eGaming Review

By Jake Pollard

MOBILE GAMING HAS BEEN under a watching brief for some time now. As much as its proponents have been promising a breakthrough, it has clearly yet to live up to expectations.

As yet, the operators have not seen mobile betting and gaming adding substantial revenues to their existing internet operations. Even the most enthusiastic of executives in egaming say that mobile gaming – after an initial rush of attention-grabbing headlines – has failed to shoot the lights out.

Which is not to say there hasn’t been progress. The more obvious downsides of mobile gaming, such as small screen size and poor connectivity have been addressed.

Moreover, it is worth asking whether the mobile was ever destined to actually overtake online gaming, or whether in actuality it was always going to be more of an add-on rather than the be-all and end-all. Informed sources point out that while they are not expecting the sector’s revenue to suddenly go into overdrive, they are happy to see their mobile offerings bring in incremental revenues.

The sheer variety of products and services being offered by the different providers,

operators and developers is also testament to the ingenuity of the sector, and highlights the options available to operators to develop additional revenue streams.

The fact that mobile gambling has not reached stratospheric profit levels has also brought a change of approach from the service providers. They have toned down their rhetoric, expressing confidence in the future of the sector while at the same time recognising the challenges it needs to overcome in order to grow.

Reflecting the increasing maturity of the egaming industry, for all the steady progress achieved in the past two years, the companies involved in mobile gambling talk realistically of the steps that need to be overcome to reach mass market levels of acceptance. Here, a number of those involved in the progress of mobile gaming, from providers to operators, discuss how much ground has been covered and what lies on the horizon:

Peter O’Donovan, head of developments at Paddy Power:

We have had a strong turnover on our WAP betting platform, which might be a bit surprising, but sports betting is simple and is about allowing people to access their bet as quickly as possible. Our stickier punters see the mobile as another channel into their accounts and would just as easily bet on the internet one day and use their phone the next: they see it as an interchangeable product and a new way to access their accounts. Handset issues are still there, and for an operator they are the most difficult to deal with because they are out of our control and can be onerous. The lack of clarity regarding the cost of connectivity is also an issue, but there is a generation growing up with mobile devices, and there will not be such a strong need to educate them in the future.

I think the appetite is there but maybe it is not necessarily what we would call a mobile appetite.

Customers are looking for ancillary routes to bet, of which the mobile is one. It is an additional channel to entry, and users do not see them as distinctly different product lines, as operators might do.

Warwick Bartlett, lead partner at Global Betting and Gaming Consultants:

The feedback I have had from operators has been one of disappointment but the expectation is that mobile gambling will be a source of growth in the future. Some of the advances  Slowly but surely, mobile gaming is taking hold; here operators and providers discuss its progress in the sector include the advent of 3G, better software that has come about through user experience and adapting to meet the challenge of a consumer on the move. But I sense a greater degree of caution from operators. It is almost as though they are waiting for someone to succeed, then copycat their success at a minimal downside risk.

The current 3G infrastructure has been slow to develop with hold-ups on planning consents and high costs due to expensive licences. This has been a major disappointment to gambling operators. With new handsets and software coming on stream in the next 18 months I would expect the remote gambling industry to be at the forefront of developing new gaming ideas. In many respects that has been the problem so far, the industry and the consumer is way ahead of mobile technology and the latter has some catching up to do.

Chris Sheffield, chief executive of reverse auction operator Million-2-1:

In my view there are a number of key features which will make mobile gambling successful.

One is reverse billed payments. The model is very effective at collecting funds from casual gamers but must be based on softer/low stake games (prize competitions or sweepstakes) that are able to incorporate the ‘operator take’ into the model.

Next is customer relationship management. A text message only allows 160 characters, there is quite a skill to getting the right message across and it is vital to get this area right.

Then there is marketing where clearly there is a higher acceptance and usage of mobile

gaming products by a younger demographic and the selection of the right marketing channels to get to these customers is paramount.

Innovation is important. No one could argue that current text betting applications are a quicker or better experience than simply calling a bookie’s call centre and placing your bet.

As a simple example, the ability to pick your weekly six lottery numbers via a text message is more convenient than any other channel and has a number of benefits such as not being able to lose your ticket. When the UK’s Gambling Act comes into force in September, it will not only ensure that less reputable operators will have to change their practice or face prosecution, it also provides a number of concessions around advertising.

‘How Lo’ (reverse auctions) provides the best example of our philosophy – with over one million customers in the UK alone this proves that with the right ideas, innovation and products, the UK market is already beginning to develop. And in countries such as China, where the mobile is king, it is clear that the potential for the right products will be huge.

Marcel Puyk, chief executive of mobile content aggregator Cellectivity:

The main advances that have been made in the mobile gambling sector can be summed up in three words: technology, technology, technology.

The lack of standards in mobile handsets still provides many difficulties and there is still an issue with data charges and browsing costs need to come down. Big online casino operators are only just getting involved and have produced some decent numbers. Personally I believe they will revitalise the market and cause it to grow faster. Big brand names certainly count in this environment. As far as network operators are concerned, I think they still believe in the service long term, but obviously a lot rests on the support they are able to provide and the users picking up mobile gaming as a service they want to use.

It is an incredibly exciting time for the market, its success is dependent on a variety of factors: legislation, EU regulations, the opening up of the Asian markets, and even potential changes in US law. The legislative environment is key and the technology is moving in the right way. If the desire for people to use these services is there, the potential is unlimited.

Neil Holroyd, head of mobile games and content at T-Mobile:

Our primary concern with gambling services is protecting our customers, and we look for partners who provide the best in terms of security protocols and actively encourage responsible gaming.

Casino games are extremely popular and in our partnerships with service providers we work together to make mobile gaming a fun yet affordable experience. We want to focus efforts here in the UK on allowing everyone to play games with bite-sized gaming propositions such as pay-per-play where the users only pay 50p each time they play. The introduction of connected gaming allows us to offer such experiences plus many more.

The usage of mobile gambling among active users is very strong and continues to improve.

A high percentage of registered players continually play regularly for short periods of times, highlighting what the industry knows as ‘snacking’. This is a nice healthy trend to see and shows that users are taking care with their money while having a good time.

Mobile betting will inevitably grow and this is likely to happen within the next two years.

Casino products will improve with the addition of novelty features and lottery and bingo will also be big contributors to its success.

Matti Zinder, chief executive of mobile casino games producer Spin3:

Although we do a lot of mobile gaming business in Asia, it is too early to say if the mobile is the ideal entry point into Asian markets. The vast majority of all gambling business in Asia is done on sports betting, and that is done on a number of devices.

However, the mobile device is different and has a significant advantage: there are many places in Asia that do not have internet connections, or have very poor ones. Wireless connectivity, on the other hand, tends to be ubiquitous and is of relatively high quality throughout the regions, which provides the mobile device with the advantage of being widely accessible.

I believe that there will be a significant growth in this sector in the next six to 12 months. There will be continued growth of mobile handset penetration into the region and this, coupled with the explosive growth of land-based gambling, will contribute to the overall growth of mobile gambling in Asia.

Charles Palmer, sales director of mobile sports betting software firm Mfuse:

Sports betting is by far the most popular for mobile gambling for our sportsbook clients, it is their bread and butter and we want to translate that onto the mobile platform. We are bundling content and live data into our products to enable the punter to bet more easily, so it becomes a more holistic experience rather than just betting.

Many companies tried to get into mobile gaming but did not realise that games had to be deployed across seven or eight networks and over 1,000 handsets, in multiple languages.

But the fact that it didn’t take off massively at first gave the sector the chance to grow at a steadier pace and in a more organic way.

The overall awareness levels of the sector and the fact that people know they can do all these things on their mobiles is starting to snowball.

The user experience of getting the application, connecting and then placing a bet, which is quite involved, has really advanced.

We have invested heavily in those areas and conversion rates and connectivity are much higher than previously.

And now that it is starting to show good signs, bookmakers are promoting their mobile products, building them up into stand-alone channels rather than just an add-on of the internet offering.

Many operators are now employing a head of mobile, which makes it a lot easier to focus on the sector and move it forward. 

Posted: 2007-05-10