The social gaming debate
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Transcript of The social gaming debate
Compliance and Technology
30 | iGamingBusiness North America | Issue 03 | October 2012
iGaming Business North America examines the social gaming space with Jez San OBE, President and Founder of PKR and Andrew Hughes, Co-Founder and CEO of AbZorba Games.
Do social games providers have a special obligation to public welfare if they provide casino-style games?Jez San (JS): Yes. When I was in the
computer games world, we spent all of our
time making our games as addictive as
possible because it meant they got played
for longer and provided more hours of
entertainment. The key is that these games
were sold once to the buyer (at retail) so the
more entertainment hours they provided,
the better value they were to the consumer
(all leisure activity can be valued that way).
Now, in the real money “gaming” world, we
go out of our way to avoid making our
games addictive – the word is “banned”
from our vocabulary. Gambling is already
inherently addictive to a select few people
without us tweaking the games to make
them even more so.
But, there’s this new game in town:
“freemium social games.” These games are,
yet again, designed to be as addictive as
possible, but the huge difference this time
is the very business model of the games’
creators is to increase the conversion rate
and make them immensely addictive –
and the “gotcha” is that these games are
designed to extract a continuing revenue
source from the players as they play.
Although it is possible to play them for
free, you are highly incentivized to pay
extra to or get a little further, or
progress a little faster.
THESOCIAL
GAMINGDEBATE
Compliance and Technology
iGamingBusiness North America | Issue 03 | October 2012 | 31
“It is imperative that we as an industry demonstrate a desire to self-regulate, have a coherent and cohesive voice saying ‘we will abide by good common goals for the protection of those who may be vulnerable, wherever they are needed’.”
And, they rely on a smaller proportion of
players paying a commensurately higher
percentage of revenue.
Andrew Hughes (AH): No. I cannot subscribe
to the notion that casino themed titles should
be viewed or treated any different from other
social games. The freemium model, the model
of choice for social games and gamers, does
seek to enhance game play through micro
sales, and why not? But the question, in effect,
proposes a two-tiered market regulation: self
or otherwise, which is indefensible.
Since a small percentage of social gamers provide a disproportionate amount of revenue for social games, does this indicate that this activity has the potential for abuse and that the games are “high-risk”? If so, then should other non-gambling games that display the same user behavior also be considered “high-risk” games?JS: Yes. There should be protections in place
to prevent people from overspending when
they are addicted and have lost control of their
cash. Players should be allowed to specify in
advance their maximum budget (per week or
per month) and the game should not allow
them to overspend. Ideally, it would be a
unifi ed spend limit for your entire collection of
social games. That way, people will get to enjoy
the games without the danger of getting into
debt or spending what they can’t afford. We
have rules and regulations in the “real money”
gaming world. We avoid problem gambling
and positively discriminate against it to curtail
the activities of those we have determined
to have a problem. We don’t want anyone
gambling with money they can’t afford.
Yet, in the “freemium social games” arena, it
seems the business model is to fi nd whales
and exploit them, but without fi rst checking if
they are rich whales or poor ones who haven’t
prioritized their cash adequately. I worry
about the single mother at home who just
wants a distraction and is playing a so-called
“free” game to while away the time… she is in
danger of an awful lot of trouble if she gets
addicted and fi nds she has overspent and
cant pay the rent or feed the kids. Why risk
this situation occurring? Why not just let all
users specify a spending limit so they don’t run
into fi nancial diffi culty? It wouldn’t be such a
problem if the games weren’t designed to be
addictive, but they are. The goal of all social
games creators is to make their games as
addictive as possible. And they can get away
with it because it doesn’t fall under existing
forms of gambling or consumer protection
rules. A little like “legal highs” that are one
step ahead of the law, or TV “quiz” phone-ins
that have impossible answers to questions to
extract maximum phone call revenue. These
guys all fall between the cracks in existing
consumer protection.
AH: Again no. I simply do not agree with the
assumptions that the freemium model has the
“potential for abuse” or poses a “high-risk” (I
assume of abuse here), at least no more than
many other industries, sectors, models, etc.
I would like to see empirical evidence that
widespread abuse is taking place. I do agree,
however, that we as an entertainment sector
can and should do more to set out codes of
practice that are just good business sense.
The more we are seen to adhere to a code the
less likely negative stories and sentiment can
fl ourish, true or false.
Should more stringent age limiting be imposed on social games that are high-revenue generative?JS: Yes. People are playing these games
thinking they’re benign and, in most cases,
initially thinking they’re free. Then, before they
know it, they get addicted and are making a
deposit they didn’t expect – with higher and
higher spend required to keep getting their
game “kicks.” There needs to be protection for
the vulnerable, just like in any other sector that
has a chance for people to lose a lot of money
without really planning to.
AH: I can see this working in most cases,
managed through the gateways such as
iTunes and Google Play. But, where should
that line be drawn? Age and revenue
potential? I don’t , however, consider age
itself to be a barrier to foolish spending; take
drinking as a good example. The vulnerable
are not necessarily protected at all by
prohibitions. Again, I point to responsible
codes and self regulation.
Is there a need for an external regulator for social casino-style games providers? If so, should the government or platform providers issue the guidelines for the regulation of social games?JS: It doesn’t hurt for there to be guidelines or
safety requirements to protect the vulnerable,
just like in other industries (not least consumer
credit and gambling). But I’m not advocating
regulation; I’m just advocating a responsible
attitude and awareness on the part of the social
games industry. I would like to see them take a
similarly responsible attitude that their licensed
real-money gaming cousins do. The world
doesn’t need more industries being regulated.
Compliance and Technology
32 | iGamingBusiness North America | Issue 03 | October 2012
AH: No. Casino games are no different
from a racing game; indeed, I fi nd some
pay-to-win models in racing, fl ying and
farm games, for example, far “pushier” than
any casino format. Moreover, this would
stifl e or decline a valued and valuable
entertainment sector, entrepreneurs and
investors would hesitate to launch and
back businesses due to prohibitive costs
and red tape. An industry adopted code of
practice would work.
When do social games become a matter of public health and is there a difference between social casino games and other social games?JS: Any game that is addictive and can
extract large amounts of money out of
random people – who may not be able to
afford it – has to have some safeguards
and protections for the vulnerable. If you
showed your bank balance on the way in
and you were rich, then go to town and
spend thousands on your farm. But, if
you’re not rich, and you’re spending beyond
your means, then the games companies
have a duty of care not to let that go
unnoticed. They say that “the lottery is a tax
on the stupid,” because people pay to play
and have less chance of winning than being
struck by lightning… twice. But will social
games become the new “tax?” These people
pay more than those in the gambling
world, and yet they have almost no chance
of winning. What’s going on there? This
makes a casino game much better value to
the player. What’s the world going to come
to when playing a “free game” can lose
you more money and be more addictive
than a casino game?
AH: I’m not certain they ever will become a
public health issue. Given that Angry Birds
broke all known records for installs and
revenues, can we say that was addictive
and therefore a public health risk? I don’t
believe so. And would I like a fraction
of that success in my mobile fun casino
games? Of course. Indeed, we are fast
approaching a million installs and within
those, we have never witnessed mass
excessive payments in one go or in the
lifetime of any gamer. So, no, let’s not have
a two-tier system.
What would be the consequences to the providers of social games and to social gaming platforms like Facebook if government regulators were to regulate social gaming?JS: The social and freemium games
industry needs to do be seen to care about
its players. It needs to be proactive. Hiding
behind excuses like “you don’t need to
pay, you can always play for free” (while
making it as addictive as possible and
encouraging uncontrolled spending for a
few vulnerable players) just seems fraught
with risk and is asking to be regulated.
Social games industry: please empower
your users to set their own spending
limits. You can avoid being over-regulated
by governments if you are seen to be
responsible. Right now, you are in denial
that there’s a problem.
AH: Regulation could introduce costs and
red-tape that might take months to form
and instigate. The whole debate could itself
cause hesitation to newcomers entering
the space and innovation will suffer. We
would have to see how far reaching any
such regulation would be; it could stagnate
an entire industry sector in its current form
and that is a risk to employers, start-ups
and the young pool of developers out there.
Therefore, it is imperative that we
as an industry demonstrate a desire
to self-regulate, have a coherent and
cohesive voice saying “we will abide by
good common goals for the protection of
those who may be vulnerable, wherever
they are needed.” Importantly, we should
all be sticking up for the vast majority of
responsible gaming companies who strive
to build, create and employ and already
abide by such codes.
Jez San, OBE, is President and Founder of PKR. Jez is the fi rst person to ever be awarded an OBE for services to the computer games industry and is one of the UK’s best known technology entrepreneurs. Having founded his fi rst company Argonaut at age 16, Jez was responsible for hit release StarGlider, one of the fi rst 3D games to hit the nascent video games market. As President, Jez’s day-to-day role involves negotiating strategic partnerships, working with investors and building and refi ning company strategy.
Andrew Hughes has been at the heart of mobile service creation from its inception in the mid 90s and believes AbZorba Games and the mobile social gaming phenomena is where all his entrepreneurial experience and mobile action fi t together. He is excited and focused to lead AbZorba as this amazing market develops. Previously, Andrew has co-founded several mobile marketing companies in Europe including Saverfone, Brainstorm Marketing, Airtime Angels and the global Mobile Marketing Association in UK and Italy. He is also Principle Consultant at Mobile EMEA Consulting and currently resides in Madrid, Spain
“I’m not advocating regulation; I’m just advocating a responsible attitude and awareness on the part of the social games industry. I would like to see them take a similarly responsible attitude that their licensed real-money gaming cousins do.”