Future SkillsOnline poker and casino certainly take the spotlight—and a majority of the winnings and profits. But on the periphery is the world of skill games. They might not be the main attraction, but GameAccount CEO Kevin Dale asks if they’re happy there.
The skill-gaming sector is one that has promised much for a long time but, at least when compared to poker, games such as backgammon and gin rummy have not quite realised their potential. Yet, with leading sportsbooks such as William Hill and Gala Coral recently heralding skill games as one of their few growth areas, has the tide finally turned? What has brought this about and, if hype is becoming reality, do they have the potential to be the proverbial ‘next poker’?
Obstacles: Why has skill gaming grown slower than poker?
In 2006, Party Gaming Plc launched PartyGammon.com to great fanfare with the world’s first $1million backgammon tournament, held in the Bahamas. A great event in its own right. But when you break it down, the number of users competing simultaneously in cash games for real money averages around 300. Despite a significant marketing spend, the user base remains tiny compared to the thousands who regularly log on to take part in real-money poker games. So why have backgammon and other skill games remained a niche pursuit?
One of the biggest issues holding back their growth was the ability to generate meaningful rake revenues, or more specifically, rake per player hour. In poker, every hand is raked and hands are played through quite rapidly. In contrast, one game of backgammon can take anywhere between three and 20 minutes. On sites which offer multiple betting offerings (sportsbook, poker, casino) customers will find less generous promotions on those games that generate lower revenues for the host.
Not only do some skill games take too long to play out but some providers have also produced games which are inherently ‘too skilful’. When new players first join they want to have at least some chance of beating their opponent. With games such as online pool, the pros will beat the newbies 10-0, which leads to a very brief and discouraging skill-gaming experience for most.
Finally, there are certain skill games that have suffered from an invasion of the ‘bots’, or players assisted by artificial intelligence or clever programmes. Bots are extremely effective in any game where developers can take advantage of a PC’s processing power to produce unfair advantage over human competitors. Bejewelled-type games, word games and Sudoku are highly susceptible, for example. Bots do also exist in poker networks but still struggle to beat the pros in no-limit hold ‘em games. In backgammon, the networks need to invest resources in weeding out bot players in order that users can be reassured that they are pitting their wits against other human beings.
Progress: So why are the bookies getting on board?
In the last couple of years, the skill gaming sector has identified and succeeded in resolving many of these issues. GameAccount, for example, recorded 20,000 active real-money players and stakes in excess of £100 million in the last quarter of 2008 (£10 million in the last quarter of 2007). William Hill has recently reported a significant increase in revenues and now estimates skill games to be two percent of the total market, compared to five percent for bingo and 20 percent for poker. And many more companies are taking note—Bwin, Gala Coral and Blue Square have all recently gone live with skill-gaming offerings of their own.
Product quality is one reason for the surge in interest and improved revenues. Operators and software providers have learned the hard way of what does and doesn’t work. Dominoes, for example, is a fast game based on a ‘poker-like’ combination of skill and chance. It’s also not an easy target for bots. Moreover, it’s familiar across the globe and has some history as a popular betting game, albeit not to the level of poker.
Good skill-game offerings also allow players the option of punting on side games while waiting for tournaments to start. This improves upon the skill/chance cross-sell, generates more revenues and leads to more and better promotions.
Opportunities: Where next?
Now that the foundations have been laid, how big can skill gaming grow? There are still many gaming operators who have yet to add skill games to their burgeoning portfolio of products. As liquidity increases with skill games, and the more operators that offer such games, the more players will sign up. Rake revenues then grow further such that larger tournaments can be offered—which, in turn, increase the propensity for players to sign up.
In a bid to broaden the appeal, more localised games will also be produced. Dominoes, backgammon and gin rummy are played universally, but there are a great many games that are only played in certain countries or regions. An Italian may be tempted into an online Sette e Mezzo tournament, while a German would much prefer to play Skat. Development of culturally targeted games, which are relatively unknown in the UK, is something that GameAccount has embraced. One in particular is Briscola for the Italian market. Regardless of highly targeted markets, provision of localised games has legs—and a marathon to run.
It may be a little premature to talk of the next generation of gambler, but, despite its relative youth, the gaming industry is no different to any other sector in its need to keep pace with the times. Marketers and developers will need to cater to consumers with shorter attention spans as well as those used to more elaborate multimedia experiences. LeCroupier.com’s avatar-based 3D Casino is making inroads into enriching the online casino experience while PKR, despite launching in a maturing market, has made good progress with their 3D poker engine. Skill-gaming developers will surely need to follow in providing more entertaining and advanced games, albeit within the constraints of non-download technology, to attract the Playstation generation.
The skill games sector has been evolving rather than maturing in recent years. Having overcome many of the obstacles, the sector has finally hit on a real and significant untapped revenue stream. Backgammon or gin rummy on its own is unlikely to ever match poker’s popularity, but combinations of these and similar skill/chance products can form an essential ingredient in a gaming operator’s portfolio. As sportsbooks and casino operators evolve into gaming entertainment portals, these games help to expand the overall market, improve customer retention and choice, and all the while generate meaningful revenues per player hour.