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Gambling companies get big on gaming
The news that 888 Corporation has spent up to $48 million on gaming company Mytopia is, at one level, no surprise.
It’s all about CPA
Gambling companies are experts at two things: customer acquisition and understanding legislation. Given that customer acquisition is the sina qua non for online games companies, it makes sense for gambling companies to buy into games in a big way.
But (and it is a big but), there are very substantial differences. The lifetime value of a gambling customer can easily run into thousands of dollars. Paying over $100 CPA (cost per acquisition) is a sensible strategy, and gambling companies are set up to spend a lot of money (both gross and per user) to acquire customers.
Games companies are different. Broadly speaking, gamers spend less than gamblers. So a gambling company will have to get used to CPAs that need to be a whole lot lower (possibly by a factor of 10 or more).
That’s not impossible. It’s just that gambling companies will have to get cleverer. And they have a decade of experience at responding to the changing online environment.
I don’t expect this acquisition to be the last by a gambling company. Far from it. The online gaming space is about to get a lot more competitive.
(Thanks to Stuart Dredge’s iPhone Games Bulletin for the heads-up)