Bing Chu, Betable chief product officer (pictured right): The potential excitement for multiplayer synchronous games is unparalleled. Look at the amazing online massively multiplayer online experiences like World of Warcraft or Xbox Live FPS games — they’re fully immersive, social, and always entertaining. I believe real-money games can offer similar entertainment value on top of the opportunity to win money. On mobile, there are technology, device, and session length constraints that mean that it’s still an emerging market by audience size. But it’s also an underserved market, which means that it’s a great place to lead the way. If you look at the casino industry, table games are the most popular today, and I believe much of it is due to their social and synchronous fun. And by the way, the structure of this question implies an either-or winner, but I believe it’s more of an expansion of the market to meet player demand. There’s no conflict.
IMA: What’s the viability of cash tournaments for skill-based games on mobile?
Chu: It’s been a viable category on the web for some time, and it has the advantage of being legal in many states in the U.S. The question is how big can it get, and what are the right games that can get a broad audience to keep playing. To date, it has been relatively niche in terms of revenue. I don’t know that mobile will have an advantage in the near-term over web in skill-based gaming market size.
IMA: You’ve said it yourself that real-money gaming won’t be legal in the U.S. for a long time. But should developers still prepare for when it is legal on a state or federal level?
Chu: “Developers” is a really broad set of people and companies. I think it’s certainly smart for all developers to be aware of the implications of RMG opening up in the U.S. For many, it won’t mean a change in their plans. But it’s always an exciting time when any new market or platform opens up. Being first is a risk, but can pay off massively. And you can’t be first and best without knowing the landscape.
IMA: You’ve also said there’s still a lot of room for innovation in the real-money gaming space. Could you elaborate on that?
Chu: There’s so much to talk about here, but I’ll limit it to two categories for now: platforms and game math. First, platforms: real-money games today are largely ports or visual representations of casino floor games. What if all game developers only took their inspiration from every day real-life games? While it’s not a bad thing to take inspiration only from proven game mechanics, that’s certainly not what people love about the video game industry. Today, players demand experiences that are highly tuned for the mobile and social platforms that companies like Apple, Google, and Facebook have created. Second, game math: Today’s popular real-money play games are only scratching the surface of “games of chance”. Slots, bingo, blackjack, roulette, craps, keno … they each represent a set of specific rules. Those combinations make up way less than 1 percent of the games that are possible (it’s infinite!).
IMA: The cost for user acquisition (UA) for real-money games tends to be higher compared to social-casual games. How can UA costs be reduced to a manageable level?
Chu: To me, it’s hard to lump all possible real-money games — even all casino games — together in just one category. UA costs vary a lot in the virtual goods space, and I think there’s opportunity in real-money games to lower marketing costs through better products. So maybe it’s a valid generalization today because there hasn’t been enough product differentiation.
IMA: I recently spoke with Phil Gordon of Jawfish Games, and he believes it doesn’t make sense to try and enter the crowded real-money gaming space in Europe. Thoughts?
Chu: Players and casinos have told us that they find huge entertainment value in the games that the Betable platform has and will enable. That’s our play. Obviously, Phil looked at the gaming market and saw an opportunity which he’s pursuing with Jawfish, and we wish him the best. They’re doing great things. The gaming market has the advantage of not having natural bounds of growth — it’s about imagination and entertainment, not material goods or finite resources.
IMA: Some of the revenue figures out there from massive social-casual games like Supercell’s titles and GungHo’s Puzzle & Dragons are showing that developers can make a lot of money without a real-money gaming component. So why should developers want to go in the real-money gaming direction?
Chu: A developer spends resources building a game, and needs to recoup those costs and hopefully make some money to develop the next set of content. They can monetize in a number of ways: paying up-front, virtual goods, and showing ads. Betable legally and securely enables developers to access one more method — real-money play. In doing so, we think the players will benefit by getting more entertainment for their money, so it’s a win-win situation for everyone. As a side note there’s an obvious survivorship bias in play in this question, as it’s more informative to look at the success rate of social and casual gaming companies over time as the market matures, vs. the outlier successes.