Social Casino 2014

« How’s Things? »

RAF KEUSTERMANSCo-Founder, CEO Plumbee

Board Director International Social Games Association

Board Director Bonza Gaming (JV Unibet/Plumbee)

Independent Social Gaming Consultant 2010-2011

Global Marketing Director Playfish (EA) 2009-2010

Marketing Director EMEA Pogo.com (EA) 2008-2009

Head of Marketing Western Europe Unibet.com 2005-2008

Strategic Planner at BBDO, Grey and Publicis 1998-2005

www.plumbee.comraf@plumbee.com@raf_keustermans

• °July 2011, London – founded by 3 ex EA/Playfish execs.

• 55+ staff today

• Top-10 social casino company in revenue and audience

• RMG JV with Unibet – Bonza Gaming (on Fb and Mobile)

• Raised $16.8M - last round ($14M) Dec-13 led by Endemol

• Key products (free-to-play): – Mirrorball Slots (Fb and mobile)

– Mirrorball Bingo, soft-launched on Fb April-14, includes Endemolbrands (Deal or No Deal bingo room)

Social Casino Status 2014• Industry growing up fast, becoming mature

– $2B-$2.5B estimated revenue in 2013

– 60% market share owned by Top-5 (Caesars, IGT, Zynga, GSN, Big Fish)• Caesars Interactive social games revenue will hit $500M in 2014!

– On-going consolidation, M&A

– Facebook canvas hit plateau, huge growth mobile/tablets

– Production and marketing budgets going up • $2M+ production budgets, $10M+ marketing budgets

• No longer ‘indie’ territory

– Tough environment for newcomers…

Social Casino M&A

• 2009: Gamesys (JackpotJoy) ‘acq-hired’ IWI (undisc)• 2010: 888.com buys Mytopia for $48M• 2010: Fremantle buys Ludia (undisc)• 2011: Caesars buys Playtika (Slotomania) for $100M+• 2012: IGT buys Double Down Interactive for $500M• 2012: RockYou buys Ryzing (bingo, undisc)• 2012: Aristocrat buys Product Madness (undisc)• 2012: Novomatics buys Cervo Media (undisc)• 2012: WMS buys Phantom EFX for $20M• 2013: Caesars buys Buffalo Studios for $90M• 2013: Caesars buys EA Montréal studio (WSOP, undisc)• 2014: Caesars buys Pacific Interactive (House of Fun) for $96M• 2014: GSN buys Bash Gaming (Bingo Bash) for $160M• 2014: Bally buys DragonPlay for $100M

$1.2B+ in the last 4 years

M&A drivers2 different corporate strategies

• Social casino as marketing tool for RMG business– Brand awareness, customer acquisition

• Use a (branded) social casino game as a brand awareness driver, expand in new markets, reach new audiences.

• Cheeky Bingo, Pokerstars Play

– Customer loyalty, CRM• Use a social casino game to (re)connect with existing casino customers. Link with

loyalty system, drive footfall to the casino/resort.

• E.g. MGM with MyVegas

• Social casino as stand-alone growth engine, revenue driver– Standalone business, social casino as a new division, a revenue

generator, new growth area.

– Not integrated with RMG business at all.

– Caesars, IGT, WMS strategy

The March To Mobile

• No more audience growth on web.

• Mobile > Web audience since mid-13.

Revenue follows audience

• Facebook (canvas) game revenue 2013: $4B

– Expected to grow to $5B in 2014

– Growth driven by increased monetization

• Mobile game revenue 2013 (all platforms): $15B+

– Expected to grow to $20B+ in 2014

– Growth driven by audience growth and improved monetization, retention

The advent of the Mega Mobile Game

• $1B+ annual revenue on Mobile/Tablets (all platforms - iOS, Android, Amazon, Microsoft)

– Puzzles & Dragons (GungHo) - $6-7M/day, mostly Asia

– Candy Crush (King) - $4M/day

– Clash of Clans (Supercell) - $4M/day

• $100M+ annual revenue on Mobile/Tablets

– Game of War (MachineZone) - $2M/day

– Hay Day (Supercell) - $1.5M/day

– Farm Heroes Saga (King) - $1M/day

– Boom Beach (Supercell) - $800K/day

– Big Fish Casino (Big Fish Games) - $300K/day

• For comparison: biggest Facebook (canvas) games

– DoubleDown Casino (IGT) - $500K/day

– Zynga Poker (Zynga) - $400K/day

– FarmVille 2 (Zynga) - $350K/day

– Slotomania (Caesars Interactive/Playtika) - $250K/day

RMG vs Social Casino

• Very different products, very different audiences!– Gambling thrill vs me-time/entertainment

– Social players optimize their gameplay for time (not cash)

– Key driver for spending real money = buy more time in the game

• Will social casino die when US allows RMG? Not likely.– Lots of players from UK, Italy, Sweden, … play social casino.

– No drop in social players from Nevada, New Jersey since markets opened.

In some markets, Social > RMG

RMG on Facebook

• UK only so far.

• 1st app launched Aug-12: Gamesys (Slots Friendzy, later Bingo Friendzy was added)

• After that:

– Dec-12: 888 with Magic888 (casino) and Bingo Appy

– Feb-13: Bonza Gaming with Bonza Slots

– July-13: PaddyPower social RMG betting app soft-launched (full commercial launch May-14)

– Jan-14: Zynga Poker RMG soft-launch (still in Beta)

Some negative press initially (Daily Mail) in 2012…

But once it became clear that Facebook RMG apps where not targeting or attracting under-age players, and where ran by responsible, professional operators, tabloids calmed down.

• Real-money social gaming startup, °Sept 2012

• 50/50 joint-venture Plumbee and Unibet

– Investment $7M to date

• UK-only for now, AGCC-licensed.

• Stand-alone business with its own offices in London and Guernsey (Channel Islands)

• Team of 16 today: engineers, product, marketing, finance, analytics, customer support…

• Products:– Bonza Slots launched February 2013 on Facebook (canvas) - 3rd RMG

app on Facebook, after Gamesys and 888

– Bonza Casino launched Dec-13 on Facebook (canvas) – slots + table games, more ‘premium’ positioning (vs more playful/casual for Slots)

– Bonza Slots soft-launched on iOS March 2014, launching on Android soon

– Shared wallet/account between all apps on FB/Mobile

• Since launch: 200K+ app installs, 50K registrations, 20K fans/likes

• #1 RMG app on Facebook in audience and revenue

iPad and iPhone

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Key learnings so far

• It’s hard! Not just porting existing product to FB.– Success comes with months of tinkering, optimizing, A/B testing, …– ‘Proper product development’ – not cheap + requires top talent

(engineers, UI/UX, product manager, analytics…)

• RMG ecosystem on FB still quite small, some trust/branding issues.• Users are really ‘a blend’ between social gamers and RMG users,

which needs to be reflected in product, tone of voice, look & feel.– More casual audience, ‘entertainment-seekers’– Bonza only got real traction once it introduced ‘fun stuff’ for non-

paying users (Tournaments)

• Retention is stronger compared to ‘portal’ RMG.– More, better communication channels: real-time notifications, better

targeting (more data)

• Monetization (ARPU and LTV) in line with casino vertical of multi-product operators.

Funnel ‘Traditional online RMG’

Views, clicks: no engagement, no fun (maybe some ‘pointless’ free-play)

Registered users: no engagement, no fun, some ‘pointless’ free-play. Some up-sell.

Paying users: full access to all products, games

Don’t care

Don’t care/upsell

$$!

Funnel Social Casino

Views, clicks: full access to product, try to engage from 1st

minute (e.g. tutorial) + drivers of viral growth.

Engaged users: full access to product, lots of free content and features + viral growth.

Paying users: full access to all products, games + extra boosters/content/features, more time/currency

Happy players + viral growth!

Happy players + viral!

$$!

Funnel Social RMG

Views, clicks: offer some fun, some access to product, games: e.g. free-play (trial) + specific features/content for free users (Free Tournaments!)Key driver for viral/organic growth!

Registered users: as above + up-sell to real-money product + key driver for viral/organic growth!

Paying users: full access to all products, games

Showcase fun, games + viral growth

Happy players + upsell + viral growth

$$!

Bonza Bonus Wheel

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• Adds value to each Tournament play

• Themes to go with each wheel

40%+ of Bonza Slots installs are non-paid!

@raf_keustermans

www.plumbee.com