Ante up: Betable adds Frima Studio's 3OAK to real money gaming platform
One of the hottest companies in the online gaming space doesn’t create any of its own games. Rather, Betable offers a platform allowing other game developers to legally add real money gambling to their games and thereby increase the lifetime value of a single player by as much as 90,000 percent. Today the company has added another top development studio partner, announcing that it will power 3OAK, the real-money gaming division of Canadian developer Frima Studio.
The most interesting element of the partnership are not the casino games that will predictably come as a result, but rather the traditional social games, like its current titles Space Shooter Blitz and Ninja Turtle Tactics, which will add real-money play mechanics in the next eight to 10 weeks.
“We think that real money can be applied to any game that has an element of chance, but that is yet to be determined,” Betable founder and CEO Christopher Griffin says. He went on to say, “With their resources and experience, we’re confident that 3OAK has the vision and skill necessary to produce innovative, industry leading real-money titles.”
Betable launched its platform into private beta in July, for the first time offering developers a plug and play way to incorporate real-money gaming. The company offers its partners the “core gaming mechanics, or building blocks” necessary to configure gaming logic, according to Griffin. Developers create their own gameplay algorithms and all gambling activity takes place on Betable’s back-end that connects to third-party games via APIs. Developers can dictate whether players bet against the house or against each other.
For developers, the difference between real money gambling and “free to play” social games, which typically allow players to purchase chips, tokens, or gameplay accessories but not cash out “winnings,” is orders of magnitude more revenue potential.
The average social game player is worth approximately $1 per month to a game developer, and $2 over the lifetime of their game play. If Betable’s early results are sustainable, the average real money player will be worth $300 per month and $1,800 over their lifetime – an increase of 90,000 percent. Further, typical virtual-goods conversion rates for social games is 2 percent, while online casino games often see rates 40 percent or greater. The motivation for offering real money game play could not be more clear.
Real money gaming is not legal in the US – or in China, Turkey, and Holland. Many in the US expect this to change in the near future, but Betable isn’t really concerned one way or another. The more than 250 million US adults are merely a blip on the radar compared to the billions of worldwide online gamers and gamblers that developers have access to elsewhere, Griffin says.
The Betable platform can identify player location and determine whether to show real money gambling features, taking the risk out of the developers’ hands. Online gambling has other issues as well, not the least of which are addiction, fraud, and underage participation. Griffin says that Betable employs safeguards to protect against all three scenarios. How these work, and how effective they are, is unclear.
Betable is officially headquartered in London, where gambling laws allow the company to develop real money gaming software and operate a real money gaming platform – actions which require two separate licenses, and which Betable is the only company in the world to currently possess both. Legal headquarters notwithstanding, the bulk of the company’s workforce – 18 of 20 total individuals – is located in San Francisco. The team has doubled since the company launched its platform into beta in July.
The Frima / 3OAK partnership is just the latest in a series of them since July, with those previously announced including Big Fish Games, Digital Chocolate, SGN, Slingo, Mandala Games, and Murka.
Other developers could choose to apply for their own licenses, but the process takes a minimum of two years and offers no guarantees. Incorporating Betable into new and existing games is dramatically faster. Big Fish Games launched Big Fish Casino some 48 hours after signing up for Betable’s platform, Griffin says, something that would have typically taken nine to 24 months worth of development to accomplish independently – let alone the time to obtain the necessary licenses.
The startup recently scored a big win when it recruited away former Zynga VP business development Jonathan Flesher, shortly after the exec signed a partnership with the company’s competitor Bwin.party. Flesher will be charged with signing up developers, as well as advancing licensing efforts in new territories and markets.
Betable raised an undisclosed seed round in July 2012 from Greylock, CrunchFund, Yuri Milner’s Start Fund, Founders Fund, True Ventures, Path co-founder Dave Morin, Delicious’ Josh Schachter, StockTwits’ Howard Lindzon, former Wikia CEO Gil Penchina, and LOLApps former CEO Arjun Sethi. (Disclosure: Greylock’s Discovery Fund, CrunchFund, and Founders Fund’s Peter Thiel invested in PandoDaily.)
The company is actually a restart of a failed previous concept centered around a gambling stock exchange. While the idea failed, it allowed the company to obtain a UK gaming license and identify this new, more attractive opportunity. The company raised $3 million from Skype founders Niklas Zennström and Janus Friis’ Atomico venture fund for this early concept, but repaid this capital prior to pursuing the current venture.
“There’s going to come a time in the near future when you won’t be able to afford not to offer real money play,” Griffin say. The CEO predicts that the cost of acquiring each user (CPA) will exceed the lifetime value of non-real money players. In this scenario, non-real money developers are effectively priced out of the market. “The momentum in the real-money gaming space has greatly exceeded our expectations.”