I was just asked to be a part big debate on whether or not the social casino industry is headed towards a small number of very large firms. My stance is as follows…
In social casino, similar to growing new products or pivot existing ones into the app market, it has gotten much harder to compete.
The reason I believe we are seeing the social casino industry headed towards a small number of very large firms, and/or lead by a more experienced firms is that social casino trends are dependant and driven by technology trends of the big players which include Facebook, Apple, Google, etc.
On the biggest platforms where we see social casino exist, we are seeing increases in competition on all paid channels, smarter analytics tooling, and tighter marketing regulations (less virality/spam, more personalization/customization).
These trends all point towards a harder entry for smaller firms to gain enough exposure to build a player base because it is too expensive to compete, maintain customers and/or make profitable.
While social casino appears on the outside to mirror a real money online casino, it could not be further from being the same beast on the business level. While casino players are playing almost identical game mechanics and rules (ie. slots, poker), and sometimes even the same IP (brand titles), real money online gambling offers players the motivation of winning real money and cashing out while most social casino products offer very little tangible value. The motivational value of a player in social casino lies strictly in the entertainment domain, and that comes with exclusive overhead of its own. Factoring the extra costs of social casino, low profit margins (being reliant on big player bases to make financial sense), and the ever growing friction in platform trends, the majority future of social casino will eventually be controlled by a small number of larger more experience/established firms.
While the social casino landscape has gotten much harder for smaller/startups to enter, it is not impossible. IE., New platform could emerge, technology trends could change making way for new social casino possibilities and of course there is always a place for big ideas with strong and unique selling proposition and/or innovations that have strong partnerships with an existing client base.
Also keep in mind that there are other business motivations for having a social casino that is not just for profitability purposes. Dependant on goals, some reasons for why a business may want to build a social casino include building a player list, market research, casino customer loyalty program, self-sustaining marketing arm, player engagement, brand building, brand extension etc.